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Minutes of the Financial Stability Oversight Council

July 28, 2017 

PRESENT: 

Steven T. Mnuchin, 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) 

Jay Clayton, Chairman, Securities and Exchange Commission (SEC) (by telephone)

J. Christopher Giancarlo, Acting Chairman, Commodity Futures Trading Commission (CFTC) 

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

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

Keith Noreika, Acting Comptroller of the Currency, Office of the Comptroller of the Currency 

(OCC) 

J. Mark McWatters, Chairman, National Credit Union Administration (NCUA) 

S. Roy Woodall, Independent Member with Insurance Expertise 

Richard Berner, Director, Office of Financial Research (OFR), Department of the Treasury 

(non-voting member) 

Ray Grace, Commissioner, North Carolina Office of the Commissioner of Banks (non-voting 

member) 

Peter Hartt, Director, Insurance Division, New Jersey Department of Banking & Insurance 

(non-voting member)

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

Division (non-voting member) 

GUESTS: 

Department of the Treasury (Treasury)

Andrew Baukol, Acting Deputy Secretary 

Craig Phillips, Counselor to the Secretary 

Brian Callanan, Acting General Counsel

David Lebryk, Fiscal Assistant Secretary

Bimal Patel, Deputy Assistant Secretary for the Council

Eric Froman, Principal Deputy Assistant General Counsel (Banking and Finance) and Executive 

Director of the Council (by telephone)

Stephen Milligan, Attorney-Advisor 

Board of Governors of the Federal Reserve System

Jerome H. Powell, Governor 

Andreas Lehnert, Director, Division of Financial Stability

Federal Deposit Insurance Corporation 

Jason Cave, Special Advisor to the Chairman for Supervisory Matters 
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Securities and Exchange Commission

Michael Piwowar, Commissioner 

Richard Grant, Co-Chief of Staff

Commodity Futures Trading Commission

Richard Danker, Special Advisor 

Consumer Financial Protection Bureau 

Ron Borzekowski, Assistant Director for Research 

Federal Housing Finance Agency 

George Sacco, Senior Analyst

Comptroller of the Currency 

Grace Dailey, Senior Deputy Comptroller for Bank Supervision Policy and Chief National Bank 

Examiner 

National Credit Union Administration

Ralph Monaco, Chief Economist 

Office of the Independent Member with Insurance Expertise

Diane Fraser, Senior Policy Advisor 

Federal Reserve Bank of New York 

William Dudley, President and Chief Executive Officer (by telephone)

Office of Financial Research

Stacey Schreft, Deputy Director for Research and Analysis

Federal Insurance Office

Steven Seitz, Deputy Director

North Carolina Office of the Commissioner of Banks 

Michael Stevens, Senior Vice President, Conference of State Bank Supervisors 

Maryland Office of the Attorney General, Securities Division

Christopher Staley, Counsel, North American Securities Administrators Association

PRESENTERS:

Volcker Rule

• Craig Phillips, Counselor to the Secretary, Treasury 

• Bimal Patel, Deputy Assistant Secretary for the Council, Treasury 
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Update on Annual Reevaluation of Nonbank Financial Company Designation 

• Bimal Patel, Deputy Assistant Secretary for the Council, Treasury 

• Stephen Ledbetter, Director of Policy, Office of the Financial Stability Oversight 

Council, Treasury 

• Eric Froman, Principal Deputy Assistant General Counsel (Banking and Finance) and 

Executive Director of the Council, Treasury (available for questions)

 

MetLife Litigation

• Brian Callanan, Acting General Counsel, Treasury 

• Jesse Panuccio, Principal Deputy Associate Attorney General, Department of Justice 

• Chad Readler, Acting Assistant Attorney General for the Civil Division, Department of 

Justice

• Eric Froman, Principal Deputy Assistant General Counsel (Banking and Finance) and 

Executive Director of the Council, Treasury (available for questions) 

Executive Session

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

approximately 3:35 P.M. 

He began by outlining the meeting agenda, which had previously been distributed to the 

members together with other materials. The agenda for the meeting included the following 

subjects: (1) consideration of, and a vote on, a resolution approving the minutes of the Council’s 

meeting on May 8, 2017; (2) a discussion about the recommendations regarding the Volcker 

Rule in Treasury’s June 2017 report issued pursuant to Executive Order 13772, “Core Principles 

for Regulating the United States Financial System”; (3) an update on the annual reevaluation of 

the designation of a nonbank financial company; and (4) a discussion regarding the pending 

litigation brought by MetLife against the Council. 

1. Resolution Approving the Minutes of the Meeting Held on May 8, 2017 

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

minutes attached hereto of the meeting held on May 8, 2017, 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. 

2. Volcker Rule 

The Chairperson then introduced the next agenda item, a discussion about the recommendations 

regarding the Volcker Rule in Treasury’s June 2017 report prepared pursuant to the presidential 

executive order on core principles for regulating the U.S. financial system, issued February 3, 

2017. The Chairperson introduced Craig Phillips, Counselor to the Secretary at Treasury, and 

Bimal Patel, Deputy Assistant Secretary for the Council at Treasury. Mr. Phillips gave a brief 

overview of Treasury’s recommendations in the report. Jerome Powell, Governor of the Federal 
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Reserve, then described potential reforms to simplify the Volcker Rule, including changes that 

could be made by amending the agencies’ regulations implementing the Volcker Rule. Council 

members then asked questions and had a discussion, including regarding potential ways to 

simplify the Volcker Rule and streamline its requirements for smaller banking organizations. 

Council members also discussed the timing and manner in which potential amendments to the 

regulations implementing the Volcker Rule could proceed, including the OCC’s expectation to 

issue a notice seeking public comment on the regulations implementing the Volcker Rule. 

3. Update on Annual Reevaluation of Nonbank Financial Company Designation 

The Chairperson then introduced the next agenda item, an update on the annual reevaluation of a 

nonbank financial company that the Council had previously designated under section 113 of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The 

Chairperson introduced Bimal Patel, Deputy Assistant Secretary for the Council at Treasury, and 

Stephen Ledbetter, Director of Policy in the Office of the Financial Stability Oversight Council 

at Treasury. Chairman Clayton recused himself from participating in the discussion, and 

Michael Piwowar, SEC Commissioner, participated in the discussion. 

Mr. Patel then described the current staff analysis with respect to the three transmission channels 

through which the Council assesses the potential for material financial distress at a nonbank 

financial company to pose a threat to financial stability. Together with Mr. Ledbetter, he 

described factors relating to the exposures of customers, counterparties, and other market 

participants to the company, and the potential for forced asset liquidations by the company. 

Council members then asked questions and had a discussion, including regarding the Council’s 

process for conducting annual reevaluations, potential exposure and asset liquidation risks 

identified in the preliminary analysis, potential mitigants to the identified risks, and the 

company’s resolvability. 

4. MetLife Litigation

The Chairperson then introduced the next agenda item, a discussion regarding the pending 

litigation brought by MetLife against the Council relating to the Council’s final determination 

regarding the company. The Chairperson introduced Brian Callanan, Acting General Counsel at

Treasury; Jesse Panuccio, Principal Deputy Associate Attorney General at the Department of 

Justice, and Chad Readler, Acting Assistant Attorney General for the Civil Division at the 

Department of Justice. Chairman Clayton recused himself from participating in the discussion, 

and Commissioner Piwowar participated in the discussion. Mr. Callanan described the litigation, 

including the district court’s decision and a pending motion by MetLife to hold the appeal in 

abeyance pending the Secretary of the Treasury’s issuance of a report on the Council’s 

designation processes pursuant to a presidential memorandum issued on April 21, 2017. Mr. 

Readler offered additional comments on the same subject. Council members then asked

questions and had a discussion regarding the litigation. 

The Chairperson adjourned the meeting at approximately 5:32 P.M.