Minutes of the Financial Stability Oversight Council

July 28, 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) 

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) 

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

Securities and Exchange Commission

Amanda Fischer, Senior Counselor
2

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

Michael Passante, Chief Counsel

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 

Kay Noonan, General Counsel, National Association of Insurance Commissioners

Maryland Office of the Attorney General, Securities Division

Dylan White, Assistant General Counsel, North American Securities Administrators Association

PRESENTERS:

Hedge Fund Working Group Update

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

• Ron Alquist, Senior Policy Advisor, Office of the Financial Stability Oversight Council, 

Treasury

• Danny Barth, Senior Economist, Division of Financial Stability, Federal Reserve

(available for questions)

• Phillip Monin, Economist, Division of Monetary Affairs, Federal Reserve (available for 

questions)
3

• Adam Minson, Lead, Financial Sector Risk, Federal Reserve Bank of New York

(available for questions)

• Timothy Husson, Associate Director, Division of Investment Management, SEC 

(available for questions)

• Ted Berg, Senior Financial Analyst, OFR (available for questions)

• Jay Kahn, Senior Economist, OFR (available for questions)

Climate-related Financial Risk Committee Update

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

• Sini Matikainen, Policy Advisor, Office of the Financial Stability Oversight Council, 

Treasury

• Kaitlin Hildner, Senior Advisor, Division of Research and Statistics, FHFA (available for 

questions)

• DJ Purnell, Associate Director, OFR (available for questions)

Digital Assets Report Update

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

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

OFR Bilateral Repurchase Agreement Data Collection

• James Martin, Acting Director, OFR

• Jay Kahn, Senior Economist, OFR

Executive Session

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

approximately 10:01 A.M. The Council convened by videoconference. The Chairperson first 

noted that the meeting was the 100th meeting of the Council, and she thanked Council members 

for their contributions. The Chairperson also congratulated Sandra Thompson on her 

confirmation as Director of the FHFA, and Michael Barr on his confirmation as Vice Chair for 

Supervision at the Federal Reserve. She then 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 Council’s Hedge Fund Working Group, (2) an update on 

the Council’s staff-level Climate-related Financial Risk Committee, (3) an update on the 

development of the Council’s digital assets report, and (4) a presentation on the OFR’s bilateral 

repurchase agreement (repo) data collection.

1. Update on Hedge Fund Working Group

The Chairperson turned to the first agenda item, an update on the Council’s Hedge Fund 

Working Group, which was reestablished in March 2021. She introduced Sandra Lee, Deputy 

Assistant Secretary for the Council at Treasury, and Ron Alquist, Senior Policy Advisor in the 

Office of the Financial Stability Oversight Council at Treasury. 

Ms. Lee noted that at the Council meeting on February 4, 2022, staff had stated that the Hedge 

Fund Working Group would develop an interagency hedge fund risk monitoring framework, to 
4

expand the Council’s understanding of the potential threats that hedge funds may pose to U.S. 

financial stability. She stated that Council member agencies had drawn upon their collective 

expertise and resources to develop the framework. She said that through this collaboration, the 

Council sought to develop a means to assess hedge fund activities and their implications for 

systemic risk. 

Mr. Alquist stated that the working group had proposed four workstreams for 2022: (1) develop 

an interagency risk monitoring framework to identify financial stability risks related to hedge 

funds; (2) consider policy options to mitigate identified risks; (3) coordinate with the InterAgency Working Group on Treasury Market Surveillance (IAWG) regarding Treasury market 

resilience; and (4) close data gaps and improve data availability. He noted that his presentation 

at this meeting focused on the first workstream, the development of an interagency risk 

monitoring framework. He stated that the risk monitoring framework being developed 

incorporated a quantitative and qualitative component and drew upon research findings and 

analysis from agencies participating in the working group. He described the data sources for the 

quantitative risk monitor. He stated that working group participants had also conducted outreach 

to industry representatives.

Mr. Alquist stated that the working group found that hedge funds had performed unevenly

through recent geopolitical shocks and elevated market volatility but had not caused significant 

disruptions to the U.S. financial system. He stated that since the default of the family office 

Archegos Capital Management, bank supervisors’ extensive work related to counterparty credit 

risk management revealed material deficiencies which, despite some improvements, still required 

corrective action.

Mr. Alquist then discussed recent trends in hedge fund activities, noting that hedge funds’

notional exposures to Treasuries and repo borrowing remained elevated, although they were 

reduced from their peak in 2020. He also noted that hedge fund equity exposures had increased 

and that prime brokerage borrowing remained high by historical standards. Mr. Alquist stated 

that banking and broker-dealer supervisors were continuing to work to address vulnerabilities in 

Treasury markets, and that the IAWG was working to improve Treasury market resilience. 

Mr. Alquist stated in conclusion that the Hedge Fund Working Group’s risk monitoring 

framework was designed to be flexible and account for emerging risks and vulnerabilities. He 

noted that the working group planned to implement the interagency risk monitor by the end of 

the third quarter of 2022. He stated that the working group expected to provide future briefings 

to discuss the risks it identifies using this framework, along with existing regulations and 

mitigants.

Council members then had a discussion about the hedge fund risk monitoring framework and 

Council member agencies’ efforts to collect and analyze data regarding hedge funds. 

2. Update on Climate-related Financial Risk Committee

The Chairperson then introduced the next agenda item, an update on the Council’s Climaterelated Financial Risk Committee (CFRC). She introduced Sandra Lee, Deputy Assistant 

Secretary for the Council at Treasury, and Sini Matikainen, Policy Advisor in the Office of the 
5

Financial Stability Oversight Council at Treasury. She noted that Kaitlin Hildner, Senior 

Advisor in the Division of Research and Statistics at FHFA, and DJ Purnell, Associate Director

at the OFR, were available for questions.

Ms. Lee stated that the Council’s 2021 Report on Climate-Related Financial Risk identified 

climate change as an emerging threat to U.S. financial stability for the first time and included 

over 30 recommendations to financial regulators on how best to identify and address climaterelated risks to the financial system.

Ms. Lee stated that since the publication of the report, the Council and its members had made 

progress on these recommendations, including by establishing the new staff-level Climaterelated Financial Risk Committee. She stated that the CFRC, which included representatives of 

all 15 Council members, served as an active forum for interagency information-sharing, 

coordination, and capacity-building. 

Ms. Matikainen stated that the Council’s climate report included recommendations to U.S. 

financial regulators in four categories: building capacity; filling climate-related methodological 

and data gaps; enhancing climate-related disclosures; and mitigating risks, including through 

scenario analysis. She noted that the Council had approved the CFRC charter in December 

2021. She stated that the CFRC was meeting regularly to provide a forum to advance the 

report’s recommendations. She described the key duties of the CFRC, as set forth in its publicly 

available charter, including identifying priority areas for assessing and mitigating climate-related 

risks to the financial system and providing updates to the Council at least semiannually. 

Ms. Matikainen then provided an overview of the CFRC’s structure. She stated that the CFRC’s

working groups, which included representatives from every Council member, focused on four 

areas: data infrastructure, data requirements, risk assessment, and scenario analysis. She noted 

that the CFRC met regularly to discuss cross-cutting topics, with the four working groups 

performing more targeted work in key priority areas.

Ms. Matikainen stated that Council members had made progress in each of the four categories of 

recommendations in the Council climate report. She noted, among other efforts, that all Council 

members had assigned staff to work on climate-related financial risk; the OFR had launched its 

Climate Data and Analytics Hub pilot with the Federal Reserve; the SEC had proposed rules to 

enhance and standardize climate-related disclosures for investors; the OCC and FDIC requested 

public comment on a draft statement of principles for climate-related financial risk management 

for large banks; and several Council members had expanded their international engagement on 

climate-related financial risk.

Ms. Matikainen stated that the climate report recommended that the Council establish a Climaterelated Financial Risk Advisory Committee (CFRAC), which would be the Council’s first

external advisory committee. She stated that the CFRAC was under development and was

expected to encompass a range of external stakeholders to support the CFRC and its working 

groups. She stated that staff anticipated that the Council would vote to establish the CFRAC at a 

future meeting in 2022.
6

Ms. Matikainen concluded by summarizing the next steps for the CFRC, including further work 

to advance the recommendations in the Council climate report, continued regular CFRC 

meetings, efforts to finalize timelines and deliverables for the CFRC working groups, semiannual 

updates by the CFRC to the Council, and contributions to the Council’s 2022 annual report. 

Following the presentation, the Chairperson stated that identifying and addressing climaterelated financial risks was a key priority for the Council and noted that the CFRC would play a 

central part in this effort. 

Council members then had a discussion about efforts on climate-related financial risk at various 

member agencies, including risk-management expectations for large banks; regulators’ 

international engagement; issues in the regulation of insurers; data collections; and public 

disclosure requirements. 

3. Update on Digital Assets Report

The Chairperson then introduced the next 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 Council member staff had made substantial progress in the development of 

the report. She stated that member staff had been collaborating to analyze financial stability 

risks and regulations and to understand the turbulence in digital assets markets in 2022. 

 

Mr. Rose stated that the Council had convened a staff-level digital assets working group in April 

2022 to prepare the report, and that the group had made progress in outlining financial stability 

risks and identifying regulatory gaps posed by various types of digital assets. He noted that the 

working group had developed a framework for consideration of these risks organized around 

vulnerabilities that amplify shocks to the digital asset market. He also described certain risks 

that may be identified in the Council’s report. He concluded by stating that the report would 

assess the current regulatory system for digital assets and describe specific regulatory gaps.

Council members then had a discussion about the development of the digital assets report. 

4. OFR Bilateral Repo Data Collection

The Chairperson then introduced the next agenda item, a presentation on the OFR’s work to 

collect data on non-centrally cleared bilateral repo. The Chairperson noted that the Council’s 

Hedge Fund Working Group continued to highlight the lack of visibility into the repo market, 

which is one of the primary sources of leverage for hedge funds. She stated that while progress 

had been made to improve repo market transparency, such as the OFR’s existing collection of 

data on cleared repo, the stresses in March 2020 showed that regulators did not have sufficient 

visibility into non-centrally cleared bilateral repo transactions. She noted that at the Council 

meeting on February 4, 2022, the OFR announced it would launch a pilot program that would ask 
7

several financial institutions to share data on these transactions, with the goal of the OFR 

publishing a rule to collect this data on an ongoing basis. She then turned to James Martin, 

Acting Director of the OFR, and Jay Kahn, Senior Economist at the OFR, for the presentation. 

Acting Director Martin stated that repo plays a critical role in lending and securities markets. He 

stated that while high-quality data is critical to assess these markets, historically little data was 

available. He noted that after the OFR conducted a pilot project in 2015, the OFR adopted a final 

rule in 2019 establishing a data collection focused on centrally cleared bilateral repo transactions. 

He noted that the OFR had now laid the groundwork for data collection on another sector of the 

market.

Mr. Kahn then described four segments of the repo market: centrally cleared triparty repo, 

centrally cleared bilateral repo, non-centrally cleared triparty repo, and non-centrally cleared 

bilateral repo. He stated that non-centrally cleared bilateral repo transaction volumes are not

known but represent approximately 60 percent of primary dealer reverse repo and 40 percent of 

primary dealer repo. He stated that this segment of the repo market lacks transparency, and that 

the OFR’s planned data collection was intended to fill this gap. 

Mr. Kahn stated that the OFR met with market participants and industry associations earlier in 

2022 to discuss this topic. He stated that the OFR found that data systems among dealers are 

heterogenous, and he discussed various dealers’ approaches to data collection and storage. He 

said that the OFR pilot data collection was intended to give dealers experience in adapting to 

transaction-level reporting.

Mr. Kahn stated that the OFR was collecting data from nine pilot program participants over three 

reporting days in June 2022, and had received the first day of trading data for all participants. He 

stated that the OFR was drafting a notice of proposed rulemaking regarding the data collection. 

He noted that the OFR intended to use information learned from the pilot program during the 

rulemaking process. He concluded by stating that the OFR was developing an internal structure 

to manage the data once the collection is fully implemented.

Council members then asked questions and had a discussion about the importance of the OFR’s 

repo data collection.

5. Other Business

Council members then had a discussion about potential topics to address in an upcoming Council 

meeting and other Council priorities. 

The Chairperson adjourned the executive session of the meeting at approximately 11:17 A.M.

Open Session

The Chairperson called the open session of the meeting of the Council to order at approximately 

11:21 A.M. The Chairperson outlined the agenda for the open session, which included (1) an 
8

update on the Council’s work on climate-related financial risk, and (2) a vote on the minutes of 

the Council’s meeting on April 8, 2022.

1. Update on Climate-related Financial Risk

The Chairperson turned to the first agenda item, an update on the Council’s work on climaterelated financial risk. She stated that addressing climate-related financial risk was a key priority 

for the Council. She noted that since the Council published its climate report in 2021, the 

Council and its members had made significant progress to advance the recommendations set out 

in the report. The Chairperson stated that the Council was committed to providing updates to the 

public on its efforts to assess and address climate-related financial risks. The Chairperson then 

introduced Sandra Lee, Deputy Assistant Secretary for the Council at Treasury, for an update on 

efforts by the Council and its members to identify and address climate-related financial risks.

Ms. Lee stated that the Council and its members had been working in close coordination to 

advance the recommendations in the Council’s 2021 climate report. She noted that progress had 

been made in the areas of capacity-building, disclosure, data, and risk assessment and mitigation. 

She stated the Council’s new staff-level interagency committee, the CFRC, was coordinating 

these efforts. She noted that the CFRC charter was approved during the Council’s meeting in 

December 2021. She stated that the CFRC had representation from all 15 Council members and 

began meeting regularly earlier in 2022. Ms. Lee stated that the CFRC served as an active forum 

for interagency information-sharing, coordination, and capacity-building. She stated that, given 

the known gaps in climate-related financial data, the continuing evolution in methodologies to 

assess risk, and the challenges of translating climate data into potential financial impact, the 

CFRC enabled Council members to learn from one another on emerging best practices. She 

stated that the CFRC would continue the Council’s work to enhance coordination, build capacity, 

and advance initiatives necessary to promote the resilience of the financial system to the risks 

posed by climate change. Ms. Lee concluded by stating that staff would provide the Council 

with ongoing updates about the CFRC’s work to build on and accelerate existing efforts to 

address climate-related financial risks and safeguard the financial system.

The Chairperson stated that she welcomed the creation of the CFRC and the work of Council 

member agencies to advance the Council’s understanding and cooperation on this topic. She 

stated that climate change, in the form of higher temperatures, droughts, wildfires, intensifying 

storms, and other climate-related events, was imposing significant costs on the U.S. economy 

and the public. She noted that the United States experienced 20 or more separate billion-dollar 

weather and climate disasters in each of 2020 and 2021. She stated that when adjusted for 

inflation, the costs attributable to the events of these two years exceeded $111 billion and 

$152 billion, respectively. She stated that climate change was responsible for economic and also 

human costs. She noted that an estimated 80 million homes in the United States are facing 

wildfire risk over the next 30 years, including 1.5 million homes that are at extreme risk. She 

stated that evidence was emerging in the United States of how climate change is affecting 

financial services. She noted as an example that the increasing frequency and severity of such 

disasters was leading to higher premiums for homeowners’ insurance, with property in some 

parts of the country becoming practically uninsurable and ultimately potentially unsellable. 
9

The Chairperson stated that the financial and economic costs from climate change were expected 

to grow. She stated that these developments underscored the importance of Council members 

taking action to expand capacity, improve data and measurement, and enhance disclosure of 

climate-related risks, so that investors, corporations, and other financial institutions can make 

better-informed decisions, assess the scale of potential vulnerabilities, and make appropriate 

adjustments in regulatory and supervisory tools. The Chairperson then invited other members of 

the Council to share information on the efforts at their agencies in this area.

Jerome Powell, Chair of the Federal Reserve, stated that the Federal Reserve appreciated the 

progress of the Council and member agencies to implement the recommendations of the Council 

climate report and to enhance members’ collective understanding of the impact of climate-related 

risks on financial institutions and financial stability. He stated that climate-related financial risk 

is an important issue that requires close collaboration and investment across Council members, 

as they seek to ensure that financial institutions are effectively managing these risks, and to 

promote the resiliency of the financial system to these risks in a manner consistent with 

members’ supervisory and financial stability mandates. 

Chair Powell stated that the Federal Reserve was engaging with external stakeholders, including 

large banks, and building its internal capacity to assess the financial risks of climate change, 

including through investing in data, research, and analytics. He stated that the Federal Reserve 

was working to understand supervised firms’ risk management capabilities and assessing the 

materiality of climate-related exposures. He noted that the Federal Reserve was continuing its 

work to identify links between climate change and financial stability, including by investigating 

how climate change can increase financial sector vulnerabilities and analyzing potential climaterelated amplification channels. He stated that as the Federal Reserve improves its understanding 

of these risks, it was incorporating them into its financial stability framework. Chair Powell 

stated that the Federal Reserve would continue to contribute to the work of the CFRC and engage 

with other Council members to meet the challenges that climate change poses for the U.S. 

financial system. 

Gary Gensler, Chair of the SEC, provided an update regarding the SEC’s March 2022 proposed 

rule to enhance and standardize climate-related disclosures for investors. Chair Gensler noted 

that for the last 90 years, U.S. capital markets had relied on a basic bargain under which 

investors could choose to decide which risks to take as long as companies provide full, fair, and 

truthful disclosures. He stated that the SEC oversees this basic bargain. He noted that the SEC 

had updated disclosure requirements over the decades to meet investor needs. He stated that in 

the 1960s the SEC began to require the disclosure of certain risk factors to aid investors, and in 

the 1970s the SEC began requiring environmental-related disclosures. He stated that the SEC 

elaborated on those requirements repeatedly in subsequent years, including in 2010, when the

SEC issued guidance regarding climate-related disclosures. Chair Gensler estimated that 

hundreds of issuers were currently disclosing climate-related information, and hundreds of 

institutional investors were making decisions based on this information. He stated that the 

SEC’s March 2022 proposed rule on climate-related disclosures was an outgrowth of its prior 

rulemakings in this area. He stated that the SEC proposal was intended to improve the 

consistency, comparability, and decision-usefulness of disclosure provided by public companies 
10

to investors. He noted that the proposal received over 14,500 comments, available on the SEC 

website. 

Chair Gensler stated that the SEC had also issued two proposals related to funds and their 

advisors. First, he stated that in May 2022, the SEC proposed modernizing the “names rule” 

under the Investment Company Act of 1940 to address changes in the fund industry and 

compliance practices in the approximately 20 years since the rule was adopted. He said that the 

proposal was intended to help ensure that fund names referencing investment goals related to 

climate, or other environmental, social, and governance (ESG) factors, align with the funds’ 

characteristics and investment strategies. Second, he stated that in May 2022, the SEC also 

proposed a rule to enhance disclosures by certain investment advisers and investment companies 

about ESG investment practices. He noted that the SEC was seeking public comment on both 

proposals. He stated that in issuing these proposals, the SEC was focused on ensuring that 

statements made by companies to investors are not materially false or misleading. He stated that 

this key principle informed the SEC’s climate disclosure proposals. Chair Gensler concluded by 

stating that when issuing these and other rulemakings, the SEC was guided by public input, 

economic analysis, the laws that Congress has passed, and the courts’ interpretation of those 

laws.

Michael Hsu, Acting Comptroller of the Currency, provided observations on the public feedback 

on the OCC’s draft principles for climate-related financial risk management for large banks, 

which were issued in December 2021. He stated that the draft principles provided a high-level 

framework for the safe and sound management of exposures to climate-related financial risks for 

large banks. He noted that for purposes of the draft principles, large banks are those with more 

than $100 billion in total consolidated assets. He stated that the OCC received responses from 

thousands of individuals, as well as financial services trade groups, banks, environmental and 

public interest groups, providers of risk models, and governmental bodies. He stated that the 

majority of commenters generally supported the draft principles, while some warned of 

regulatory overreach. He noted that most commenters who supported the principles also offered 

suggestions for changes, reflecting a range of views on the subjects that should be addressed in 

the guidance, the level of detail, and the focus on large institutions. He said that numerous 

commenters recommended cooperation with other domestic and international regulators. He 

stated that a number of financial services trade groups also expressed general support for a 

flexible, principles-based approach to risk management in this area. 

Acting Comptroller Hsu noted that the OCC also received many detailed responses on the 

specific questions posed. He said that many commenters focused on the two interrelated areas of 

scenario analysis and data availability. He stated that the draft principles presented scenario 

analysis as an important approach for identifying, measuring, and managing climate-related 

risks. He noted that the OCC received detailed comments on how banks currently conduct 

scenario analysis, how they should conduct this analysis, and the challenges they face. He said 

that commenters identified a number of challenges, including a lack of clarity and guidance, the 

level of uncertainty regarding future developments, the absence of granularity in currently 

available information, the lack of institutional knowledge and expertise, and the general lack of 

reliable data and information. Turning to data availability, he stated that the draft principles 

noted that sound risk management depends on the availability of relevant, accurate, and timely 
11

data, while acknowledging that data in this area is rapidly evolving. He said that the OCC asked 

for feedback on what specific data, metrics, tools and models banks need to identify, measure, 

monitor, and control their climate-related financial risks. He stated that commenters provided 

detailed lists of data needs, information on current data sources, and suggestions on how to 

obtain critical data. He stated in conclusion that the OCC was evaluating the feedback received 

and determining its next steps.

Martin Gruenberg, Acting Chairman of the FDIC, stated that addressing the financial risks that 

climate change poses to the safety and soundness of financial institutions and to the stability of 

the financial system was a priority for the FDIC. He stated that the FDIC had established an 

internal interdivisional working group tasked with assessing the safety and soundness and 

financial stability risks of climate change, and was investing in research to better understand the 

transmission channels of climate change risk to financial institutions and to the financial system. 

He stated that the FDIC had prioritized international engagement through its participation in 

Basel Committee on Banking Supervision and Financial Stability Board groups. He noted that 

the FDIC had joined the Network of Central Banks and Supervisors for Greening the Financial 

System (NGFS) and was participating in the Council’s CFRC. He noted that in March 2022, the 

FDIC had requested comment on a draft statement of principles for climate-related financial risk 

management for large financial institutions, designed to help institutions make progress toward 

addressing key questions as they consider incorporating climate-related financial risks into their 

institutions’ risk management framework. He also noted that climate risks disproportionately 

impact low- and moderate-income communities and households, which may have fewer 

resources to adapt to and address those risks. He stated that in May 2022, the federal banking 

regulators issued a proposed rulemaking to modernize the Community Reinvestment Act (CRA), 

including proposals to provide CRA credit for investments to promote climate resiliency and 

disaster preparedness in low- and moderate-income communities. He noted that the agencies 

were accepting public comments on the proposal.

Rostin Behnam, Chairman of the CFTC, provided an update on the CFTC’s efforts regarding 

climate-related financial risk. He stated that the CFTC was focused on climate-related risk 

management, anticipating that firms and individuals would increasingly turn to the derivatives 

markets to manage and mitigate climate change-induced physical and transmission risks. He 

noted that in March 2021, the CFTC created the Climate Risk Unit (CRU) to leverage the 

agency’s resources and expertise to better understand the role of derivatives in both pricing and 

mitigating climate-related risk and also support the orderly transmission to a net-zero economy 

through market-based initiatives. He said that during its initial 12 months, the CRU focused on 

engaging with stakeholders to explore opportunities for public-private partnerships.

Chairman Behnam stated that the CRU hosted an all-day voluntary carbon market convening at 

the CFTC on June 2, 2022. He stated that the convening included panelists from voluntary 

carbon markets and discussed carbon offset standards and quality initiatives; the trading 

ecosystem for carbon offsets, which are the underlying commodities for several regulated futures 

products; and the participants’ recommendations for the CFTC. He stated that to support a 

whole-of-government approach to climate change, the convening included representatives from 

the White House’s Office of Science and Technology Policy and the Departments of the 
12

Treasury, State, Transportation, and Agriculture to discuss their policy initiatives for carbon 

offsets. 

Chairman Behnam noted that in June 2022, the CFTC also issued a request for information (RFI) 

on climate-related financial risk. He said that the RFI was seeking feedback on climate-related 

financial risk as it may pertain to the derivatives markets, underlying commodity markets, 

registered entities, registrants, and other market participants. He stated that the RFI also 

requested input on data, scenario analysis, stress testing, risk management, disclosure, product 

innovation, voluntary carbon markets, digital assets, greenwashing, financially vulnerable 

communities, and public-private partnerships and engagement. He said that the CFTC may use 

this information to issue new or amend existing guidance, interpretations, policy statements, and 

regulations, among other potential actions. He stated that the CFTC was focused on ensuring 

that market participants are equipped to manage their risks from increasingly severe and frequent 

weather events as well as the transition to a net-zero, low carbon economy. He noted in 

conclusion that the CFTC would solicit public comment on the RFI until October 7, 2022. 

Sandra Thompson, Director of the FHFA, stated that the FHFA and its regulated entities had an 

important role to play in addressing issues related to climate change. She stated that much of the 

FHFA’s work in the housing sector focused on the impact of events such as natural disasters, 

floods, wildfires, and hurricanes on the residential and multifamily mortgage market. She stated 

that the FHFA, in its supervisory capacity, had been working to ensure that its regulated entities 

account for these risks. She stated that in 2021, the FHFA had issued a statement affirming that 

the FHFA was committed to making tangible progress on addressing climate change and its 

consequences. She said the statement also noted that the FHFA’s regulated entities should 

identify climate change as a priority concern while actively considering its effects in their 

decision-making. She noted that in January 2022, the FHFA established an internal climate 

change and ESG steering committee. She stated that during 2022, Fannie Mae and Freddie Mac 

had worked under the guidance of FHFA to enhance their climate risk frameworks and 

governance and to consider the effects of climate-related financial risk on vulnerable 

communities. 

Director Thompson stated that in May 2022, the FHFA became a member of the NGFS. She 

stated that FHFA was an active participant in this organization’s working groups, and also 

participated in the Council’s CFRC and its working groups. She also noted that the FHFA was 

participating in the Financial Literacy and Education Commission and contributing to its 

upcoming report on the effects of climate change, particularly regarding the impacts on low- and

moderate-income and vulnerable communities. She stated in conclusion that the FHFA was 

focused on addressing the threat of climate change to preserve the safety and soundness and 

stability of the housing finance system. 

Steven Seitz, Director of FIO, stated that assessing climate-related financial risk in the insurance 

sector was a top priority for FIO. He stated that the insurance sector can play an important role 

in combating climate change and in reducing financial losses from climate-related events. He 

noted that the availability of insurance is a critical component in the functioning of the housing 

and banking sectors. He then highlighted three efforts FIO was undertaking. First, he said that 

FIO intended to publish a report by the end of 2022 assessing climate-related issues and gaps in 
13

the regulation and supervision of insurers, including their potential effects on U.S. financial 

stability. He noted that some state insurance regulators were taking steps in this area and said 

that FIO would continue to monitor and assess those developments. Second, he stated that FIO 

was conducting quantitative analysis in two areas of climate-related financial risk: the potential 

transition risk to insurer asset portfolios, and the physical risks of insurers’ climate-related 

underwriting exposures, focusing on homeowners’ insurance and particularly on at-risk markets. 

He noted that as part of this analysis, FIO would consider how climate change was impacting 

underserved communities that are often most affected by, and often least able to respond to, 

climate-related events. He stated that such analyses were dependent upon the availability of 

relevant, reliable, and granular data. He stated that FIO was continuing to assess the use of its 

data-collection and data-dissemination authorities to help fill potential data gaps. Third, he 

stated that FIO continued to engage with stakeholders and colleagues domestically and 

intentionally, including federal and state partners. He stated that FIO was engaging with the 

Intentional Association of Insurance Supervisors and the Sustainable Insurance Forum and noted 

that in 2022 FIO joined the NGFS.

James Martin, Acting Director of the OFR, stated that identifying risks to financial stability from 

climate change was a priority for both the Council and the OFR. He noted that climate risk is not 

easily defined and that its potential risk to the financial system is difficult to model and to 

forecast. He stated that to accurately assess this risk, financial regulators would need to combine 

and analyze climate and financial data. He said that this requires high-powered computing to 

ingest large, often complex data sets, as well as advanced statistical software to merge these data 

to create new vantage points. He stated that the OFR was uniquely positioned to provide these 

resources to the Council. He said that to test the OFR’s capabilities to open its analytic 

environment to analysts and researchers outside of the OFR, it had partnered with the Federal 

Reserve to develop the Climate Data and Analytics Hub, which could feature both climate data 

and analytic tools. He said that the data hub provided certain staff from the OFR and the Federal 

Reserve System access to climate data and offered the tools needed to merge this data with 

financial data. He said that the data hub also enabled users to collaborate on their research and 

share their findings. He stated that this project demonstrated two ways the OFR can support the 

Council: by enabling Council members to use the OFR’s expertise in data onboarding and by 

providing access to the OFR’s analytical environment for greater insight into financial stability 

risk. He stated that the OFR was working to expand access to the data hub to other Council 

members.

Following these remarks, the Chairperson stated that the challenges in the area of climate-related 

financial risk were significant and would require the Council’s collective efforts. She noted that 

while the Council had made progress in identifying and addressing these risks, the Council 

would continue to work on this issue and that it would remain a Council priority. 

2. Resolution Approving the Minutes of the Meeting Held on April 8, 2022 

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

minutes attached hereto of the meeting held on April 8, 2022 of the Council are hereby 

approved. 
14

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 11:51 A.M.