Goldman Sachs 2015 Annual Report Download - page 189

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Contingencies
Legal Proceedings. See Note 27 for information about
legal proceedings, including certain mortgage-related
matters, and agreements the firm has entered into to toll the
statute of limitations.
Certain Mortgage-Related Contingencies. There are
multiple areas of focus by regulators, governmental
agencies and others within the mortgage market that may
impact originators, issuers, servicers and investors. There
remains significant uncertainty surrounding the nature and
extent of any potential exposure for participants in this
market.
The firm has not been a significant originator of residential
mortgage loans. The firm did purchase loans originated by
others and generally received loan-level representations.
During the period 2005 through 2008, the firm sold
approximately $10 billion of loans to government-
sponsored enterprises and approximately $11 billion of
loans to other third parties. In addition, the firm transferred
$125 billion of loans to trusts and other mortgage
securitization vehicles. In connection with both sales of
loans and securitizations, the firm provided loan level
representations and/or assigned the loan level
representations from the party from whom the firm
purchased the loans.
The firm’s exposure to claims for repurchase of residential
mortgage loans based on alleged breaches of
representations will depend on a number of factors such as
the extent to which these claims are made within the statute
of limitations taking into consideration the agreements to
toll the statute of limitations the firm has entered into with
trustees representing trusts. Based upon the large number of
defaults in residential mortgages, including those sold or
securitized by the firm, there is a potential for repurchase
claims. However, the firm is not in a position to make a
meaningful estimate of that exposure at this time.
Other Contingencies. In connection with the sale of
Metro, the firm provided customary representations and
warranties, and indemnities for breaches of these
representations and warranties, to the buyer. The firm
further agreed to provide indemnities to the buyer, which
primarily relate to potential liabilities for legal or regulatory
proceedings arising out of the conduct of Metro’s business
while the firm owned it.
Guarantees
The tables below present information about certain
derivatives that meet the definition of a guarantee, securities
lending indemnifications and certain other guarantees.
As of December 2015
$ in millions Derivatives
Securities
lending
indemnifications
Other
financial
guarantees
Carrying Value of Net
Liability $ 8,351 $ — $ 76
Maximum Payout/Notional Amount by Period of Expiration
2016 $640,288 $31,902 $ 611
2017 - 2018 168,784 — 1,402
2019 - 2020 67,643 — 1,772
2021 - thereafter 49,728 — 676
Total $926,443 $31,902 $4,461
As of December 2014
$ in millions Derivatives
Securities
lending
indemnifications
Other
financial
guarantees
Carrying Value of Net
Liability $ 11,201 $ — $ 119
Maximum Payout/Notional Amount by Period of Expiration
2015 $351,308 $27,567 $ 471
2016 - 2017 150,989 — 935
2018 - 2019 51,927 — 1,390
2020 - thereafter 58,511 — 1,690
Total $612,735 $27,567 $4,486
In the tables above:
‰The maximum payout is based on the notional amount of
the contract and does not represent anticipated losses.
‰Amounts exclude certain commitments to issue standby
letters of credit that are included in “Commitments to
extend credit.” See the tables in “Commitments” above
for a summary of the firm’s commitments.
Goldman Sachs 2015 Form 10-K 177