I presume you're aware that there is no Net Asset Value for a TIAA Traditional Account. In other words, the value of securities in the General Account of TIAA (the big insurance company) does not directly affect your account value (which the company [but not the government...] guarantees will not decline), nor their promise that you will never earn less than 3% during the accumulation phase of your account.
I suppose there is a distant chance that bad investments could affect future interest rate announcements for TIAA Traditional, but I wouldn't lose any sleep over it.
Unlike the CREF annuities and the Institutional Mutual Funds, there is no requirement to report the specific securities in the General Account. Because it appears that the Mae/Mac bonds will not fail to be honored, let me speculate only on the issues of their preferred and common stocks in the General Account.
The most recent financial statement (.pdf LINK, December 31, 2007) shows about 4% of the account in common and preferred stocks (that is, stocks of every company in which they invest.) It's just inconceivable to me that such a large and diversified account would have even 1% of it's stocks in those two companies. Why do I make that unsupported statement?
Because the CREF Stock Account, which is the same order of magnitude (but smaller) in assets, and VERY large-cap oriented, has only three stocks in which more than 1% of the account is invested (Exxon Mobil. GE. and Microsoft, if you are interested.) There's no reason I can see why the General Account would do such a thing.
Now, 1% of 4% is .04%. And I feel confident that it's even less than that. So when and if they issue a report on the topic (I mean, like the reports (LINK to example) they've published on asset-backed bonds), I wouldn't worry too much. It is interesting that that link says (June 30, 2008):
Commercial mortgage-backed securities holdings represent approximately
12 percent of the General Account's holdings. Our CMBS portfolio
emphasizes high-quality issues that are diversified across various
dates of issue. Since the beginning of 2007, CMBS realized losses have
totaled $16 million (less than one-hundredth of 1 percent of the
General Account's total assets).
which is part of the answer to your larger question. This paragraph is not as reassuring as the rest of this post! But the whole point of the endless posts you read here about lower interest rates for SRA/GSRA accounts, and annuitization penalties for flipping your TIAA Traditional is that they don't have to realize losses on these bonds. They can wait until they mature and probably get the full face value!
Tim
Edit: I should have thought to look this up before: Neither on December 31, 2007, nor on June 30, 2008 did the CREF Stock Account have any reportable quantity of common or preferred shares in a company with the word "Federal" at the beginning of the name. And (especially if you're cynical...) you have to assume that the analysts' advice - either for investment or for "window dressing" - would be taken for TIAA's own account, before they took it for our account! I did see some AIG there though ....
But I acknowledge again that I haven't answered your specific question, because it cannot be determined from publicly available documents.
