Fannie Mae 2009 Annual Report Download - page 130

(d) Servicer and MBS trust payable; and (e) Other liabilities. The carrying value of these items in our GAAP
consolidated balance sheets together totaled $94.8 billion and $42.2 billion as of December 31, 2009 and 2008,
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.
(9)
The amount included in “estimated fair value” of the senior preferred stock is the liquidation preference, which is the
same as the GAAP carrying value, and does not reflect fair value.
LIQUIDITY AND CAPITAL MANAGEMENT
Our business activities require that we maintain adequate liquidity to fund our operations. We have
implemented a liquidity policy which is designed to mitigate our liquidity risk. During 2009, we experienced
strong demand for our debt securities, and we believe our ready access to long-term debt funding has been
primarily due to actions taken by the federal government to support us and the financial markets.
Liquidity Management
Liquidity risk is the risk that we will not be able to meet our funding obligations in a timely manner. Liquidity
management involves forecasting funding requirements and maintaining sufficient capacity to meet these needs
while accommodating fluctuations in asset and liability levels due to changes in our business operations or
unanticipated events. Our Treasury group is responsible for our liquidity and contingency planning strategies.
Primary Sources and Uses of Funds
Our primary source of funds is proceeds from the issuance of short-term and long-term debt securities.
Accordingly, our liquidity depends largely on our ability to issue unsecured debt in the capital markets. Our
status as a GSE and federal government support of our business continue to be essential to maintaining our
access to the unsecured debt markets. Our senior unsecured debt obligations are rated AAA, or its equivalent,
by the major rating agencies.
In addition to funding we obtain from the issuance of debt securities, our other sources of cash include:
• principal and interest payments received on mortgage loans, mortgage-related securities and non-mortgage
investments we own;
• proceeds from the sale of mortgage loans, mortgage-related securities and non-mortgage assets;
• funds from Treasury pursuant to the senior preferred stock purchase agreement;
• borrowings under secured and unsecured intraday funding lines of credit we have established with several
large financial institutions;
• guaranty fees received on Fannie Mae MBS;
• borrowings against mortgage-related securities and other investment securities we hold pursuant to
repurchase agreements and loan agreements;
• payments received from mortgage insurance counterparties; and
• net receipts on derivative instruments.
Our primary funding needs include:
• the repayment of matured, redeemed and repurchased debt;
• the purchase of mortgage loans (including delinquent loans from MBS trusts), mortgage-related securities
and other investments;
• interest payments on outstanding debt;
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