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Minutes of the Financial Stability Oversight Council

Held June 24, 2014

PRESENT: 

Jacob J. Lew, Secretary of the Treasury and Chairperson of the Financial Stability Oversight 

Council (Council)

Janet Yellen, Chair, Board of Governors of the Federal Reserve System (Federal Reserve)

Martin J. Gruenberg, Chairperson, Federal Deposit Insurance Corporation (FDIC) 

Mary Jo White, Chair, Securities and Exchange Commission (SEC) 

Timothy Massad, Chairman, Commodity Futures Trading Commission (CFTC) 

Richard Cordray, Director, Consumer Financial Protection Bureau (CFPB)

Melvin Watt, Director, Federal Housing Finance Agency (FHFA)

Thomas J. Curry, Comptroller of the Currency, Office of the Comptroller of the Currency (OCC)

Debbie Matz, Chairman, National Credit Union Administration (NCUA)

Roy Woodall, Independent Member with Insurance Expertise

Richard Berner, Director, Office of Financial Research, Department of the Treasury (non-voting 

member)

Michael McRaith, Director, Federal Insurance Office, Department of the Treasury (non-voting 

member)

John Huff, Director, Missouri Department of Insurance, Financial Institutions, and Professional 

Registration (non-voting member) (by telephone)

David Massey, Deputy Securities Administrator, North Carolina Department of the Secretary of 

State, Securities Division (non-voting member) 

GUESTS: 

Department of the Treasury 

Sarah Bloom Raskin, Deputy Secretary 

Christopher J. Meade, General Counsel

Patrick Pinschmidt, Executive Director of the Council

Board of Governors of the Federal Reserve System 

Daniel K. Tarullo, Governor

Federal Deposit Insurance Corporation 

Jason Cave, Special Advisor to the Chairman for Supervisory Matters

Securities and Exchange Commission 

Lona Nallengara, Chief of Staff

Commodity Futures Trading Commission

Lawranne Stewart, Special Counsel
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Consumer Financial Protection Bureau

Ron Borzekowski, Deputy Assistant Director

Federal Housing Finance Agency 

Mario Ugoletti, Special Advisor to the Director

National Credit Union Administration 

John Worth, Chief Economist

Office of the Comptroller of the Currency 

John Lyons, Senior Deputy Comptroller and Chief National Bank Examiner

Office of the Independent Member with Insurance Expertise

Chris Ledoux, Senior Advisor

Office of Financial Research

Patricia Mosser, Deputy Director for Research and Analysis

Federal Insurance Office

John Nolan, Deputy Director (Financial Stability)

Louisiana Office of Financial Institutions

Margaret Liu, Senior Vice President & Deputy General Counsel, Conference of State Bank 

Supervisors

Missouri Department of Insurance, Financial Institutions, and Professional Registration 

Mark Sagat, Counsel and Manager, Financial Policy and Legislation, National Association of 

Insurance Commissioners

North Carolina Department of the Secretary of the State, Securities Division

Joseph Brady, General Counsel, North American Securities Administrators Association

PRESENTERS:

Short-term Wholesale Funding Markets

• Mark Van Der Weide, Deputy Director, Division of Banking Supervision and 

Regulation, Federal Reserve

• Susan McLaughlin, Senior Vice President, Federal Reserve Bank of New York

Macro-economic and Market Developments Update

• Richard Berner, Director, Office of Financial Research

• Matthew Rutherford, Assistant Secretary for Financial Markets, Treasury

• Darrin Benhart, Deputy Comptroller for Credit and Market Risk, Office of the 

Comptroller of the Currency
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Executive Session 

The Chairperson called the executive session of the meeting of the Council to order at 

approximately 2:06 P.M. (EDT). He started by welcoming the new Chairman of the CFTC, 

Timothy Massad, to the Council. He then outlined the meeting agenda, which had previously 

been distributed to the members together with copies of the resolution and other materials. The 

agenda included the following subjects: (1) a presentation on short-term wholesale funding 

markets; (2) an update on macro-economic and market developments, and (3) consideration of, 

and a vote on, a resolution approving the minutes of the Council’s meeting on May 7, 2014.

1. Short-term Wholesale Funding Markets

The Chairperson introduced the first agenda item, a presentation on risks in short-term wholesale 

funding markets. He introduced Mark Van Der Weide, Deputy Director of the Division of 

Banking Supervision and Regulation at the Federal Reserve, and Susan McLaughlin, Senior Vice 

President at the Federal Reserve Bank of New York. Mr. Van Der Weide discussed certain 

reforms to date, including increased bank capital requirements, reduction of liquidity risk in the 

banking system, and efforts to reduce structural risks in the market through tri-party repo 

reforms. With respect to tri-party repo reforms, he noted that although much has been 

accomplished, significant risks remain for potential fire sales of collateral held by lenders in the 

event of a large dealer default. He then discussed regulatory options to reduce residual risks by 

discouraging reliance on short-term wholesale funding and reducing lenders’ incentives to run.

Ms. McLaughlin then discussed global and national initiatives to collect data to monitor 

securities financing transactions. After the presentation, members of the Council asked questions 

and had a discussion about topics including the global nature of the risks identified, the potential 

timing for implementing regulatory reforms, and proposed money market mutual fund reforms. 

2. Macro-economic and Market Developments Update

The Chairperson introduced the next agenda item, a macro-economic and market developments 

update. The Chairperson introduced Richard Berner, Director of the OFR, who provided an 

update on macro-economic and market developments, including an overview of recent 

developments in interest rates, emerging markets, and municipal markets. Following that 

presentation, Matthew Rutherford, Assistant Secretary for Financial Markets at Treasury, 

provided a brief update on municipal market issues. Darrin Benhart, Deputy Comptroller for 

Credit and Market Risk at the OCC, then discussed U.S. syndicated leveraged loan markets. He 

noted that large corporate leverage ratios continue to climb while the credit quality of new 

issuance continues to decline. He also presented on corporate loan origination and investor 

trends. The members of the Council asked questions and had a discussion.

3. Resolution Approving the Minutes of the Meeting held on May 7, 2014

“BE IT RESOLVED, by the Financial Stability Oversight Council (the “Council”), that the 

minutes attached hereto of the meeting held on May 7, 2014 of the Council are hereby 

approved.” 
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Sarah Bloom Raskin, Deputy Secretary of the Treasury, presented the resolution approving the 

minutes because the Chairperson had to briefly leave the meeting. She asked for a motion to 

approve the resolution, which was made and seconded. The Council approved the resolution by 

unanimous vote.

Deputy Secretary Raskin adjourned the meeting at approximately 3:13 P.M. (EDT).