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Liquidity Management
We seek to ensure that we have adequate liquidity to sustain business operations, fund asset growth and satisfy debt
obligations under normal and stress conditions. In addition to the funding sources discussed above, we also maintain highly
liquid unencumbered assets in our investment portfolio.
We employ a variety of metrics to monitor and manage liquidity. Regular liquidity stress testing and contingency
funding planning is performed as part of our liquidity management process. We evaluate a range of stress scenarios including
company specific and systemic events that could impact funding sources and our ability to meet liquidity needs. These
scenarios measure the liquidity position over a two-year horizon by analyzing the stress on liquidity versus ability to generate
contingent liquidity. We maintain contingent funding sources, including our liquidity portfolio, private securitizations with
unused capacity and Federal Reserve discount window capacity, which we could utilize to satisfy liquidity needs during such
stress events. We expect to be able to satisfy all maturing obligations and fund business operations during the next 12 months
by utilizing our deposit channels, credit card asset-backed securitizations and our contingent funding sources.
We maintain policies outlining the overall framework and general principles for managing liquidity risk across our
business, which is the responsibility of our Asset and Liability Committee (the “ALCO”). We seek to balance the trade-offs
between maintaining too much liquidity, which may limit financial flexibility and be costly, with having too little liquidity that
could cause financial distress. Liquidity risk is centrally managed by the ALCO, which is chaired by our Treasurer and has
cross-functional membership. The ALCO monitors positions and determines any actions that need to be taken.
At November 30, 2011, our liquidity portfolio was comprised of cash and cash equivalents and high quality, liquid
investment securities. Cash and cash equivalents are invested primarily in deposits with the Federal Reserve. Investment
securities included credit card asset-backed securities of other issuers and U.S. Treasury, U.S. government agency and AAA-
rated corporate debt obligations issued under the Temporary Liquidity Guarantee Program that are guaranteed by the FDIC, all
of which are considered highly liquid. In addition, we have the ability to raise cash by utilizing repurchase agreements and
pledging certain of these investments. The level of our liquidity portfolio may fluctuate based upon the level of expected
maturities of our funding sources as well as operational requirements and market conditions.
At November 30, 2011, our liquidity portfolio and undrawn credit facilities were $26.2 billion, which was $3.5 billion
higher than the balance at November 30, 2010 due to the addition of multi-year conduit capacity during 2011 in order to
balance the flexibility and economics of our liquidity mix, partially offset by maturities of securitized debt.
Liquidity portfolio
Cash and cash equivalents(1)
Other short term investments
Investment securities(2)
Total liquidity portfolio
Undrawn credit facilities
Private asset-backed securitizations(3)
Unsecured committed credit facility(4)
Federal Reserve discount window(3)(5)
Total undrawn credit facilities
Total liquidity portfolio and undrawn credit facilities
November 30,
2011
(dollars in millions)
$ 2,440
—
6,108
8,548
6,750
2,445
8,407
17,602
$ 26,150
November 30,
2010
$ 4,754
375
5,003
10,132
3,300
2,445
6,747
12,492
$ 22,624
(1) Cash-in-process is excluded from cash and cash equivalents for liquidity purposes.
(2) The weighted average life of our investment securities available for sale was approximately 29 months and 24 months as of November 30, 2011 and
2010, respectively.
(3) See "—Funding Sources—Additional Funding Sources" for additional information.
(4) This credit facility was terminated on December 16, 2011. There were no outstanding borrowings as of November 30, 2011.
(5) Excludes $276 million and $1.5 billion of investments accounted for in the liquidity portfolio that were pledged to the Federal Reserve as of
November 30, 2011 and November 30, 2010, respectively.
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