Goldman Sachs 2009 Annual Report Download - page 80

The following table sets forth the average loan value of the
securities (the estimated amount of cash that would be
advanced by counterparties against these securities), as well
as certain overnight cash deposits that are included in our
Global CoreExcess:
Year Ended
December November
(inmillions) 2009 2008
U.S. dollar-denominated $120,970 $78,048
Non-U.S. dollar-denominated 45,404 18,677
Total Global Core Excess $166,374 $96,725
The U.S. dollar-denominated excess is comprised of only
unencumbered U.S. government securities, U.S. agency
securities and highly liquid U.S. agency mortgage-backed
securities, all of which are eligible as collateral in Federal
Reserve open market operations, as well as certain overnight
cash deposits. Our non-U.S. dollar-denominated excess is
comprised of only unencumbered French, German, United
Kingdom and Japanese government bonds and certain
overnight cash deposits in highly liquid currencies. We strictly
limit our Global Core Excess to this narrowly de ned list of
securities and cash because we believe they are highly liquid,
even in a dif cult funding environment. We do not believe
that other potential sources of excess liquidity, such as lower-
quality unencumbered securities or committed credit facilities,
are as reliable in a liquidity crisis.
We maintain our Global Core Excess to enable us to meet
current and potential liquidity requirements of our parent
company, Group Inc., and all of its subsidiaries. The Global
Core Excess is held at Group Inc. and our major broker-
dealer and bank depository institution subsidiaries. Each of
these entities has its own liquidity model and funding risk
management framework with separate excess liquidity pools
intended to meet potential out ows in each entity in a stressed
environment. Liquidity held in each of these subsidiaries is
assumed to be usable only by that entity for the purpose of
meeting its liquidity requirements. Subsidiary liquidity is
not available to Group Inc. unless legally provided for and
assuming no additional regulatory, tax or other restrictions.
In addition to our Global Core Excess, we have a signi cant
amount of other unencumbered securities as a result of our
business activities. These assets include other government
bonds, high-grade money market securities, corporate bonds
and marginable equities. We do not include these securities in
our Global Core Excess.
In reporting our Global Core Excess and other unencumbered
assets, we use loan values that are based on stress-scenario
borrowing capacity and we regularly review these assumptions
asset class by asset class. The estimated aggregate loan value
of our Global Core Excess, cash deposits not included in
the Global Core Excess and our other unencumbered assets
averaged $210.48billion and $163.41billion for the years
ended December2009 and November2008, respectively.
ASSET-LIABILITY MANAGEMENT
Assets. We seek to maintain a liquid balance sheet and
substantially all of our inventory is marked-to-market daily. We
impose balance sheet limits for each business and utilize aged
inventory limits for certain  nancial instruments as a disincentive
to our businesses to hold inventory over longerperiods of time.
Although our balance sheet  uctuates due to client activity,
market conventions andperiodic market opportunities in certain
of our businesses, our total assets and adjusted assets at  nancial
statement dates are typically not materially different from those
occurring within our reportingperiods.
Liabilities. We seek to structure our liabilities to meet the
following objectives:
▪ Term Structure. We seek to structure our liabilities to have
long-dated maturities in order to reduce re nancing risk.
We manage maturity concentrations for both secured and
unsecured funding to ensure we are able to mitigate any
concentrated funding out ows.
▪ Diversity of Funding Sources. We seek to maintain broad
and diversi ed funding sources globally for both secured
and unsecured funding. We make use of the repurchase
agreement and securities lending markets, as well as other
secured funding markets. We issue long-term debt through
syndicated U.S. registered offerings, U.S. registered and
144A medium-term noteprograms, offshore medium-term
noteofferings and other debt offerings. We issue short-term
debt through U.S. and non-U.S. commercial paper and
promissory noteissuances and other methods. We raise
demand and savings deposits through cash sweep programs
and time deposits through internal and third-party broker
networks. We generally distribute our funding products
through our own sales force to a large, diverse global
creditor base. We believe that our relationships with our
creditors are critical to our liquidity. Our creditors include
banks, governments, securities lenders, pension funds,
insurance companies, mutual funds and individuals. We
access funding in a variety of markets in the Americas,
Europe and Asia. We have imposed various internal
Goldman Sachs 2009 Annual Report
78
Management’s Discussion and Analysis