Refer to the section titled "Glossary of Terms" located at the end of Part II, Item 7. " Management's Discussion and Analysis of Financial Condition and Results of Operations. At December 31, 2020, we had $64.8 billion of repurchase agreements outstanding. Exhibits, Financial Statement Schedules." Timothy P. Coffey has served as Chief Credit Officer of Annaly since January 2016. Mr. Green has over 20 years of experience in corporate and securities law. 7ANNALY CAPITAL MANAGEMENT, INC. As a result, U.S. unemployment claims have dramatically risen at unprecedented rates. Leverage, which is fundamental to our investment strategy, creates significant risks. However, we are not required to stay below this economic leverage ratio. We may not be able to achieve our optimal leverage. One or more of our lenders could be unwilling or unable to provide us with financing. An increase or decrease in prepayment rates may adversely affect our profitability. No strategy can completely insulate us from prepayment risk. These indices generally reflect short-term interest rates. The manner and timing of this shift is not known with certainty. Also, SOFR is an overnight rate instead of a term rate. The process of transition involves operational risks. We also bear fees for use of the Swap Execution Facility. Therefore, we bear the credit risk of the dealer with which we executed the swaption. Derivative transactions are subject to margin requirements. AND SUBSIDIARIESItem 1A. Risk Factorsmarkets, and generally have higher financing costs. Commercial and non-Agency mortgage-backed securities we acquire may be subject to losses. The MERS System is widely used by participants throughout the mortgage finance industry. Risks Related to Our Business StructureOn June 30, 2020, we closed our Internalization. We plan to continue to meet the requirements for taxation as a REIT. This would likely have a significant adverse effect on the value of our equity. However, there are certain exceptions to this rule. Even a technical or inadvertent violation could jeopardize our REIT qualification. Tax rates could be changed in future legislation.
