Morgan Stanley 2009 Annual Report Download - page 85

On November 12, 2009, the FDIC Board of Directors adopted a final rule amending the assessment regulations to
require insured depository institutions to prepay their estimated quarterly regular risk-based assessments for the
fourth quarter of 2009, and for all of 2010, 2011 and 2012 (the prepayment period) on December 30, 2009, at the
same time that institutions pay their regular quarterly deposit insurance assessments for the third quarter of 2009.
The prepaid assessment is recorded as a prepaid expense (asset) as of December 30, 2009. As of December 31,
2009, and each quarter thereafter, the Company will record an expense (charge to earnings) for its regular
quarterly assessment for the quarter and an offsetting credit to the prepaid assessment until the asset is exhausted.
On October 3, 2008, under the Emergency Economic Stabilization Act of 2008, the FDIC temporarily raised the
basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. This increased
coverage lasts through December 31, 2013 and is in effect for the Company’s two U.S. depository institutions.
Additionally, under the Final Rule extending the Transaction Account Guarantee Program, the FDIC provides
unlimited deposit insurance through June 30, 2010 for certain transaction accounts at FDIC-insured participating
institutions. The Company has elected for its FDIC-insured subsidiaries to participate in the extension of the
Transaction Account Guarantee Program.
Long-Term Borrowings. The Company uses a variety of long-term debt funding sources to generate liquidity,
taking into consideration the results of the CFP requirements. In addition, the issuance of long-term debt allows the
Company to reduce reliance on short-term credit sensitive instruments (e.g., commercial paper and other unsecured
short-term borrowings). Financing transactions are generally structured to ensure staggered maturities, thereby
mitigating refinancing risk, and to maximize investor diversification through sales to global institutional and retail
clients. Availability and cost of financing to the Company can vary depending on market conditions, the volume of
certain trading and lending activities, the Company’s credit ratings and the overall availability of credit.
During 2009, the Company’s long-term financing strategy was driven, in part, by its continued focus on
improving its balance sheet strength (evaluated through enhanced capital and liquidity positions). As a result, for
2009, a principal amount of approximately $44 billion of unsecured debt was issued, including $30 billion of
publicly issued senior unsecured notes not guaranteed by the FDIC.
The Company may from time to time engage in various transactions in the credit markets (including, for
example, debt repurchases) that it believes are in the best interests of the Company and its investors. Maturities
and debt repurchases during 2009 were approximately $33 billion in aggregate.
Long-term borrowings as of December 31, 2009 consisted of the following (dollars in millions):
U.S. Dollar
Non-U.S.
Dollar
At
December 31,
2009
Due in 2010 ........................................ $ 19,973 $ 6,115 $ 26,088
Due in 2011 ........................................ 17,386 9,424 26,810
Due in 2012 ........................................ 21,815 16,224 38,039
Due in 2013 ........................................ 3,378 21,642 25,020
Due in 2014 ........................................ 10,657 6,209 16,866
Thereafter .......................................... 39,181 21,370 60,551
Total .......................................... $112,390 $80,984 $193,374
See Note 9 to the consolidated financial statements for further information on long-term borrowings.
Credit Ratings.
The Company relies on external sources to finance a significant portion of its day-to-day operations. The cost and
availability of financing generally are dependent on the Company’s short-term and long-term credit ratings. In
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