Fannie Mae 2008 Annual Report Download - page 317

Fair value losses, net for the year ended December 31, 2008 primarily related to a decline in interest rates,
which resulted in a decrease in the value of our derivatives and an increase in hedge gains. Significant
widening of credit spreads resulted in losses on our trading securities.
Reclassifications
In addition to the reclassification of prior period amounts to “Fair value losses, net,” prior period amounts
previously recorded as a component of “Fee and other income” in our consolidated statements of operations
related to our master servicing assets and liabilities have been reclassified as “Other expenses” to conform to
the current period presentation.
Pursuant to our adoption of FSP FIN 39-1, to offset derivative positions with the same counterparty under a
master netting arrangement, we reclassified amounts in our consolidated balance sheet as of December 31,
2007 related to cash collateral receivables and payables. We reclassified $1.2 billion from “Other assets” to
“Derivative liabilities at fair value” and $1.9 billion from “Other liabilities” to “Derivative assets at fair value”
related to cash collateral receivables and cash collateral payables, respectively.
New Accounting Pronouncements
SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB 51 (“SFAS 160”). SFAS 160 requires noncontrolling interests initially to be
measured at fair value and classified as a separate component of equity. Under SFAS 160, gains or losses are
not recognized from transactions with noncontrolling interests that do not result in a change in control, instead
purchases or sales of noncontrolling interests are accounted for as equity transactions. Upon deconsolidation of
consolidated entities, a gain or loss is recognized for the difference between the proceeds of that sale and the
carrying amount of the interest sold. Additionally, a new fair value is established for any remaining ownership
interest in the entity. SFAS 160 is effective for the first annual reporting period beginning on or after
December 15, 2008; earlier application is prohibited. SFAS 160 is required to be adopted prospectively, with
the exception of presentation and disclosure requirements (e.g., reclassifying noncontrolling interests to appear
in equity), which are required to be adopted retrospectively. We adopted SFAS 160 on January 1, 2009,
without a material impact on our consolidated financial statements.
SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB
Statement 133
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities—an amendment of FASB Statement 133 (“SFAS 161”). SFAS 161 amends and expands the
disclosure provisions in SFAS 133 for derivative instruments and hedging activities. SFAS 161 requires
qualitative disclosures about how and why derivative instruments are used and the related impact on the
financial statements. Quantitative disclosures including the fair value of derivative instruments and their gains
and losses are required in a tabular format. SFAS 161’s provisions apply to all derivative instruments including
bifurcated derivative instruments and any related hedged items. SFAS 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008, with early application
encouraged. As SFAS 161 only requires additional footnote disclosures, it will impact the notes to our
consolidated financial statements, but has no impact to our consolidated financial statements themselves.
F-39
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)