Freddie Mac 2010 Annual Report Download - page 225

Table 8.8 — AOCI Related to Available-For-Sale Securities
2010 2009 2008
Year Ended December 31,
(in millions)
Beginning balance . . . ............................................................ $(20,616) $(28,510) $ (7,040)
Adjustment to initially apply the adoption of amendments to accounting standards for transfers of financial
assets and the consolidation of VIEs
(1)
.............................................. (2,683) — —
Adjustment to initially apply the adoption of an amendment to the accounting standards for investments in
debt and equity securities
(2)
..................................................... — (9,931) —
Adjustment to initially apply the accounting standards on the fair value option for financial assets and
liabilities
(3)
................................................................ — — (854)
Net unrealized holding gains (losses)
(4)
............................................... 10,876 11,250 (31,753)
Net reclassification adjustment for net realized losses
(5)(6)
................................... 2,745 6,575 11,137
Ending balance . . . . . ............................................................ $ (9,678) $(20,616) $(28,510)
(1) Net of tax benefit of $1.4 billion for the year ended December 31, 2010.
(2) Net of tax benefit of $5.3 billion for the year ended December 31, 2009.
(3) Net of tax benefit of $460 million for the year ended December 31, 2008.
(4) Net of tax benefit (expense) of $(5.9) billion, $(6.1) billion and $17.1 billion for the years ended December 31, 2010, 2009 and 2008, respectively.
(5) Net of tax benefit of $1.5 billion, $3.5 billion and $6.0 billion for the years ended December 31, 2010, 2009 and 2008, respectively.
(6) Includes the reversal of previously recorded unrealized losses that have been recognized on our consolidated statements of operations as impairment
losses on available-for-sale securities of $2.8 billion, $7.3 billion and $11.5 billion, net of taxes, for the years ended December 31, 2010, 2009 and
2008, respectively.
Trading Securities
Table 8.9 summarizes the estimated fair values by major security type for trading securities.
Table 8.9 — Trading Securities
2010 2009
December 31,
(in millions)
Mortgage-related securities:
Freddie Mac . . . . ...................................................................... $13,437 $170,955
Fannie Mae . . . . . ...................................................................... 18,726 34,364
Ginnie Mae. . . . . ...................................................................... 172 185
Other . . . . . . . . . ...................................................................... 31 28
Total mortgage-related securities ......................................................... 32,366 205,532
Non-mortgage-related securities:
Asset-backed securities . ................................................................ 44 1,492
Treasury bills . . ...................................................................... 17,289 14,787
Treasury notes . ...................................................................... 10,122 —
FDIC-guaranteed corporate medium-term notes ................................................. 441 439
Total non-mortgage-related securities . . . ................................................... 27,896 16,718
Total fair value of trading securities . . . ......................................................... $60,262 $222,250
For the years ended December 31, 2010, 2009 and 2008 we recorded net unrealized gains (losses) on trading securities
held at December 31, 2010, 2009 and 2008 of $(1.4) billion, $4.3 billion and $1.6 billion, respectively.
Total trading securities include $2.5 billion and $3.3 billion, respectively, of assets as defined by the derivative and
hedging accounting guidance regarding certain hybrid financial instruments as of December 31, 2010 and 2009. Gains
(losses) on trading securities on our consolidated statements of operations include gains (losses) of $(53) million and
$96 million, respectively, related to these trading securities for the years ended December 31, 2010 and 2009.
Collateral Pledged
Collateral Pledged to Freddie Mac
Our counterparties are required to pledge collateral for securities purchased under agreements to resell transactions and
most derivative instruments are subject to collateral posting thresholds generally related to a counterparty’s credit rating. We
consider the types of securities being pledged to us as collateral when determining how much we lend related to securities
purchased under agreements to resell transactions. Additionally, we subsequently and regularly review the market values of
these securities compared to amounts loaned to ensure our exposure to losses is minimized. We had cash and cash
equivalents pledged to us related to derivative instruments of $2.2 billion and $3.1 billion at December 31, 2010 and 2009,
respectively. Although it is our practice not to repledge assets held as collateral, a portion of the collateral may be repledged
based on master agreements related to our derivative instruments. At December 31, 2010 and 2009, we did not have
collateral in the form of securities pledged to and held by us under these master agreements. Also at December 31, 2010 and
2009, we did not have securities pledged to us for securities purchased under agreements to resell transactions that we had
the right to repledge. From time to time we may obtain pledges of collateral from certain seller/servicers as additional
222 Freddie Mac