Goldman Sachs 2009 Annual Report Download - page 131

Goldman Sachs 2009 Annual Report
129
Notes to Consolidated Financial Statements
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William Street credit extension program. Substantially
all of the commitments provided under the William
Street credit extension program are to investment-grade
corporate borrowers. Commitments under the program
are principally extended by William Street Commitment
Corporation (Commitment Corp.), a consolidated
wholly owned subsidiary of GSBank USA, GSBank USA
and other subsidiaries of GSBank USA. The commitments
extended by Commitment Corp. are supported, in part,
by funding raised by William Street Funding Corporation
(Funding Corp.), another consolidated wholly owned
subsidiary of GSBank USA. The assets and liabilities of
Commitment Corp. and Funding Corp. are legally separated
from other assets and liabilities of the  rm. The assets
of Commitment Corp. and of Funding Corp. will not be
available to their respective shareholders until the claims
of their respective creditors have been paid. In addition, no
af liate of either Commitment Corp. or Funding Corp.,
except in limited cases as expressly agreed in writing, is
responsible for any obligation of either entity. With respect
to most of the William Street commitments, Sumitomo
Mitsui Financial Group, Inc. (SMFG) provides the  rm with
credit loss protection that is generally limited to 95% of the
 rst loss the  rm realizes on approved loan commitments, up
to a maximum of approximately $950million. In addition,
subject to the satisfaction of certain conditions, upon the
 rm’s request, SMFG will provide protection for 70% of
additional losses on such commitments, up to a maximum of
$1.13billion, of which $375million of protection had been
provided as of both December2009 and November2008.
The  rm also uses other  nancial instruments to mitigate
credit risks related to certain William Street commitments
not covered by SMFG.
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Warehouse  nancing. The  rm provides  nancing for the
warehousing of  nancial assets. These arrangements are
secured by the warehoused assets, primarily consisting
of commercial mortgages as of December2009 and
November2008.
Leases. The  rm has contractual obligations under long-term
noncancelable lease agreements, principally for of ce space,
expiring on various dates through 2069. Certain agreements
are subject to periodic escalation provisions for increases in
real estate taxes and other charges. Future minimum rental
payments, net of minimum sublease rentals are set forth below:
(inmillions) As of December 2009
2010 $ 494
2011 369
2012 295
2013 260
2014 195
2015 – thereafter 1,555
Total $3,168
Rent charged to operating expense is set forth below:
(inmillions)
2007 $412
2008 438
2009 434
Contingencies
The  rm is involved in a number of judicial, regulatory
and arbitration proceedings concerning matters arising in
connection with the conduct of its businesses. Management
believes, based on currently available information, that the
results of such proceedings, in the aggregate, will not have
a material adverse effect on the  rm’s  nancial condition,
but may be material to the  rm’s operating results for any
particular period, depending, in part, upon the operating
results for such period. Given the inherent dif culty of
predicting the outcome of the  rm’s litigation and regulatory
matters, particularly in cases or proceedings in which
substantial or indeterminate damages or  nes are sought, the
 rm cannot estimate losses or ranges of losses for cases or
proceedings where there is only a reasonable possibility that a
loss may be incurred.
In connection with its insurance business, the  rm is
contingently liable to provide guaranteed minimum death
and income bene ts to certain contract holders and has
established a reserve related to $6.35billion and $6.13billion
of contract holder account balances as of December2009 and
November2008, respectively, for such bene ts. The weighted
average attained age of these contract holders was 68 years
as of both December2009 and November2008. The net
amount at risk, representing guaranteed minimum death and
income bene ts in excess of contract holder account balances,
was $1.96billion and $2.96billion as of December2009
and November2008, respectively. See Note12 for more
information on the  rm’s insurance liabilities.