Fannie Mae 2008 Annual Report Download - page 150

(7)
Includes certain short-term debt and long-term debt instruments reported in our GAAP consolidated balance sheet at
fair value as of December 31, 2008 of $4.5 billion and $21.6 billion, respectively.
(8)
The line item “Other liabilities” consists of the liabilities presented on the following four line items in our GAAP
consolidated balance sheets: (i) Accrued interest payable; (ii) Reserve for guaranty losses; (iii) Partnership liabilities;
and (iv) Other liabilities. The carrying value of these items in our GAAP consolidated balance sheets together totaled
$42.2 billion and $20.5 billion as of December 31, 2008 and 2007, respectively. The GAAP carrying values of these
other liabilities generally approximate fair value. We assume that certain other liabilities, such as deferred revenues,
have no fair value. Although we report the “Reserve for guaranty losses” as a separate line item on our consolidated
balance sheets, it is incorporated into and reported as part of the fair value of our guaranty obligations in our non-
GAAP supplemental consolidated fair value balance sheets.
Table 33: Change in Fair Value of Net Assets (Net of Tax Effect)
2008 2007
(Dollars in millions)
Balance as of January 1, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,799 $ 43,699
Effect of change in measuring fair value of guaranty obligations
(1)
. . . . . . . . . . . . . . . . . . . . . 1,558 —
Balance as of January 1, as adjusted to include effect of change in measuring fair value of
guaranty obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,357 43,699
Capital transactions:
(2)
Common dividends, common stock repurchases and issuances, net . . . . . . . . . . . . . . . . . . . . . 1,929 (1,740)
Preferred dividends and issuances, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,616 7,208
Capital transactions, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,545 5,468
Change in estimated fair value of net assets, excluding effect of capital transactions . . . . . . . . . (148,052) (13,368)
Decrease in estimated fair value of net assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (142,507) (7,900)
Balance as of December 31
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(105,150) $ 35,799
(1)
Represents the estimated after-tax impact of the change in our approach to measuring the fair value of our guaranty
obligations as part of our January 1, 2008 implementation of SFAS 157. Amount reflects the difference of $2.3 billion
($1.6 billion after-tax) between the estimated fair value of our guaranty obligations based on our current valuation
approach of $18.2 billion as of December 31, 2007, and the previously reported fair value of our guaranty obligations
of $20.5 billion as of December 31, 2007. See “Critical Accounting Policies and Estimates—Fair Value of Financial
Instruments—Fair Value of Guaranty Obligations” for additional information.
(2)
Represents net capital transactions, which are reflected in the consolidated statements of changes in stockholders’
equity. The issuance of senior preferred stock and warrant to purchase common stock to Treasury in 2008 did not have
an impact to stockholders’ equity as displayed in our consolidated statement of changes in stockholders’ equity.
(3)
Represents estimated fair value of net assets (net of tax effect) presented in Table 32: Supplemental Non-
GAAP Consolidated Fair Value Balance Sheets.
LIQUIDITY AND CAPITAL MANAGEMENT
Our business activities require that we maintain adequate liquidity to fund our operations. We have a liquidity
and capital risk management framework and policies that are intended to ensure appropriate liquidity during
normal and stress periods. Our senior management establishes our overall liquidity and capital policies through
various risk and control committees.
Under the Regulatory Reform Act, FHFA must place us into receivership if the Director of FHFA makes a
written determination that our assets are, and during the preceding 60 days have been, less than our
obligations. FHFA has notified us that the measurement period for this determination begins no earlier than
the date of the SEC filing deadline for our quarterly and annual financial statements. As a result of our net
loss for 2008, our net worth (defined as the amount by which our total assets exceed our total liabilities, as
reflected on our consolidated balance sheets, prepared in accordance with GAAP) was negative $15.2 billion
as of December 31, 2008. The Director of FHFA submitted a request on February 25, 2009 for $15.2 billion in
funds from Treasury on our behalf under the terms of the senior preferred stock purchase agreement to
eliminate our net worth deficit as of December 31, 2008, in order to avoid a trigger of mandatory receivership
under the Regulatory Reform Act. FHFA requested that Treasury provide the funds on or prior to March 31,
2009. If current
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