Fannie Mae 2009 Annual Report Download - page 138

(5)
Includes only unconditional purchase obligations that are subject to a cancellation penalty for certain telecom services,
software and computer services, and other agreements. Excludes arrangements that may be cancelled without penalty.
Amounts also include off-balance sheet commitments for the unutilized portion of lending agreements entered into
with multifamily borrowers.
(6)
Excludes risk management derivative transactions that may require cash settlement in future periods and our
obligations to stand ready to perform under our guarantees relating to Fannie Mae MBS and other financial guarantees,
because the amount and timing of payments under these arrangements are generally contingent upon the occurrence of
future events. For a description of the amount of our on- and off-balance sheet Fannie Mae MBS and other financial
guarantees as of December 31, 2009, see “Off-Balance Sheet Arrangements and Variable Interest Entities.” Includes
future cash payments due under our contractual obligations to fund LIHTC and other partnerships that are
unconditional and legally binding and cash received as collateral from derivative counterparties, which are included in
our consolidated balance sheets under “Partnership liabilities” and “Other liabilities,” respectively. Amounts also
include our obligation to fund partnerships that have been consolidated and tax liabilities for unrecognized tax benefits.
Equity Funding
As a result of the covenants under the senior preferred stock purchase agreement and Treasury’s ownership of
the warrant to purchase up to 79.9% of the total shares of our common stock outstanding, we no longer have
access to equity funding except through draws under the senior preferred stock purchase agreement. For a
description of the covenants under the senior preferred stock purchase agreement, see “Business—
Conservatorship and Treasury Agreements—Treasury Agreements—Covenants Under Treasury Agreements.”
We have received a total of $59.9 billion from Treasury pursuant to the senior preferred stock purchase
agreement as of December 31, 2009. These funds allowed us to eliminate our net worth deficits as of the end
of each of the four prior quarters. In February 2010, the Acting Director of FHFA submitted a request for
$15.3 billion from Treasury under the senior preferred stock purchase agreement to eliminate our net worth
deficit as of December 31, 2009, and requested receipt of those funds on or prior to March 31, 2010. Upon
receipt of the requested funds, the aggregate liquidation preference of the senior preferred stock, including the
initial aggregate liquidation preference of $1.0 billion, will equal $76.2 billion. Due to current trends in the
housing and financial markets, we continue to expect to have a net worth deficit in future periods, and
therefore will be required to obtain additional funding from Treasury pursuant to the senior preferred stock
purchase agreement. Treasury’s maximum funding commitment to us prior to the December 2009 amendment
of the senior preferred stock purchase agreement was $200 billion. The amendment to the agreement stipulates
that the cap on Treasury’s funding commitment to us under the senior preferred stock purchase agreement will
increase as necessary to accommodate any net worth deficits for calendar quarters in 2010 through 2012. For
any net worth deficits after December 31, 2012, Treasury’s remaining funding commitment will be
$124.8 billion ($200 billion less $59.9 billion drawn to date and $15.3 billion requested based on our net
worth deficit as of December 31, 2009) less any positive net worth as of December 31, 2012.
Liquidity Governance and Monitoring
Our liquidity position could be adversely affected by many causes, both internal and external to our business,
including: actions taken by the conservator, the Federal Reserve, Treasury or other government agencies;
legislation relating to our business; an unexpected systemic event leading to the withdrawal of liquidity from
the market; an extreme market-wide widening of credit spreads; a downgrade of our credit ratings from the
major ratings organizations; a significant further decline in our net worth; loss of demand for our debt, or
certain types of our debt, from a major group of investors; a significant credit event involving one of our
major institutional counterparties; a sudden catastrophic operational failure in the financial sector due to a
terrorist attack or other event; or elimination of our GSE status. See “Risk Factors” for a description of factors
that could adversely affect our liquidity.
We conduct daily liquidity governance and monitoring activities to achieve the goals of our liquidity risk
policy, including:
• daily monitoring and reporting of our liquidity position to management and FHFA;
• daily forecasting and statistical analysis of our daily cash needs over a 28-business-day period;
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