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Minutes of the Financial Stability Oversight Council

Held September 28, 2012

PRESENT: 

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

Oversight Council 

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

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

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

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

phone)

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

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

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

Thomas J. Curry, Comptroller of the Currency, Office of the Comptroller of the Currency (OCC) 

Roy Woodall, Independent Member with Insurance Expertise

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 

Neal Wolin, Deputy Secretary

Mary J. Miller, Under Secretary for Domestic Finance

Amias Gerety, Deputy Assistant Secretary for FSOC 

Christopher J. Meade, Acting General Counsel

Board of Governors of the Federal Reserve System 

Daniel K. Tarullo, Governor

Scott Alvarez, General Counsel

Federal Deposit Insurance Corporation 

Jason Cave, Deputy Director, Division of Complex Financial Institutions

Securities and Exchange Commission 

Jennifer McHugh, Senior Advisor to the Chairman

Commodity Futures Trading Commission

Dan Berkovitz, General Counsel
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Consumer Financial Protection Bureau

Ashwin Vasan, Senior Advisor

Federal Housing Finance Agency 

Mario Ugoletti, Special Advisor to the Director

National Credit Union Administration 

John Worth, Chief Economist

Office of the Comptroller of the Currency 

John Lyons, Senior Deputy Comptroller and Chief National Bank Examiner

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

Federal Insurance Office

John Nolan, Senior Policy Advisor

Louisiana Office of Financial Institutions

Michael Stevens, Senior Vice President and Director of Regulatory Affairs, Conference of State 

Banking 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, Deputy General Counsel, North American Securities Administrators Association

PRESENTERS:

Nonbank Financial Company Designations: Advancement of an Initial Set of Nonbank 

Financial Companies to Stage 3

• Amias Gerety, Deputy Assistant Secretary for FSOC

• Hampton Finer, Assistant Vice President, Financial Institutions Supervision Group, 

Federal Reserve Bank of New York

• Caroline Frawley, Senior Vice President, Financial Institutions Supervision Group, 

Federal Reserve Bank of New York

• George Sacco, Senior Analyst, FHFA

• Peter Yen, Capital Markets Policy Analyst, FDIC

• Diana Hancock, Deputy Associate Director, Division of Research and Statistics, 

Federal Reserve
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Macro-environment Overview: Update on LIBOR and Europe

• Lael Brainard, Under Secretary for International Affairs, Treasury 

• John Schindler, Section Chief, Macroprudential Analysis, Federal Reserve 

Approval of the Council’s 2013 Budget

• Amias Gerety, Deputy Assistant Secretary for FSOC, Treasury

Executive Session 

The Chairperson called the executive session of the meeting of the Financial Stability Oversight 

Council (Council) to order at approximately 10:03 A.M. (EDT). 

The Chairperson began by outlining the meeting agenda, which had been previously distributed 

to the members together with copies of the resolutions and other materials. The agenda for the 

meeting included the following subjects: (1) nonbank financial company designations and the 

advancement of an initial set of nonbank financial companies to stage 3 of the evaluation 

process; (2) an update on London interbank offered rate (LIBOR) issues and an update on 

Europe; (3) an update on money market mutual funds; (4) consideration of, and a vote on, a 

resolution approving the Council’s 2013 budget; and (5) consideration of, and a vote on, a 

resolution approving the minutes from the Council’s meeting on July 18, 2012. 

1. Nonbank Financial Company Designations: Advancement of an Initial Set of Nonbank 

Financial Companies to Stage 3

The Chairperson asked Amias Gerety, Deputy Assistant Secretary for FSOC at Treasury, to 

introduce the first item, the advancement of an initial set of nonbank financial companies and the 

non-advancement of certain nonbank financial companies to stage 3 of the evaluation process. 

After the introduction, the Chairperson called on Hampton Finer, Assistant Vice President, 

Financial Institutions Supervision Group at the Federal Reserve Bank of New York; Caroline 

Frawley, Senior Vice President, Financial Institutions Supervision Group at the Federal Reserve 

Bank of New York; George Sacco, Senior Analyst at the FHFA; Peter Yen, Capital Markets 

Policy Analyst at the FDIC; and Diana Hancock, Deputy Associate Director, Division of 

Research and Statistics at the Federal Reserve to present on an initial set of nonbank financial 

companies being considered for advancement or non-advancement to stage 3. After the 

presentations, members of the Council asked questions and had a discussion. Following the 

completion of the presentations and the discussion, the Chairperson presented to the Council the 

following resolution approving the advancement of an initial set of nonbank financial companies 

and the non-advancement of certain nonbank financial companies (identified in an attachment 

thereto) to stage 3 of the evaluation process. 

“WHEREAS, section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(the “DFA”) authorizes the Financial Stability Oversight Council (“Council”) to determine that 

a nonbank financial company shall be supervised by the Board of Governors of the Federal 

Reserve System (“Federal Reserve”) and shall be subject to enhanced prudential standards if 

the Council determines that material financial distress at the nonbank financial company, or the 

nature, scope, size, scale, concentration, interconnectedness, or mix of the activities (collectively, 
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the “Determination Standards”) of the nonbank financial company, could pose a threat to the 

financial stability of the United States; and 

WHEREAS, in making a determination under section 113 of the DFA, the Council must take into 

consideration the following: (A) the extent of the leverage of the company; (B) the extent and 

nature of the off-balance-sheet exposures of the company; (C) the extent and nature of the 

transactions and relationships of the company with other significant nonbank financial 

companies and significant bank holding companies; (D) the importance of the company as a 

source of credit for households, businesses, and State and local governments and as a source of 

liquidity for the United States financial system; (E) the importance of the company as a source of 

credit for low-income, minority, or underserved communities, and the impact that the failure of 

such company would have on the availability of credit in such communities; (F) the extent to 

which assets are managed rather than owned by the company, and the extent to which ownership 

of assets under management is diffuse; (G) the nature, scope, size, scale, concentration, 

interconnectedness, and mix of the activities of the company; (H) the degree to which the 

company is already regulated by 1 or more primary financial regulatory agencies; (I) the 

amount and nature of the financial assets of the company; (J) the amount and types of the 

liabilities of the company, including the degree of reliance on short-term funding; and (K) any 

other risk-related factors that the Council deems appropriate;

WHEREAS, the Council issued a final rule (the “Final Rule”) and accompanying interpretive 

guidance (the “Interpretive Guidance”) to be codified in 12 C.F.R. Part 1310 that describes the 

criteria and the processes and procedures by which the Council will determine that a nonbank 

financial company shall be supervised by the Federal Reserve and shall be subject to enhanced 

prudential standards under the DFA; and 

WHEREAS, the Interpretive Guidance describes a three-stage process that the Council expects 

to use for evaluating a nonbank financial company prior to a Council vote on a proposed 

determination; and 

WHEREAS, the staffs of the Council Members and their Agencies have evaluated an initial set of 

nonbank financial companies under stage 1, which consisted of the application of uniform 

quantitative thresholds to identify nonbank financial companies for further evaluation; and 

WHEREAS, in stage 2, the staffs of the Council Members and their Agencies have analyzed 

certain of the nonbank financial companies identified in stage 1, based on a wide range of 

quantitative and qualitative information available to the Council, primarily through public and 

regulatory sources; 

WHEREAS, based on the stage 2 evaluations, the staffs of the Council Members and their 

Agencies recommend that the Council approve the advancement of an initial set of nonbank 

financial companies from stage 2 to stage 3 of the evaluation process, which will include an 

evaluation of information collected directly from the nonbank financial companies, with a focus 

on whether the nonbank financial company could pose a threat to U.S. financial stability under 

the Determination Standards; 
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WHEREAS, based on the stage 2 evaluations, the staffs of the Council Members and their 

Agencies recommend that the Council not, at this time, approve the advancement of certain 

nonbank financial companies from stage 2 to stage 3 of the evaluation process; and

WHEREAS, in furtherance of the evaluation of nonbank financial companies in stage 3 of the 

evaluation process, the Council intends to make certain information requests, coordinate and 

consult with certain regulatory agencies, and take certain other actions, which actions the 

Council deems appropriate to delegate to the Deputies Committee, pursuant to § XXX.6(i) of the 

Rules of Organization of the Council. 

NOW, THEREFORE, BE IT RESOLVED, that the Council hereby authorizes the advancement of 

an initial set of nonbank financial companies (identified in an attachment hereto) to stage 3 of 

the evaluation process, and authorizes the staffs of the Council Members and their Agencies to 

begin the stage 3 evaluation process.

BE IT FURTHER RESOLVED, that certain nonbank financial companies (identified in an 

attachment hereto) will not, at this time, be advanced to stage 3 of the evaluation process, and 

that such companies shall be evaluated by the Nonbank Designations Committee from time to 

time, as appropriate, in accordance with sections 112 and 113 of the DFA and the Interpretive 

Guidance.

BE IT FURTHER RESOLVED, that the Council hereby approves the attached notification letters 

required by the Final Rule (12 C.F.R. § 1310.21) and authorizes the letters to be sent in October 

2012 to the initial set of nonbank financial companies advancing to stage 3 of the evaluation 

process.

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 notification letters. 

BE IT FURTHER RESOLVED, that in accordance with § XXX.6(i) of the Rules of Organization 

of the Council, the Council hereby delegates authority to the Deputies Committee, operating by 

consensus, to (1) prepare, approve, and cause to be transmitted requests for information to the 

nonbank financial companies advancing to stage 3 of the evaluation process, (2) prepare, 

approve, and cause to be transmitted requests for information to, and engage in coordination 

and consultations with, the primary financial regulatory agencies (as defined in section 2(12) of 

the DFA) or foreign regulatory authorities with respect to the nonbank financial companies 

advancing to stage 3 of the evaluation process, and (3) take other actions, in each case as the 

Deputies Committee may deem necessary or appropriate for the purpose of evaluating such 

nonbank financial companies in stage 3 of the evaluation process in accordance with the DFA, 

the Final Rule and the Interpretive Guidance.” 

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

The Council approved the resolution by unanimous vote.
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2. Macro-environment Overview: Update on LIBOR and Europe

The Chairperson then raised the agenda item regarding an update on LIBOR and Europe. He 

first asked Lael Brainard, Under Secretary for International Affairs at Treasury, to provide an 

update on Europe. After the presentation, members of the Council asked questions and had a 

discussion. 

The Chairperson then asked John Schindler, Section Chief, Macroprudential Analysis at the 

Federal Reserve, to provide an update on LIBOR. Mr. Schindler explained, among other things, 

potential systemic implications and options for reform. After the presentation, members of the 

Council asked questions and had a discussion. 

3. Money Market Mutual Fund Update

The Chairperson next addressed the agenda item regarding an update on money market mutual 

funds (MMF). On September 27, 2012, the Chairperson sent a letter to Council Members 

regarding a proposed path forward on MMF reform. This letter urged the Council to use its 

authority under section 120 of the Dodd-Frank Wall Street Reform and Consumer Protection Act

(“Dodd-Frank Act”) to make a recommendation to the SEC on MMF reform. The Chairperson 

explained that the Council should take action to further the pursuit of reform swiftly. As set 

forth in his letter, the Chairperson also urged the Council to take parallel steps to consider 

authorities under Title I and Title VIII of the Dodd-Frank Act in the event that the SEC is 

unwilling to act in a timely and effective manner. He asked the staff to work on a 

recommendation for the Council to consider at its November meeting. Members of the Council 

then discussed ongoing efforts to support MMF reform. 

4. Approval of the Council’s 2013 Budget

The Chairperson turned to the next agenda item regarding consideration of a resolution 

approving the Council’s budget for fiscal year 2013, and he asked Amias Gerety, Deputy 

Assistant Secretary for FSOC at Treasury, to provide an overview of the budget. The 

Chairperson then presented to the Council the following resolution approving the Council’s 2013 

budget. 

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

Council’s budget for FY 2013 attached hereto is hereby approved.” 

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

The Council then approved the resolution by unanimous vote.

5. Resolution Approving the Minutes of the Meeting held on July 18, 2012

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

minutes attached hereto of the meeting held on July 18, 2012 of the Council are hereby 

approved.” 
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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 asked for a motion to adjourn the meeting, and the Council voted to adjourn. 

The Chairperson adjourned the meeting at approximately 11:45 A.M. (EDT).