Fannie Mae 2009 Annual Report Download - page 142

and net cash outflows used in financing activities of $42.9 billion. The net cash used in financing activities
was attributable to the redemption of a significant amount of short-term debt, which was partially offset by the
issuance of long-term debt in excess of amounts redeemed and the funds received from Treasury under the
senior preferred stock purchase agreement.
Year Ended December 31, 2008. Cash and cash equivalents of $17.9 billion as of December 31, 2008
increased by $14.0 billion from December 31, 2007. This increase was due in large part to our efforts during
the second half of 2008 to increase our cash and cash equivalent balances in light of market conditions. Net
cash generated from operating activities totaled $15.9 billion, resulting primarily from the proceeds from
maturities or sales of our short-term, liquid investments, which are classified as trading securities. We also
generated net cash from financing activities of $70.6 billion, reflecting the proceeds from the issuance of
common and preferred stock, which was partially offset by the redemption of a significant amount of long-
term debt as interest rates fell during the period. Net cash used in investing activities was $72.5 billion,
attributable to our purchases of available-for-sale securities, loans held for investment and advances to lenders.
Capital Management
Regulatory Capital
FHFA has announced that our existing statutory and FHFA-directed regulatory capital requirements will not be
binding during the conservatorship, and that FHFA will not issue quarterly capital classifications during the
conservatorship. We continue to submit capital reports to FHFA during the conservatorship and FHFA
continues to closely monitor our capital levels. We report our minimum capital requirement, core capital and
GAAP net worth in our periodic reports on Form 10-Q and Form 10-K, and FHFA also reports them on its
website. FHFA is not reporting on our critical capital, risk-based capital or subordinated debt levels during the
conservatorship.
Pursuant to its authority under the GSE Act, FHFA has announced that it will be revising our minimum capital
and risk-based capital requirements.
Table 38 displays our core capital and our statutory minimum capital requirement as of December 31, 2009
and December 31, 2008. The amounts for December 31, 2009 are our estimates as submitted to FHFA.
Table 38: Regulatory Capital Measures
2009
(1)
2008
(1)
As of December 31,
(Dollars in millions)
Core capital
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (74,540) $ (8,641)
Statutory minimum capital requirement
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,057 33,552
Deficit of core capital over statutory minimum capital requirement . . . . . . . . . . . . . . . . . . . . . . . $(107,597) $(42,193)
Deficit of core capital percentage over statutory minimum capital requirement. . . . . . . . . . . . . . . (325.5)% (125.8)%
(1)
Amounts as of December 31, 2009 and 2008 represent estimates that have been submitted to FHFA. As noted above,
FHFA is not issuing capital classifications during conservatorship.
(2)
The sum of (a) the stated value of our outstanding common stock (common stock less treasury stock); (b) the stated
value of our outstanding non-cumulative perpetual preferred stock; (c) our paid-in capital; and (d) our retained
earnings (accumulated deficit). Core capital excludes (a) accumulated other comprehensive income (loss) and
(b) senior preferred stock.
(3)
Generally, the sum of (a) 2.50% of on-balance sheet assets; (b) 0.45% of the unpaid principal balance of outstanding
Fannie Mae MBS held by third parties; and (c) up to 0.45% of other off-balance sheet obligations, which may be
adjusted by the Director of FHFA under certain circumstances (See 12 CFR 1750.4 for existing adjustments made by
the Director).
The reduction in our core capital during 2009 was attributable to the net loss we incurred during the period.
See “Consolidated Results of Operations” for factors that affected our results of operations in 2009. The senior
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