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Minutes of the Financial Stability Oversight Council

Held July 31, 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 P. Ducrest, Commissioner, Louisiana Office of Financial Institutions (non-voting member) 

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

Registration (non-voting member)

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 

Mary J. Miller, Under Secretary for Domestic Finance

Christopher J. Meade, General Counsel

Patrick Pinschmidt, Deputy Assistant Secretary and 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, Senior Counsel
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Consumer Financial Protection Bureau

Steve Antonakes, Deputy Director

Federal Housing Finance Agency 

Mario Ugoletti, Special Advisor to the Director

Comptroller of the Currency 

John Lyons, Senior Deputy Comptroller and Chief National Bank Examiner

National Credit Union Administration 

John Worth, Chief Economist

Office of the Independent Member with Insurance Expertise

Chris Ledoux, Senior Advisor

Federal Reserve Bank of New York

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

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

Michael Stevens, Senior Executive Vice President, 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
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PRESENTERS:

Asset Management Update

• Patrick Pinschmidt, Deputy Assistant Secretary and Executive Director of the Council

• Jon Hertzke, Assistant Director, Division of Investment Management, Risk and 

Examinations Office, SEC

 • Lyndsay Huot, Senior Policy Advisor, Treasury

 • Jim Hodder, Financial Economist, SEC

 • David Aikman, Advisor, Federal Reserve

 • Nellie Liang, Director, Office of Financial Stability Policy and Research, Federal 

Reserve 

Annual Reevaluations of Designated Nonbank Financial Companies

• Todd Cohen, Policy Advisor, Treasury

Nonbank Financial Company Designations Stage 3 Analysis Update

 • Todd Cohen, Policy Advisor, Treasury

 • Felton Booker, Senior Advisor, Banking Supervision and Regulation, Federal Reserve

 • Diane Fraser, Senior Policy Advisor, Office of the Independent Member with 

Insurance Expertise

 • John Nolan, Deputy Director (Financial Stability), Federal Insurance Office

 • Eric Froman, Deputy Assistant General Counsel for FSOC, Treasury 

Executive Session 

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

approximately 1:34 P.M. (EDT). He 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) an asset management update; (2) a discussion of 

money market mutual fund (MMF) reforms; (3) the annual reevaluations of two previously 

designated nonbank financial companies, American Intentional Group, Inc. (AIG) and General 

Electric Capital Corporation (GECC); (4) an update on the nonbank financial company 

designations stage 3 analysis; and (5) consideration of, and a vote on, a resolution approving the 

minutes of the Council’s meeting on June 24, 2014.

1. Asset Management Update

The Chairperson introduced the first agenda item, an update related to the staff work on asset 

management. He introduced Patrick Pinschmidt, Deputy Assistant Secretary and Executive 

Director of the Council; Lyndsay Huot, Senior Policy Advisor at Treasury; and Jon Hertzke, 

Assistant Director of the Division of Investment Management, Risk and Examinations Office at 

the SEC. Jim Hodder, Financial Economist at the SEC; David Aikman, Advisor at the Federal 

Reserve; and Nellie Liang, Director of the Office of Financial Stablity Policy and Research at the 

Federal Reserve, were available for questions. Mr. Pinschmidt, Ms. Huot, and Mr. Hertzke

described the work of the Council staff relating to the Council’s ongoing assessment of potential 

industry-wide and firm-specific risks to U.S. financial stability arising from the asset 

management industry and its activities. The Council then had a discussion, and directed staff to 
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undertake a more focused analysis of industry-wide products and activities to assess potential 

risks associated with the asset management industry. 

2. Money Market Mutual Fund Reform

The Chairperson introduced the next agenda item, a discussion of money market mutual fund 

reforms. In November 2012, the Council used its authority under section 120 of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to propose specific 

recommendations for SEC reform. The SEC proposed reforms in 2013 and adopted final rules 

on July 23, 2014. The Chairperson introduced Mary Jo White, Chair of the SEC, to discuss how

the final rules recently adopted by the SEC address risks identified by the Council. Chair White 

briefly described the final rules, noting that the reforms took a combination approach by 

establishing a floating net asset value (NAV) for institutional prime MMFs, and permitting MMF 

boards to impose liquidity fees and redemption gates. The members of the Council then had a 

discussion regarding the final rules in the context of the Council’s proposed recommendations 

for MMF reform. The Council discussed its intention to monitor the effectiveness of the SEC’s 

reforms in addressing risks to financial stability, including any unintended consequences of 

liquidity fees and gates, as well as the treatment of retail funds. After these measures have been 

implemented, the Council intends to report on the effects of these reforms and their broader 

implications for financial stability.

3. Annual Reevaluations of Designated Nonbank Financial Companies

The Chairperson introduced the next agenda item, the first annual reevaluations of two nonbank 

financial companies, AIG and GECC, that the Council had designated in 2013 under section 113 

of the Dodd-Frank Act. Under the Dodd-Frank Act, the Council is required annually to 

reevaluate each previous designation and rescind a designation if the Council determines that the 

company no longer meets the statutory standards. It was noted that the Council has a statutory 

obligation at least annually to reevalaute each determination made under section 113 of the 

Dodd-Frank Act with respect to a nonbank financial company, regardless whether the company 

has contested the Council’s determination. The Chairperson introduced Todd Cohen, Policy 

Advisor at Treasury, who presented on the analyses and conclusions related to the companies 

under review, including regarding material changes with respect to each company since it was 

designated by the Council and in light of the standards for designations under section 113. The 

staff recommended that the Council not rescind its final determinations with respect to AIG and 

GECC. Members of the Council then asked questions and had a discussion. The Council did not 

rescind either company’s designation. 

4. Nonbank Financial Company Designations Stage 3 Analysis Update

The Secretary then introduced the next agenda item, an update on the ongoing analysis of a 

nonbank financial company that the Council previously advanced to stage 3 of the designations 

process. The Chairperson introduced Todd Cohen, Policy Advisor at Treasury; Felton Booker, 

Senior Advisor, Banking Supervision and Regulation at the Federal Reserve; Diane Fraser, 

Senior Policy Advisor at the Office of the Independent Member with Insurance Expertise; and 

John Nolan, Deputy Director (Financial Stability) of the Federal Insurance Office. Eric Froman, 
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Deputy Assistant General Counsel for FSOC at Treasury, was also available for questions. Mr. 

Booker then gave a presentation. The members of the Council asked questions and had a 

discussion.

5. Resolution Approving the Minutes of the Meeting held on June 24, 2014

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

minutes attached hereto of the meeting held on June 24, 2014 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 3:50 P.M. (EDT).