NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 28. FAIR VALUE MEASUREMENTS  The Bancorp measures certain financial assets and liabilities at fair  value in accordance with U.S. GAAP, which defines fair value as  the price that would be received to sell an asset or paid to transfer  a liability in an orderly transaction between market participants at  the measurement date. U.S. GAAP also establishes a fair value  hierarchy, which prioritizes the inputs to valuation techniques  used to measure fair value into three broad levels. The fair value  hierarchy gives the highest priority to quoted prices in active  markets for identical assets or liabilities (Level 1) and the lowest  priority to unobservable inputs (Level 3). A financial instrument’s  categorization within the fair value hierarchy is based upon the  lowest level of input that is significant to the instrument’s fair  value measurement. The three levels within the fair value  hierarchy are described as follows: Level 1  – Quoted prices (unadjusted) in active markets for  identical assets or liabilities that the Bancorp has the ability  to access at the measurement date. Level 2  – Inputs other than quoted prices included within  Level 1 that are observable for the asset or liability, either  directly or indirectly. Level 2 inputs include: quoted prices  for similar assets or liabilities in active markets; quoted prices  for identical or similar assets or liabilities in markets that are  not active; inputs other than quoted prices that are  observable for the asset or liability; and inputs that are  derived principally from or corroborated by observable  market data by correlation or other means.  Level 3  – Unobservable inputs for the asset or liability for  which there is little, if any, market activity at the measurement date. Unobservable inputs reflect the Bancorp’s own assumptions about what market participants  would use to price the asset or liability. The inputs are  developed based on the best information available in the  circumstances, which might include the Bancorp’s own  financial data such as internally developed pricing models,  discounted cash flow methodologies, as well as instruments  for which the fair value determination requires significant  management judgment. Assets and Liabilities Measured at Fair Value on a  Recurring Basis The following tables summarize assets and liabilities measured at  fair value on a recurring basis, including financial instruments in  which the Bancorp has elected the fair value option.  Fifth Third Bancorp 117 As of December 31, 2010 ($ in millions)  Level 1 Level 2  Level 3  Total Fair Value  Assets: Available-for-sale securities:  U.S. Treasury and Government agencies  $230 - - $230 U.S. Government sponsored agencies  - 1,645 - 1,645 Obligations of states and political subdivisions  - 172 - 172 Agency mortgage-backed securities  - 10,973 - 10,973 Other bonds, notes and debentures  - 1,342 - 1,342 Other securities  (a) 180 4 - 184 Available-for-sale securities  (a) 410 14,136 - 14,546 Trading securities:  U.S. Treasury and Government agencies  1 - - 1 Obligations of states and political subdivisions  -  20  1  21  Agency mortgage-backed securities  - 8 - 8 Other bonds, notes and debentures  - 115 5 120 Other securities  47 97 - 144 Trading securities 48 240 6 294 Residential mortgage loans held for sale  - 1,892 - 1,892 Residential mortgage loans  (b) - - 46 46 Derivative assets:  Interest rate contracts  90 1,448 13 1,551 Foreign exchange contracts  - 343 - 343 Equity contracts  - - 81 81 Commodity contracts  - 99 - 99 Derivative assets  90 1,890 94 2,074 Total assets  $548 18,158 146 $18,852 Liabilities:  Derivative liabilities  Interest rate contracts  14 846 11 871 Foreign exchange contracts  - 323 - 323 Equity contracts  - - 28 28 Commodity contracts  - 92 - 92 Derivative liabilities  14 1,261 39 1,314 Short positions  1 1 - 2 Total liabilities  $15 1,262 39 $1,316 Fair Value Measurements Using 