Morgan Stanley 2010 Annual Report Download - page 94

(1) Total deposits insured by the FDIC at December 31, 2010 and December 31, 2009 were $48 billion and $46 billion, respectively.
(2) Certain time deposit accounts are carried at fair value under the fair value option (see Note 4 to the consolidated financial statements).
With the passage of the Dodd-Frank Act, the statutory standard maximum deposit insurance amount was
permanently increased to $250,000 per depositor and is in effect for the Company’s relevant U.S. subsidiary
banks.
On November 9, 2010, the FDIC issued a Final Rule implementing Section 343 of the Dodd-Frank Act that
provides for unlimited insurance coverage of non-interest bearing transaction accounts. Beginning December 31,
2010 through December 31, 2012, all non-interest bearing transaction accounts are fully insured, regardless of
the balance of the account, at all FDIC-insured institutions, including the Company’s FDIC-insured
subsidiaries. This unlimited insurance coverage is available to all depositors and is separate from, and in addition
to, the insurance coverage provided to a depositor’s other deposit accounts held at an FDIC-insured
institution. Money Market Deposit Accounts (“MMDA”) and Negotiable Order of Withdrawal (“NOW”)
accounts are not eligible for this unlimited insurance coverage, regardless of the interest rate, even if no interest
is paid on the account.
Long-Term Borrowings. The Company uses a variety of long-term debt funding sources to generate liquidity,
taking CFP requirements into consideration. 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). Long-term borrowings 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
2010, the Company issued notes with a principal amount of approximately $33 billion.
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. During
2010, approximately $34 billion in aggregate long-term borrowings matured.
Long-term borrowings at December 31, 2010 consisted of the following:
Parent Subsidiaries Total
(dollars in millions)
Due in 2011 ........................................ $ 24,953 $1,958 $ 26,911
Due in 2012 ........................................ 37,175 690 37,865
Due in 2013 ........................................ 24,721 757 25,478
Due in 2014 ........................................ 16,704 999 17,703
Due in 2015 ........................................ 17,197 3,829 21,026
Thereafter .......................................... 62,218 1,256 63,474
Total .......................................... $182,968 $9,489 $192,457
See Note 11 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 is impacted by the Company’s credit ratings. In addition, the Company’s credit
ratings can have a significant impact on certain trading revenues, particularly in those businesses where longer
term counterparty performance is critical, such as OTC derivative transactions, including credit derivatives and
interest rate swaps. Factors that are important to the determination of the Company’s credit ratings include the
level and quality of earnings, capital adequacy, liquidity, risk appetite and management, asset quality, business
mix and perceived levels of government support.
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