Minutes of the Financial Stability Oversight Council

September 22, 2023 

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, 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) (via 

videoconference) 

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) 

Adrienne Harris, Superintendent, New York State Department of Financial Services (non-voting 

member) 

Elizabeth K. Dwyer, Superintendent of Financial Services, Rhode Island Department of Business 

Regulation (non-voting member) (via videoconference) 

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

Division (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)

Sean Hoskins, Director of Policy, Office of the Financial Stability Oversight Council 

Board of Governors of the Federal Reserve System 

Andreas Lehnert, Director, Division of Financial Stability 

Federal Deposit Insurance Corporation 

Susan Baker, Corporate Expert, Division of Complex Institution Supervision and Resolution 
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Securities and Exchange Commission 

Amanda Fischer, Chief of Staff

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, Deputy Director, Division of Housing Mission and Goals 

Comptroller of the Currency 

Jay Gallagher, Senior Deputy Comptroller for Supervision Risk and Analysis

National Credit Union Administration

Elizabeth Eurgubian, Director of External Affairs and Communications and Policy Advisor (via 

videoconference)

Office of the Independent Member with Insurance Expertise

Charles Klingman, Senior Policy Advisor 

Federal Reserve Bank of New York

John Williams, President 

Richard Crump, Financial Research Advisor, Macrofinance Studies 

Office of Financial Research

Sriram Rajan, Associate Director, Research and Analysis Center

Federal Insurance Office

Philip Goodman, Senior Insurance Regulatory Policy Analyst (via videoconference)

New York State Department of Financial Services

Karen Lawson, Executive Vice President for Policy and Supervision, Conference of State Bank 

Supervisors 

Rhode Island Department of Business Regulation 

Ethan Sonnichsen, Managing Director, National Association of Insurance Commissioners (via 

videoconference)

Maryland Office of the Attorney General, Securities Division 

Vincente Martinez, General Counsel, North American Securities Administrators Association 

PRESENTERS:

Update on International Market Developments

• John Ammer, Senior Economic Project Manager, Federal Reserve
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• Andrew Coflan, Principal Markets Group, Federal Reserve Bank of New York

• Jeff Dawson, International Policy Advisor, Federal Reserve Bank of New York (available 

for questions)

Update on Proposed Analytic Framework on Financial Stability Risks and Proposed Interpretive 

Guidance on Nonbank Financial Company Determinations

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

• Eric Froman, Assistant General Counsel (Banking & Finance), Treasury

2023 Annual Report

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

• Paula Tkac, Executive Vice President and Director of Research, Federal Reserve Bank of 

Atlanta

Fiscal Year 2024 Council Budget

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

• Samantha MacInnis, Director of Operations, Office of the Financial Stability Oversight 

Council, Treasury (available for questions)

• Dennis Lee, Deputy Director of Operations, Office of the Financial Stability Oversight 

Council, Treasury (available for questions)

Executive Session

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

approximately 9:27 A.M. The Chairperson began by outlining 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 international market developments, (2) an update on 

the Council’s proposed analytic framework on financial stability risks and the Council’s 

proposed interpretive guidance regarding nonbank financial company determinations, (3) an 

update on the Council’s 2023 annual report, (4) a vote on the Council’s fiscal year 2024 budget, 

and (5) a vote on the minutes of the Council’s meeting on July 28, 2023.

1. Update on International Market Developments

The Chairperson introduced the first agenda item, an update on international market 

developments, including the outlook for global financial stability and macroeconomic and 

financial conditions in China. The Chairperson introduced John Ammer, Senior Economic 

Project Manager at the Federal Reserve, and Andrew Coflan, from the Principal Markets Group 

of the Federal Reserve Bank of New York, for the update. 

Mr. Ammer presented on the Federal Reserve’s international financial stability assessment. He 

noted that the assessment annually evaluates prominent international financial stability risks, 

foreign vulnerabilities, and potential transmission to the United States. He stated that overall 

vulnerabilities were medium to notable in emerging market economies and moderate in advanced 

foreign economies. He noted that potential risks from interest rates and energy prices had been 

manageable so far. He stated that real estate valuations were generally elevated in advanced 
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foreign economies, but that banks appear resilient. He also noted that corporate debt remains 

high in China. He stated that the risks of potential transmission of stress arise from countries 

with financial links to the United States. He then highlighted certain geopolitical risks, including 

risks related to China and the war in Ukraine. He noted that higher interest rates had not stressed 

foreign banks so far, but that further risks from higher rates may emerge, particularly if inflation 

persists. He noted that higher rates had resulted in higher debt service for leveraged households, 

businesses, and governments. He said that in advanced foreign economies, higher rates could 

exacerbate property market risks, and he noted that in these countries housing valuations 

generally remained stretched and that stresses had emerged in the commercial real estate sector. 

He also noted that stress in advanced foreign economies could lead banks from those 

jurisdictions to reduce their lending in the United States.

Mr. Coflan then provided an update regarding China’s macroeconomic and financial outlook. 

He stated that China’s macroeconomic outlook had continued to soften, with the property sector 

at the center of the downturn. He noted, however, that broader economic activity—outside the 

property sector—had not slowed dramatically. He stated that financial markets indicated

growing concerns, with equity markets down and net outflows of foreign investment. He also 

noted that the cyclical slowdown was occurring amid broader structural problems, including high 

debt levels, overreliance on property and local government borrowing, a policy shift from highspeed to high-quality growth, and demographic headwinds. He stated that policy efforts to rein 

in the property sector were reducing growth. He also stated that financial risks remained 

elevated, including due to exposures in the banking system. He noted, however, that financial 

distress so far had arisen primarily on the periphery of the financial system, and that 

deleveraging in shadow financing had reduced some risks. He stated that local government debt 

was a key risk factor, and that local government financial vehicles were a potential catalyst for 

further economic and financial stress. He concluded by describing China’s near-term policy 

challenges, and he noted that global spillovers had been muted so far.

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

economy and financial markets and potential channels for the transmission of financial risk from 

China to the United States.

2. Update on Proposed Analytic Framework on Financial Stability Risks and Proposed 

Interpretive Guidance on Nonbank Financial Company Determinations

The Chairperson then turned to the second agenda item, an update on the Council’s proposed 

analytic framework for financial stability risk identification, assessment, and response, and the 

Council’s proposed interpretive guidance regarding nonbank financial company determinations.

She introduced Sandra Lee, Deputy Assistant Secretary for the Council at Treasury, and Eric 

Froman, Assistant General Counsel (Banking & Finance) at Treasury, for the update.

Ms. Lee noted that the Council had approved the proposed guidance and framework on April 21, 

and that the comment period for the proposals closed on July 27. She stated that the purpose of 

the proposed guidance was to establish a durable process for the Council’s use of its authority to 

designate nonbank financial companies for Federal Reserve supervision and prudential 

standards, maintain rigorous procedural protections for firms that are reviewed for potential 
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designation, and remove inappropriate hurdles to designation imposed by guidance the Council 

issued in 2019. She stated that the proposed framework described how the Council expects to 

identify, assess, and respond to potential risks to financial stability, irrespective of the source, 

across its authorities.

Ms. Lee then briefly described key changes that the proposed guidance would make compared to 

the Council’s existing guidance on nonbank financial company designations, including that the 

proposed guidance would remove several requirements that the 2019 guidance had imposed. She 

noted that staff had reviewed the public comments and had engaged in interagency discussions 

regarding the comments and the timeline for completing the guidance and the analytic 

framework. 

Ms. Lee then summarized key themes that staff had identified in the public comments on the two 

proposals. She noted that a broad range of commenters had submitted letters. She then 

described certain themes in the public comments, including regarding cost-benefit analysis, the 

prioritization of an activities-based approach, the assessment of the likelihood of a nonbank 

financial company’s material financial distress, the Council’s interpretation of “threat to financial 

stability,” and the substantive factors set forth in the proposed analytic framework. For each 

topic, Ms. Lee and Mr. Froman described the public comments and potential approaches the 

Council could take.

Council members then asked questions and had a discussion regarding the public comments and 

potential Council approaches for the final guidance and analytic framework.

3. 2023 Annual Report

The Chairperson then introduced the next agenda item, an update on the Council’s 2023 annual 

report. She introduced Paula Tkac, Executive Vice President and Director of Research at the 

Federal Reserve Bank of Atlanta, for the update.

Ms. Tkac noted that Council member agency staffs were working collaboratively on drafting the 

Council’s 2023 annual report. She described the timeline for developing the report and the 

anticipated report structure. She described certain vulnerabilities and other issues the annual 

report may address, and she also noted risks that had been addressed in the Council’s 2022 

annual report. 

Council members then asked questions and had a discussion, including regarding risks and other 

issues that may be addressed in the annual report.

4. Fiscal Year 2024 Council Budget

The Chairperson introduced the next agenda item, the Council’s fiscal year 2024 budget. She 

turned to Sandra Lee, Deputy Assistant Secretary for the Council at Treasury, for the 

presentation. 

Ms. Lee noted that the Council is funded by the Financial Research Fund. She stated that the 
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Council’s budget includes support for the Office of the Financial Stability Oversight Council at 

Treasury and the office of the Council’s independent member with insurance expertise. She said 

that the proposed fiscal year 2024 budget included $14.2 million for these expenses, an increase 

of $750,000 from the budget approved for fiscal year 2023. She said that the Council’s budget 

also includes reimbursement of certain FDIC expenses related to the implementation of Title II 

of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and she noted that the 

proposed budget included $3.2 million for the reimbursement of these expenses. 

Ms. Lee stated that the proposed increase in funding was largely intended to enable the hiring of 

additional staff to support the Council’s priorities. She stated that the proposed budget called for 

a total of 40 full-time-equivalent employees in the Office of the Financial Stability Oversight 

Council at Treasury. She stated that a larger staff would support a variety of Council priorities

and key initiatives, including climate-related financial risk, Treasury market resilience, nonbank 

financial intermediation, digital assets, and financial market utilities. She said that the proposed 

budget would also be used to support the recently reestablished Analysis team in the Office of 

the Financial Stability Oversight Council at Treasury and to develop further the Council’s 

Systemic Risk Committee.

Council members then asked questions and had a discussion, including regarding the need for 

adequate staffing levels to support the Council’s mission.

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

budget for fiscal year 2024.

BE IT RESOLVED, by the Financial Stability Oversight Council (Council), that the Council’s 

budget for fiscal year 2024 attached hereto is 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.

5. Resolution Approving the Minutes of the Meeting Held on July 28, 2023

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

attached hereto of the meeting held on July 28, 2023 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.

6. Other Business

Rohit Chopra, Director of the CFPB, noted that the Supreme Court would soon hear arguments 

in a case that could affect the validity of actions taken by agencies that are not funded by annual 

appropriations. He stated that the case could have secondary effects, including on the CFPB’s 

qualified mortgage rule and its definition of “qualified residential mortgage.” Council members 

discussed this and related issues.
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The Chairperson adjourned the meeting at approximately 10:53 A.M.