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Minutes of the Financial Stability Oversight Council

Held December 21, 2011

PRESENT: 

Timothy F. Geithner, Secretary of the Treasury and Chairperson of the Financial Stability 

Oversight Council 

Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System (Federal Reserve)

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

Mary Schapiro, Chairman, Securities and Exchange Commission (SEC) 

Edward DeMarco, Acting Director, Federal Housing Finance Agency (FHFA)

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

John Walsh, Acting Comptroller of the Currency, Office of the Comptroller of the Currency

(OCC) 

Roy Woodall, Independent Member with Insurance Expertise

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

member)

William Haraf, Commissioner, California Department of Financial Institutions (non-voting

member) 

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

Registration (non-voting member) 

NOT PRESENT:

Gary Gensler, Chairman, Commodity Futures Trading Commission (CFTC) 

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

State, Securities Division (non-voting member) 

GUESTS: 

Department of the Treasury 

Neal S. Wolin, Deputy Secretary of the Treasury 

Mary J. Miller, Assistant Secretary for Financial Markets

Amias Gerety, Deputy Assistant Secretary for FSOC

Christopher J. Meade, Principal Deputy General Counsel

Board of Governors of the Federal Reserve System 

Daniel K. Tarullo, Governor, Federal Reserve

Federal Deposit Insurance Corporation 

Jason Cave, Deputy Director for Monitoring, Office of Complex Financial Institutions 

Securities and Exchange Commission 

Robert Cook, Director, Division of Trading and Markets

Commodity Futures Trading Commission 

Timothy Karpoff, Counsel to the Chairman
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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 

James Basham, Associate Director, Legislative and Regulatory Activities Division

Office of the Independent Member with Insurance Expertise

Amanda Wise

Federal Reserve Bank of New York

William Dudley, President and Chief Executive Officer

Federal Insurance Office

John Nolan, Senior Policy Advisor

California Department of Financial Institutions 

Michael Stevens, Senior Vice President and Director of Regulatory Affairs, Conference of State 

Bank Supervisors 

Missouri Department of Insurance, Financial Institutions, and Professional Registration 

Mark Sagat, Government Relations Policy Counsel, National Association of Insurance 

Commissioners 

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

Joseph Brady, Deputy General Counsel, North American Securities Administrators Association

PRESENTERS:

Advancement of Certain Financial Market Utilities to Stage 2 of the Designation Process

• Lance Auer, Deputy Assistant Secretary for Financial Institutions Policy, Treasury

Assessment Schedule to Fund the Financial Research Fund

• Amias Gerety, Deputy Assistant Secretary for FSOC, Treasury

Report on Prompt Corrective Action

• Amias Gerety, Deputy Assistant Secretary for FSOC, Treasury

Executive Session 

The Chairperson called the executive session of the meeting of the Financial Stability Oversight 

Council (Council) to order at 1:35 P.M. (EST). The Council convened by teleconference. 
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The Chairperson turned to the meeting agenda, which had been previously distributed to the 

members together with copies of the recommendations and other materials. The agenda for the 

meeting included the following subjects: (1) discussion and vote on advancement of certain 

financial market utilities (FMUs) from stage 1 to stage 2 of the designation process; 

(2) consideration of the assessment schedule to fund the Financial Research Fund; and 

(3) consideration of transmittal to Congress, and publication of, a statutorily required report on 

prompt corrective action. 

1. Advancement of Certain FMUs to Stage 2 of the Designation Process

The Chairperson turned to the first agenda item and called on Lance Auer, Deputy Assistant 

Secretary for Financial Institutions at the Treasury, to give a presentation on behalf of the FMU 

Designations Committee (Committee). Mr. Auer stated that the Committee recommended that 

certain FMUs advance from stage 1 to stage 2 of the designation process under Section 804 of 

the Dodd-Frank Act, and that the Committee also recommended that the Council authorize the 

issuance of the notification letters required by 12 C.F.R. § 1320.11 to those FMUs. 

The Chairperson asked for a motion approving the following resolution to approve the 

advancement of an initial set of FMUs to stage 2 of the evaluation process:

“WHEREAS, section 804 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(the “DFA”) authorizes the Financial Stability Oversight Council (the “Council”) to designate 

financial market utilities that the Council determines are, or are likely to become, systemically 

important; and

WHEREAS, under the provisions of the DFA, in making a determination on whether a financial 

market utility is, or is likely to become, systemically important, the Council must take into 

consideration the following: (A) the aggregate monetary value of transactions processed by the 

financial market utility; (B) the aggregate exposure of the financial market utility to its 

counterparties; (C) the relationship, interdependencies, or other interactions of the financial 

market utility with other financial market utilities or payment, clearing, or settlement activities; 

(D) the effect that the failure of or a disruption to the financial market utility would have on 

critical markets, financial institutions, or the broader financial system; and (E) any other factors 

that the Council deems appropriate; and

WHEREAS, the Council issued a final rule codified in 12 C.F.R. Part 1320 that describes the 

criteria and the processes and procedures by which the Council will designate financial market 

utilities as systemically important under the DFA; and 

WHEREAS, the preamble to the final rule describes a two-stage process that the Council expects 

to use for evaluating financial market utilities prior to a Council vote on a proposed designation 

of systemic importance; and 

WHEREAS, the staffs of the Council Members and their Agencies have evaluated an initial set of 

financial market utilities under stage 1, which consisted of a largely data-driven process to 
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identify a preliminary set of financial market utilities, whose failure or disruption could 

potentially threaten the stability of the U.S. financial system; and 

WHEREAS, based on the stage 1 evaluation, the staffs of the Council Members and their 

Agencies recommend that the Council approve the advancement of an initial set of financial 

market utilities from stage 1 to stage 2 of the evaluation process, which will consist of a more indepth review, with a greater focus on qualitative factors, in addition to institutional and market 

specific considerations. 

NOW, THEREFORE, BE IT RESOLVED, that the Council hereby authorizes the advancement 

of an initial set of financial market utilities (identified in an attachment hereto) to stage 2 of the 

evaluation process, and authorizes the staffs of the Council Members and their Agencies to begin 

the stage 2 evaluation process.

BE IT FURTHER RESOLVED, that the Council hereby approves the attached notification letters 

required by the final rule (12 C.F.R. § 1320.11) and authorizes the letters to be sent in January 

2012 to the initial set of financial market utilities advancing to stage 2 of the evaluation process.

BE IT FURTHER RESOLVED, that the Council hereby delegates authority to the Chairperson, 

or his designee, to make technical, nonsubstantive, or conforming changes to the text of the 

attached notification letters.” 

A motion approving the resolution to approve the advancement of an initial set of financial 

market utilities to stage 2 of the evaluation process was made and seconded. The Council 

approved the resolution by unanimous vote. 

2. Assessment Schedule to Fund the Financial Research Fund

The Chairperson then turned to the next item on the agenda, which was the consideration of the 

assessment schedule to fund the Financial Research Fund. He called on Amias Gerety, Deputy 

Assistant Secretary for FSOC at the Treasury, to give the presentation. Mr. Gerety noted that 

under the Dodd-Frank Act, the assessment schedule requires the approval of the FSOC. He 

described the proposed assessment rule under consideration, which implements Section 155 of 

the Dodd-Frank Act.

After the presentation, the Chairperson asked for a motion on the resolution to approve the 

Treasury’s publication of the notice of proposed rulemaking relating to assessments, as follows:

“WHEREAS, section 155(d) of the Dodd-Frank Wall Street Reform and Consumer Protection 

Act (the “DFA”) requires the Secretary of the Treasury (“Secretary”) to establish, by 

regulation, and with the approval of the Financial Stability Oversight Council (the “Council”), 

an assessment schedule, including the assessment base and rates, applicable to bank holding 

companies with total consolidated assets of $50,000,000,000 or greater and nonbank financial 

companies supervised by the Board of Governors of the Federal Reserve System; and 
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WHEREAS, the staff of the Secretary has prepared a notice of proposed rulemaking (“NPR”) 

that, consistent with the DFA, establishes, by regulation, an assessment schedule, including the 

assessment base and rates, applicable to bank holding companies with total consolidated assets 

of $50,000,000,000 or greater and nonbank financial companies supervised by the Board of 

Governors of the Federal Reserve System; and

WHEREAS, the staffs of the Council Members and their Agencies recommend that the Council 

approve the proposed assessment schedule so that the Secretary may publish the attached NPR 

in the Federal Register.

NOW, THEREFORE, BE IT RESOLVED, that the Council hereby approves the assessment 

schedule so that the Secretary, or his designee, may cause the attached NPR to be published in 

the Federal Register, in a form and manner acceptable to the Secretary, or his designee.

BE IT FURTHER RESOLVED, that the Council hereby authorizes the Secretary, or his designee, 

to make technical, nonsubstantive, or conforming changes to the text of the attached Federal 

Register document to ensure that the Secretary can issue the attached NPR in the Federal 

Register, and to take such other actions and issue such other documents incident and related to 

the foregoing as the Secretary, or his designee, deems necessary or appropriate to fulfill the 

Secretary’s objectives in connection with its publication.”

A motion to approve the resolution was made and seconded. The Council approved the 

resolution by unanimous vote.

3. Report on Prompt Corrective Action

The Chairperson then turned to the last item on the agenda, which was the consideration of 

transmittal to Congress, and the publication of, a statutorily required report on prompt corrective 

action (PCA). He called on Amias Gerety, Deputy Assistant Secretary for FSOC at the Treasury, 

to give the presentation. 

After the presentation, the Chairperson asked for a motion to approve the following resolution to

issue a report regarding the report by the Comptroller General on PCA:

“WHEREAS, section 202(g)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection 

Act (the “DFA”) requires the Financial Stability Oversight Council (the “Council”) to submit a 

report to Congress regarding the actions taken by the Council in response to a study conducted 

by the Comptroller General (“GAO”) on prompt corrective action; and 

WHEREAS, the staffs of the Council Members and their Agencies have prepared a report that, 

consistent with the DFA, describes the Council’s consideration of the study issued by GAO and 

related actions the Council has taken in response to the study; and

WHEREAS, the staffs of the Council Members and their Agencies recommend that the Council 

approve the attached report so that the Secretary may transmit it to Congress.
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NOW, THEREFORE, BE IT RESOLVED, that the Council hereby approves the report so that the 

Secretary, or his designee, may cause the attached report to be submitted to Congress in 

accordance with section 202(g)(4) of the DFA and to otherwise make it available to the public as 

the Secretary deems appropriate, in a form and manner acceptable to the Secretary, or his 

designee.

BE IT FURTHER RESOLVED, that the Council hereby authorizes the Secretary, or his designee, 

to make technical, nonsubstantive, or conforming changes to the text of the attached report to 

ensure that the Secretary can transmit the attached report, and to take such other actions and 

issue such other documents incident and related to the foregoing as the Secretary, or his 

designee, deems necessary or appropriate to fulfill the Secretary’s objectives in connection with 

its issuance.”

A motion to approve the resolution to issue the report on PCA was made and seconded. The 

Council then approved the resolution by unanimous vote.

The Chairperson adjourned the meeting at approximately 1:48 P.M. (EST).