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98 ge 2008 annual report
notes to consolidated financial statements
When we securitize financing receivables we retain interests
in the transferred receivables in two forms: a seller’s interest in
the assets of the QSPE, which we classify as financing receivables,
and subordinated interests in the assets of the QSPE, which we
classify as investment securities.
Other than those entities described above, we also hold
passive investments in RMBS, CMBS and asset-backed securities
issued by entities that may be either VIEs or QSPEs. Such invest-
ments were, by design, investment grade at issuance and held by
a diverse group of investors. As we have no formal involvement in
such entities beyond our investment, we believe that the likeli-
hood is remote that we would be required to consolidate them.
Further information about such investments is provided in Note 9.
We transfer assets to QSPEs in the ordinary course of business
as part of our ongoing securitization activities. In our securitization
transactions, we transfer assets to a QSPE in exchange for cash,
which is funded by beneficial interests issued by the QSPE to third
parties and our retained interests in the assets transferred.
The financing receivables in our QSPEs have similar risks and
characteristics to our on-book financing receivables and were
underwritten to the same standard. Accordingly, the perfor-
mance of these assets has been similar to our on-book financing
receivables; however, the blended performance of the pools of
receivables in our QSPEs reflects the eligibility screening require-
ments that we apply to determine which receivables are selected
for sale. Therefore, the blended performance can differ from the
on-book performance.
Financing receivables transferred to securitization entities that remain outstanding and our retained interests in those financing
receivables at December 31, 2008 and 2007 follows.
Commercial Credit card
December 31 (In millions) Equipment (a)(b) real estate(b) receivables Other assets (b) Total assets
2008
Asset amount outstanding $13,298 $7,970 $26,046 $5,250 $52,564
Included within the amount above are retained interests of:
Financing receivables(c) 339 — 3,802 — 4,141
Investment securities 747 222 4,806 532 6,307
2007
Asset amount outstanding $15,566 $9,244 $26,248 $5,067 $56,125
Included within the amount above are retained interests of:
Financing receivables(c) 764 — 3,455 — 4,219
Investment securities 763 454 3,922 535 5,674
(a) Includes inventory floorplan receivables.
(b) In certain equipment and commercial real estate transactions entered into prior to December 31, 2004, we provided contractual credit and liquidity support to third parties
who purchased debt in the QSPEs. We have not entered into additional arrangements since that date. At December 31, 2008 and 2007, liquidity support amounted to
$2,143 million and $2,810 million, respectively. Credit support amounted to $2,164 million and $2,804 million at December 31, 2008 and 2007, respectively. Liabilities with
recourse obligations related to off-balance sheet assets were $8 million and $3 million at December 31, 2008 and 2007, respectively. The maximum exposure to loss under
these obligations was $124 million and $99 million at December 31, 2008 and 2007, respectively.
(c) Uncertificated sellers interests.
We have not provided non-contractual support to any QSPEs in
2008 or 2007. We do not have any implicit support arrangements
with QSPEs.