Fannie Mae 2012 Annual Report Download - page 120

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Table 38 displays information on the composition of our cash and other investments portfolio as of the dates indicated.
Table 38: Cash and Other Investments Portfolio
As of December 31,
2012 2011 2010
(Dollars in millions)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,117 $ 17,539 $ 17,297
Federal funds sold and securities purchased under agreements to resell or similar
arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,500 46,000 11,751
Non-mortgage-related securities:
U.S. Treasury securities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,950 47,737 27,432
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,111 5,321
Total non-mortgage-related securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,950 49,848 32,753
Total cash and other investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71,567 $113,387 $ 61,801
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(1) Excludes $1.1 billion, $600 million and $4.0 billion of U.S. Treasury securities which are a component of cash equivalents as of
December 31, 2012, 2011 and 2010, respectively, as these securities had a maturity at the date of acquisition of three months or less.
Unencumbered Mortgage Portfolio
Another potential source of liquidity in the event our access to the unsecured debt market becomes impaired is the
unencumbered mortgage assets in our mortgage portfolio, which could be sold or used as collateral for secured borrowing.
We believe that the amount of mortgage-related assets that we could successfully sell or borrow against in the event of a
liquidity crisis or significant market disruption is substantially lower than the amount of mortgage-related assets we hold. Our
ability to sell whole loans from our mortgage portfolio is limited due to the credit-related issues of these loans, as well as
operational constraints.
While our liquidity contingency planning attempts to address stressed market conditions and our status under conservatorship
and Treasury arrangements, we believe that our liquidity contingency plans may be difficult or impossible to execute for a
company of our size in our circumstances. See “Risk Factors” for a description of the risks associated with our liquidity
contingency planning.
Credit Ratings
Our credit ratings from the major credit ratings organizations, as well as the credit ratings of the U.S. government, are
primary factors that could affect our ability to access the capital markets and our cost of funds. In addition, our credit ratings
are important when we seek to engage in certain long-term transactions, such as derivative transactions. S&P, Moody’s and
Fitch have all indicated that, if they were to lower the sovereign credit ratings on the U.S, they would likely lower their
ratings on the debt of Fannie Mae and certain other government-related entities. We cannot predict whether one or more of
these ratings agencies will lower our debt ratings in the future. See “Risk Factors” for a discussion of the possibility of further
downgrades and the risks to our business relating to a decrease in our credit ratings, which could include an increase in our
borrowing costs, limits on our ability to issue debt, and additional collateral requirements under our derivatives contracts and
other borrowing arrangements.