GE 2009 Annual Report Download - page 109

GE 2009 ANNUAL REPORT 107
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Other than those entities described above, we also hold pas-
sive 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 3.
Securitization Activities
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 and receive a combi-
nation of cash and retained interests in the assets transferred.
The QSPE sells beneficial interests in the assets transferred to
third-party investors, to fund the purchase of the assets.
Financing receivables transferred to securitization entities that remained outstanding and our retained interests in those financing
receivables at December 31, 2009 and 2008, follows.
December 31 (In millions) Equipment (a)(b)(c) Commercial
real estate (b) Credit card
receivables (c) Other assets (b) Total assets
2009
Asset amount outstanding $10,414 $7,381 $25,573 $3,528 $46,896
Included within the amount above are retained interests of
Financing receivables (d) 496 — 2,471 — 2,967
Investment securities 1,081 263 7,156 292 8,792
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 (d) 339 — 3,802 — 4,141
Investment securities 747 222 4,806 532 6,307
(a) Included inventory floorplan receivables.
(b) In certain 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, 2009 and 2008, liquidity support totaled $2,084 million and $2,143 million, respectively.
Credit support totaled $2,088 million and $2,164 million at December 31, 2009 and 2008, respectively.
(c) As permitted by the terms of the applicable trust documents, in the second and third quarters of 2009, we transferred $268 million of floorplan financing receivables to the
GE Dealer Floorplan Master Note Trust and $328 million of credit card receivables to the GE Capital Credit Card Master Note Trust in exchange for additional subordinated
interests. These actions had the effect of maintaining the AAA ratings of certain securities issued by these entities.
(d) Uncertificated seller’s interests.
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 performance
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.
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. In certain credit card receivables trusts,
we are required to maintain minimum free equity (subordinated
interest) of 4% or 7% depending on the credit rating of GE Capital.