Freddie Mac 2011 Annual Report Download - page 113

information about our reported multifamily delinquency rates and credit enhancements on multifamily loans. For further
information on delinquencies, including geographical and other concentrations, see “NOTE 16: CONCENTRATION OF
CREDIT AND OTHER RISKS.”
CONSOLIDATED BALANCE SHEETS ANALYSIS
The following discussion of our consolidated balance sheets should be read in conjunction with our consolidated
financial statements, including the accompanying notes. Also, see “CRITICAL ACCOUNTING POLICIES AND
ESTIMATES” for information concerning certain significant accounting policies and estimates applied in determining our
reported financial position.
Cash and Cash Equivalents, Federal Funds Sold and Securities Purchased Under Agreements to Resell
Cash and cash equivalents, federal funds sold and securities purchased under agreements to resell, and other liquid
assets discussed in “Investments in Securities — Non-Mortgage-Related Securities,” are important to our cash flow and
asset and liability management, and our ability to provide liquidity and stability to the mortgage market. We use these
assets to help manage recurring cash flows and meet our other cash management needs. We consider federal funds sold to
be overnight unsecured trades executed with commercial banks that are members of the Federal Reserve System.
Securities purchased under agreements to resell principally consist of short-term contractual agreements such as reverse
repurchase agreements involving Treasury and agency securities.
The short-term assets on our consolidated balance sheets also include those related to our consolidated VIEs, which
are comprised primarily of restricted cash and cash equivalents at December 31, 2011. These short-term assets, related to
our consolidated VIEs, decreased by $9.2 billion from December 31, 2010 to December 31, 2011, primarily due to a
relative decline in the level of refinancing activity.
Excluding amounts related to our consolidated VIEs, we held $28.4 billion and $37.0 billion of cash and cash
equivalents, $0 billion and $1.4 billion of federal funds sold, and $12.0 billion and $15.8 billion of securities purchased
under agreements to resell at December 31, 2011 and 2010, respectively. The aggregate decrease in these assets was
primarily driven by a decline in funding needs for debt redemptions. In addition, excluding amounts related to our
consolidated VIEs, we held on average $32.4 billion and $33.0 billion of cash and cash equivalents and $13.2 billion and
$19.1 billion of federal funds sold and securities purchased under agreements to resell during the three months and year
ended December 31, 2011, respectively.
Beginning in the third quarter of 2011, we changed the composition of our portfolio of liquid assets to hold more
cash and overnight investments given the market’s concerns about the potential for a downgrade in the credit ratings of
the U.S. government and the potential that the U.S. would exhaust its borrowing authority under the statutory debt limit.
For more information regarding liquidity management and credit ratings, see “LIQUIDITY AND CAPITAL
RESOURCES — Liquidity.”
Investments in Securities
The two tables below provide detail regarding our investments in securities as of December 31, 2011, 2010 and 2009.
The tables do not include our holdings of single-family PCs and certain Other Guarantee Transactions as of December 31,
2011 and 2010. For information on our holdings of such securities, see “Table 16 — Composition of Segment Mortgage
Portfolios and Credit Risk Portfolios.”
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