Minutes of the Financial Stability Oversight Council

Held July 18, 2011

PRESENT:

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

Oversight Council

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

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

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

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

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

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

John Walsh, Acting Comptroller of the Currency (OCC)

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)

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

State, Securities Division (non-voting member)

Michael McRaith, Director, Federal Insurance Office (non-voting member)

GUESTS:

Department of the Treasury

Neal Wolin, Deputy Secretary

Jeffrey Goldstein, Under Secretary for Domestic Finance

Amias Gerety, Deputy Assistant Secretary for FSOC

Laurie Schaffer, Assistant General Counsel (Banking and Finance)

Board of Governors of the Federal Reserve System

Daniel Tarullo, Governor

Commodity Futures Trading Commission

Timothy Karpoff, Counsel to the Chairman

Comptroller of the Currency

Julie Williams, Chief Counsel and First Senior Deputy Comptroller

Federal Deposit Insurance Corporation

Arthur Murton, Director, Division of Insurance and Research 

Federal Housing Finance Agency

Mario Ugoletti, Special Advisor to the Director

National Credit Union Administration

John Worth, Chief Economist
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Securities and Exchange Commission

Ricardo Delfin, Special Counsel to the Chairman

Federal Reserve Bank of New York

William Dudley, President and Chief Executive Officer

California Department of Financial Institutions

Margaret Liu, Senior Vice President, Deputy General Counsel, Conference of State Bank 

Supervisors

Missouri Department of Insurance, Financial Institutions, and Professional Registration

Mark Sagat, Government Relations Analyst and Counsel, National Association of Insurance 

Commissioners

North Carolina Department of the Secretary of State, Securities Division

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

PRESENTERS

Macro-environment Overview and the FSOC Annual Report 

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

Reserve

• Art Murton, Director of Insurance & Research, FDIC

• Simon Potter, Senior Policy Advisor, FSOC, Treasury

• Amias Gerety, Deputy Assistant Secretary for FSOC, Treasury

Designations of Nonbank Financial Companies 

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

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

Institutions

• Michael Gibson, Senior Associate Director, Division of Research and Statistics, 

Federal Reserve

Enhanced Prudential Standards

• Mark Van der Weide, Chief of Staff for Policy, Division of Banking Supervision and 

Regulation, Federal Reserve

Final Rule Regarding Designations of Financial Market Utilities 

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

• Jeff Stehm, Associate Director of Financial Market Infrastructure Oversight, Federal 

Reserve

• Robert Wasserman, Associate Director, DCIO, CFTC

Secured Creditor Haircut Study

• Felton Booker, Acting Director, Office of Financial Institutions Policy, Treasury
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• Penfield Starke, Senior Counsel, FDIC

Executive Session

Secretary Geithner called the executive session of the meeting of the Financial Stability 

Oversight Council (Council) to order at 10:05 a.m. (EDT). 

The Chairperson outlined the meeting agenda, which had been previously distributed to the 

member agencies together with copies of the resolution and other materials. The agenda for the 

meeting included the following subjects: (1) a presentation and discussion on designation of 

nonbank financial companies; (2) a presentation and discussion on enhanced prudential 

standards; and (3) a presentation and discussion on the Council’s annual report and the current 

macro-economic environment; (4) consideration of, and a vote on, the Financial Market Utilities 

Designations Final Rule; (5) consideration of, and vote on, the Secured Creditor Haircut Study; 

and, (5) consideration of, and a vote on, the minutes from the May 24 and July 13, 2011

meetings. The Chairperson indicated that the first three items would be considered in the 

executive session and that the remaining items would be considered in the open session.

1. Designation of Nonbank Financial Companies 

The Chairperson turned to the agenda item regarding designation of nonbank financial 

companies and asked Lance Auer, Deputy Assistant Secretary for Financial Institutions, 

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

Reserve Board, and Jason Cave, Deputy Director for Monitoring, Office of Complex Financial 

Institutions, FDIC, to provide a presentation on the work of the interagency staff on the 

framework and process for designations of nonbank financial companies. The members of the 

Council asked questions about the presentation and discussed the designation process. 

2. Enhanced Prudential Standards 

The Chairperson then turned to the agenda item regarding enhanced prudential standards and 

called on Mark Van der Weide, Chief of Staff for Policy, Division of Banking Supervision and 

Regulation, Federal Reserve Board, to discuss the status of the Federal Reserve Board’s 

rulemaking implementing regarding the standards. Mr. Van Der Weide reviewed the 

requirements of section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection 

Act. He discussed international developments regarding capital surcharges for systemically 

important financial companies and that the Federal Reserve Board was reviewing the 

international framework as part of its work on developing a proposed rule regarding the capital 

element under the enhanced prudential standards. The members of the Council asked questions 

about the presentation. Chairman Gruenberg thanked the Federal Reserve for its cooperation on 

the joint rule implementing the resolution plan requirement of the enhanced prudential standards.

3. Annual Report and the Current Macro-Economic Environment

The Chairperson raised the agenda item regarding the Council’s annual report and the current 

macro-economic environment. The Chairperson asked Simon Potter, Senior Policy Advisor, 
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FSOC, Nellie Liang, Director, Office of Financial Stability Policy and Research, Federal Reserve 

Board, Art Murton, Director of Insurance & Research, FDIC, and Amias Gerety, Deputy 

Assistant Secretary for FSOC to make the presentation. 

The individuals listed above provided the presentation, which reviewed the statutory 

requirements for the report and recommendations. The members complimented the work that has 

been done to date on the report and asked questions regarding the report. A discussion took 

place regarding the current macro-economic environment and the Chairperson discussed the U.S. 

fiscal situation.

Open Session

The Chairperson called the open session of the meeting of the Council to order at 11:20 a.m. 

(EDT). The Chairperson presented four resolutions for consideration by the Council.

1. Discussion on the Annual Report of the Council

The Chairperson called on Amias Gerety, Deputy Assistant Secretary for FSOC and Simon Potter, 

Senior Policy Advisor, FSOC to discuss the annual report. The Chairperson also introduced 

Nellie Liang, Director, Office of Financial Stability Policy and Research, Federal Reserve Board, and Art

Murton, Director of Insurance & Research, FDIC who were available to answer questions in 

addition to Mr. Auer. Mr. Gerety discussed that this is the first annual report of the Council and 

reviewed the recommendations contained in the report. The Council voted to approve the 

annual report by notation vote on July 22, 2001 as set forth below.

2. Discussion and Vote on Resolution Approving the Final Rule Concerning the 

Designation of Certain Financial Market Utilities and Publication of the Final Rule

The Chairperson recognized Lance Auer, Deputy Assistant Secretary for Financial Institutions, 

Treasury, to give a presentation on the key issues raised in the public comments on the Notice of 

Proposed Rulemaking and the revisions made in the Final Rule. The Chairperson also 

introduced Jeff Stehm, Associate Director of Financial Market Infrastructure Oversight, Federal 

Reserve, Robert Wasserman, Associate Director, DCIO, CFTC who were available to answer 

questions in addition to Mr. Auer. After the presentation, the Chairperson presented to the 

Council the following resolution approving the Final Rules and its publication.

“WHEREAS, the Financial Stability Oversight Council (the “Council”) was established by the 

Dodd-Frank Wall Street Reform and Consumer Protection Act (the “DFA”) with a duty to 

“...identify systemically important financial market utilities . . .;” 

WHEREAS, section 804 of the DFA gives the Council the authority to designate financial market 

utilities that the Council determines are, or are likely to become, systemically important; 

WHEREAS, the Council published a notice of proposed rulemaking (“NPR”) on March 28, 

2011, through which it sought public comment on the criteria and analytical framework by 

which it will designate those financial market utilities that it determines are, or are likely to 

become, systemically important; and
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WHEREAS, the staffs of the Council Agencies have reviewed the public comments received in 

response to the NPR and have prepared a final rule that describes the criteria that will inform, 

and the processes and procedures established under the DFA for, the Council’s designation of 

financial market utilities under the DFA.

NOW, THEREFORE, BE IT RESOLVED, that the Council hereby approves the final rule as 

presented and authorizes the Chairperson, or his designee, to cause the attached final rule to be 

published in the Federal Register, in a form and manner acceptable to the Chairperson, or his 

designee.

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 Federal Register document, and to take such other actions and issue such other 

documents incident and related to the foregoing as they deem necessary or appropriate to fulfill 

the Council’s objectives in connection with its publication in the Federal Register.

The Chairperson asked for a motion approving the resolution which was made and seconded. The 

Council than approved the resolution by unanimous vote.

3. Discussion and Vote on Resolution Approving the Study Required by Section 215 of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The Chairperson recognized Felton Booker, Acting Director, Office of Financial Institutions 

Policy, Treasury, and Penfield Starke, Senior Counsel, FDIC

to provide a presentation on the study. After the presentation, the Chairperson presented to the 

Council the following resolution approving the study and its publication and transmission to the 

Congress.

WHEREAS, the Financial Stability Oversight Council (the “Council”) under the provisions of 

section 215 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “DFA”) is 

required to conduct a study evaluating the importance of maximizing United States taxpayer 

protections and promoting market discipline with respect to the treatment of fully secured 

creditors in the utilization of the orderly liquidation authority authorized by the DFA. 

WHEREAS, the Council under the provisions of section 215 of the DFA is required to issue a 

report to the Congress containing all findings and conclusions made by the Council in carrying 

out such study.

WHEREAS, the Council Agencies conducted the study and prepared the attached report 

pursuant to section 215 of the DFA.

NOW THEREFORE, BE IT RESOLVED, that the Council approves the attached report prepared 

under the provisions of section 215 of the DFA and authorizes the Chairperson, or his designee, 

to take such action as necessary to formally transmit the attached report to the Congress and to 

otherwise make it available to the public as the Chairperson deems appropriate; and,
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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 report and to take such other actions as they deem necessary or appropriate to prepare 

the report for release to the Congress and the public.

The Chairperson asked for a motion approving the resolution which was made and seconded. The 

Council than approved the resolution by unanimous vote.

4. Resolution Approving the Minutes of the May 24, 2011 meeting.

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

minutes attached hereto of the May 24, 2011 meeting of the Council are hereby approved.” 

The Chairperson asked for a motion approving the resolution which was made and seconded. The 

Council than approved the resolution by unanimous vote.

4. Resolution Approving the Minutes of the July 13, 2011 meeting

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

minutes attached hereto of the July 13, 2011 meeting of the Council are hereby approved.” 

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

The Council then approved the resolution by unanimous voice vote.

The Chairperson then asked for a motion to adjourn the meeting, which was made. The 

Chairperson adjourned the meeting at approximately 12:00 p.m. (EST).