Minutes of the Financial Stability Oversight Council

September 23, 2022 

PRESENT: 

Janet L. Yellen, Secretary of the Treasury and Chairperson of the Financial Stability Oversight 

Council (Council) 

Jerome H. Powell, Chair, Board of Governors of the Federal Reserve System (Federal Reserve)

Martin Gruenberg, Acting Chairman, Federal Deposit Insurance Corporation (FDIC) 

Gary Gensler, Chair, Securities and Exchange Commission (SEC) 

Rostin Behnam, Chairman, Commodity Futures Trading Commission (CFTC) 

Rohit Chopra, Director, Consumer Financial Protection Bureau (CFPB) 

Sandra L. Thompson, Director, Federal Housing Finance Agency (FHFA) 

Michael J. Hsu, Acting Comptroller of the Currency, Office of the Comptroller of the Currency 

(OCC)

Todd M. Harper, Chairman, National Credit Union Administration (NCUA) 

Thomas E. Workman, Independent Member with Insurance Expertise 

James Martin, Acting Director, Office of Financial Research (OFR), Department of the Treasury

(non-voting member) 

Steven Seitz, Director, Federal Insurance Office (FIO), Department of the Treasury (non-voting 

member) 

Charles G. Cooper, Commissioner, Texas Department of Banking (non-voting member) 

Elizabeth K. Dwyer, Superintendent of Financial Services, Rhode Island Department of Business 

Regulation (non-voting member) 

Melanie Lubin, Securities Commissioner, Maryland Office of the Attorney General, Securities 

Division (non-voting member) 

GUESTS: 

Department of the Treasury (Treasury)

Nellie Liang, Under Secretary for Domestic Finance

Sandra Lee, Deputy Assistant Secretary for the Council 

Laurie Schaffer, Principal Deputy General Counsel 

Eric Froman, Assistant General Counsel (Banking and Finance) 

Sean Hoskins, Director of Policy, Office of the Financial Stability Oversight Council 

Mark Schlegel, Attorney-Advisor 

Board of Governors of the Federal Reserve System 

Michael Barr, Vice Chair for Supervision 

Andreas Lehnert, Director, Division of Financial Stability 

Federal Deposit Insurance Corporation 

James McGraw, Senior Deputy Director, Division of Complex Institution Supervision and 

Resolution 
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Securities and Exchange Commission

Amanda Fischer, Senior Counselor 

Commodity Futures Trading Commission 

David Gillers, Chief of Staff 

Consumer Financial Protection Bureau

Gregg Gelzinis, Advisor to the Director 

Federal Housing Finance Agency 

Naa Awaa Tagoe, Acting Deputy Director, Division of Housing Mission and Goals 

Comptroller of the Currency 

Jay Gallagher, Acting Senior Deputy Comptroller for Supervision Risk and Analysis

National Credit Union Administration

Timothy Flynn, Economist, Office of the Chief Economist

Office of the Independent Member with Insurance Expertise

Charles Klingman, Senior Policy Advisor 

Federal Reserve Bank of New York

Richard Crump, Vice President, Capital Markets Function 

Office of Financial Research

Sriram Rajan, Associate Director, Research Analysis Center

Federal Insurance Office

Philip Goodman, Senior Insurance Regulatory Policy Analyst 

Texas Department of Banking 

Karen Lawson, Senior Vice President for Policy, Conference of State Bank Supervisors 

Rhode Island Department of Business Regulation 

Ethan Sonnichsen, Managing Director, National Association of Insurance Commissioners 

Maryland Office of the Attorney General, Securities Division 

Vincente Martinez, General Counsel, North American Securities Administrators Association 

PRESENTERS:

Digital Assets Report Update 

• Sandra Lee, Deputy Assistant Secretary for the Council, Treasury 

• Jonathan Rose, Senior Economist, Federal Reserve Bank of Chicago 

• Daniel Sufranski, Attorney, Bank Advisory Group, Chief Counsel’s Office, OCC 

(available for questions) 
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FHFA Federal Home Loan Bank System Review 

• Joshua Stallings, Deputy Director, Division of Bank Regulation, FHFA

• Amy Bogdon, Associate Director of Regulatory Policy and Programs, Division of Bank 

Regulation, FHFA

2022 Annual Report Update

• Sandra Lee, Deputy Assistant Secretary for the Council, Treasury

• Jeff Gerlach, Vice President, Quantitative Supervision and Research Unit, Federal 

Reserve Bank of Richmond

• Kelsey Pristach, Senior Policy Advisor, Office of the Financial Stability Oversight 

Council, Treasury (available for questions)

Fiscal Year 2023 Council Budget

• Sandra Lee, Deputy Assistant Secretary for the Council, Treasury

• Samantha MacInnis, Director of Operations, Office of the Financial Stability Oversight 

Council, Treasury (available for questions)

• Dennis Lee, Management and Program Analyst, Office of the Financial Stability 

Oversight Council, Treasury (available for questions)

• Thomas Peddicord, Deputy Director, Division of Finance, FDIC (available for 

questions)

Executive Session

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

approximately 10:01 A.M. She outlined the meeting agenda, which had previously been 

distributed to the members together with other materials. The agenda for the executive session 

included (1) an update on the development of the Council’s digital assets report, (2) a 

presentation on the FHFA’s review of the Federal Home Loan Bank System, (3) an update on the 

Council’s 2022 annual report, (4) a vote on the Council’s fiscal year 2023 budget, and (5) a vote 

on the minutes of the Council’s meeting on July 28, 2022.

1. Update on Digital Assets Report

The Chairperson introduced the first agenda item, an update on the Council report being

prepared in response to the Executive Order on Ensuring Responsible Development of Digital

Assets, which was issued on March 9, 2022. She introduced Sandra Lee, Deputy Assistant 

Secretary for the Council at Treasury, and Jonathan Rose, Senior Economist at the Federal 

Reserve Bank of Chicago.

Ms. Lee stated that the report reflected interagency staff efforts. She noted that the report 

focused on the three areas identified in the Executive Order: financial stability risks, regulatory 

gaps, and recommendations to address those risks and gaps. She noted that interagency staff had 

participated in a digital assets working group to develop insights and recommendations for the 

report, and conducted outreach to industry participants and other stakeholders. She stated that 

the Council would vote on the report at an upcoming meeting. 
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Mr. Rose described certain financial stability risks that may be identified in the report. He also 

highlighted key findings that may be included in the report regarding the existing regulatory 

structure applicable to crypto-assets. Mr. Rose said the report would describe regulatory gaps, 

including the spot market for crypto-assets that are not securities; the potential for regulatory 

arbitrage; and direct retail access, in which investors interact with platforms directly, without the 

use of an intermediary. Mr. Rose concluded by describing certain recommendations that may 

appear in the report. 

The Chairperson then underscored the potential financial stability risks and regulatory gaps 

related to crypto-assets, and she expressed support for collective efforts of Council member 

agencies to make progress in this area. 

Council members then had a discussion about certain financial stability risks, vulnerabilities, and 

regulatory gaps that may be described in the report, including the potential need for additional 

legislation, international collaboration, or the use of agencies’ existing authorities. 

2. FHFA Federal Home Loan Bank System Review

The Chairperson then introduced the next agenda item, a presentation on the FHFA’s review of 

the Federal Home Loan Bank System (FHLB System). She introduced Joshua Stallings, Deputy 

Director in the Division of Bank Regulation at FHFA, and Amy Bogdon, Associate Director of 

Regulatory Policy and Programs in the Division of Bank Regulation at FHFA.

Mr. Stallings stated that as the Federal Home Loan Banks approach their centennial, FHFA was 

conducting a comprehensive review to ensure the FHLB System remains positioned to serve the 

needs of communities. He noted that there had been efforts in the past to evaluate the role of the 

Federal Home Loan Banks, but it had been some time since the last in‐depth review. He said 

that a number of recommendations developed as part of past studies were eventually the subject 

of legislation amending the Federal Home Loan Bank Act (FHLB Act), including the 

establishment of a new capital structure for the Federal Home Loan Banks and membership 

eligibility for non-depository community development financial institutions (CDFIs). He stated 

that the FHFA intended to examine the mission, purpose, structure, and operation of the Federal 

Home Loan Banks. 

Mr. Stallings described the 11 Federal Home Loan Bank districts in the United States. He stated 

that the FHLB System was established by the FHLB Act to support liquidity in the mortgage 

market, but that the FHLB Act does not contain an explicit mission statement. He said that the 

mission of the Federal Home Loan Banks, as referenced in the Housing and Economic Recovery 

Act of 2008, is generally considered to be two‐pronged: providing liquidity to members, and 

affordable housing and community development. He said that the Federal Home Loan Banks

provide financial products and services to assist with the financing of housing and community 

lending. He noted that Federal Home Loan Bank membership provides the ability to obtain low‐

cost loans, referred to as advances, and other financial products and services.
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Mr. Stallings stated that the Federal Home Loan Banks support low‐income housing and 

community development by providing loans and grants to their members through three 

programs: the statutorily mandated Affordable Housing Program (AHP), funded by 10 percent of 

net earnings; the statutorily mandated Community Investment Program (CIP); and the voluntary 

Community Investment Cash Advance Program. He noted that from 1990, when the AHP was 

authorized, through 2021, the Federal Home Loan Banks awarded approximately $7.3 billion to 

support about 1 million housing units. He stated that over the same period, the Federal Home 

Loan Banks provided $82 billion in CIP advances.

Mr. Stallings noted that the FHLB Act sets forth the types of entities that are eligible for 

membership, including insured depository institutions, insurance companies, and CDFIs. He 

said that there were currently approximately 6,500 members. He stated that the FHLB Act had 

been amended over time to expand membership to include federally insured commercial banks 

and credit unions, CDFIs, and non‐federally insured credit unions. He noted that Congress had

never removed a type of eligible entity. He noted that the FHFA issued a rule in 2016 making 

captive insurance companies ineligible for membership because captives were being used as 

conduits by ineligible entities to gain access to the FHLB System. He noted that in 2020, FHFA 

had issued a request for information seeking input on Federal Home Loan Bank membership. 

Mr. Stallings then stated that Federal Home Loan Bank advances generally increase during times 

of market stress. He noted that advances had risen to over $800 billion at the end of the first 

quarter of 2020 and then declined to approximately $350 billion in the third quarter of 2021, 

before rising again in 2022. Mr. Stallings noted that the types of entities eligible for membership 

in the Federal Home Loan Banks accounted for a decreasing share of the mortgage origination 

and servicing market, and that as a result the relative role of the Federal Home Loan Banks in the 

residential mortgage market had declined.

Mr. Stallings then described views of various stakeholders regarding the Federal Home Loan 

Banks’ support for affordable and sustainable housing and community development.

Mr. Stallings stated that, as part of its review, the FHFA would host two listening sessions and a 

series of regional roundtable discussions to hear from stakeholders on the role or potential role of 

the Federal Home Loan Banks in addressing housing finance, community and economic 

development, affordability, and other issues. He stated that the FHFA was seeking input on six 

key areas: the mission and purpose of the Federal Home Loan Banks; the organization, 

operational efficiency, and effectiveness of the FHLB System; the role of the Federal Home 

Loan Banks in promoting affordable, sustainable, equitable, and resilient housing and 

community investment; addressing the needs of rural and financially vulnerable communities; 

member products, services, and collateral requirements; and membership eligibility and 

requirements. 

Council members then asked questions and had a discussion about the FHFA review and the 

FHLB System, including insurers’ use of Federal Home Loan Bank advances, interconnections 

between the Federal Home Loan Banks and the broader financial system, and potential risks 

related to Federal Home Loan Banks’ activities.
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3. Update on 2022 Annual Report 

The Chairperson then turned to the next agenda item, an update on the Council’s 2022 annual 

report. She introduced Sandra Lee, Deputy Assistant Secretary for the Council at Treasury, and 

Jeff Gerlach, Vice President of Quantitative Supervision and Research at the Federal Reserve 

Bank of Richmond.

Ms. Lee provided an overview of initial work on the Council’s 2022 annual report. She stated 

that staff had gathered feedback from Council member agencies regarding the substance and 

structure of the report, with the intention of focusing the report on risks to financial stability.

Mr. Gerlach then described the proposed structure of the annual report and highlighted certain 

potential vulnerabilities that the report may address. He also provided an update regarding 

interagency staff deliberations about the report and the proposed timing for completion of the 

report. 

Council members then asked questions and had a discussion about certain topics that may be

included in the report.

4. Fiscal Year 2023 Council Budget

The Chairperson then introduced the next agenda item, the Council’s fiscal year 2023 budget. 

She introduced Sandra Lee, Deputy Assistant Secretary for the Council at Treasury, for the 

presentation.

Ms. Lee noted that the Council is funded by the Financial Research Fund. She noted that the 

budget of the Council included the Office of the Financial Stability Oversight Council at 

Treasury and the office of the Council’s independent member with insurance expertise. She said 

that the proposed fiscal year 2023 budget included $13.4 million for these expenses, an increase 

of $5.9 million from the budget approved for fiscal year 2022. She said that the Council’s 

budget also included reimbursement of certain FDIC expenses related to the implementation of 

Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and noted that the 

proposed budget included $2.9 million for the reimbursement of these expenses.

Ms. Lee stated that the proposed increase in funding was largely intended to enable the hiring of 

staff to support the Council’s priorities. She said that additional funding would also expand 

resources for data and staff training. She stated that the proposed budget called for a total of 35 

full-time-equivalent employees in the Office of the Financial Stability Oversight Council at 

Treasury. She stated that a larger staff would support a variety of Council priorities, including 

climate-related financial risks, the hedge fund risk monitoring framework, the Council’s general 

risk monitoring and analysis function, and risks from central counterparties and financial market 

utilities. She stated that the Office of the Financial Stability Oversight Council at Treasury had 

been understaffed in recent years and that the budget would support back-filling staff in the 

office.
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Council members then asked questions and had a discussion about the Council’s fiscal year 2023

budget, long-term planning, and related matters, including noting that the proposed budget 

contemplated an increase of four full-time-equivalent employees in the Office of the Financial 

Stability Oversight Council at Treasury compared to the Council’s fiscal year 2017 budget. 

The Chairperson then presented to the Council the following resolution approving the Council’s

budget for fiscal year 2023.

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

Council’s budget for fiscal year 2023 attached hereto is hereby approved.

The Chairperson asked for a motion to approve the resolution, which was made and seconded. 

The Council approved the resolution by unanimous vote.

5. Resolution Approving the Minutes of the Meeting Held on July 28, 2022 

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

minutes attached hereto of the meeting held on July 28, 2022 of the Council are hereby 

approved. 

The Chairperson asked for a motion to approve the resolution, which was made and seconded. 

The Council approved the resolution by unanimous vote.

The Chairperson adjourned the meeting at approximately 11:13 A.M.