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Minutes of the Financial Stability Oversight Council

Held December 17, 2015

PRESENT: 

Sarah Bloom Raskin, Deputy Secretary of the Treasury (acting pursuant to delegated authority) 

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 (OFR), Department of the Treasury 

(nonvoting 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) 

Adam Hamm, Commissioner, North Dakota Insurance Department (non-voting member) 

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

Division (non-voting member)

GUESTS: 

Department of the Treasury (Treasury)

Patrick Pinschmidt, Deputy Assistant Secretary and Executive Director of the Financial Stability 

Oversight Council (Council)

Eric Froman, Deputy Assistant General Counsel for the Council 

Mark Kaufman, Counselor to the Deputy Secretary

Board of Governors of the Federal Reserve System

Daniel K. Tarullo, Governor

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

Federal Deposit Insurance Corporation

Jason Cave, Special Advisor to the Chairman for Supervisory Matters

Securities and Exchange Commission

Michael Liftik, Deputy Chief of Staff

Commodity Futures Trading Commission

Lawranne Stewart, Special Counsel
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Consumer Financial Protection Bureau

Meredith Fuchs, Acting Deputy Director

Federal Housing Finance Agency

Sandra Thompson, Deputy Director, Division of Housing Mission and Goals

Comptroller of the Currency

Jonathan Fink, Special Counsel to the Comptroller

National Credit Union Administration

Ralph Monaco, Chief Economist

Office of the Independent Member with Insurance Expertise

Chris Ledoux, Senior Policy Advisor

Federal Reserve Bank of New York

William Dudley, President and Chief Executive Officer

Office of Financial Research

Stacey Schreft, Deputy Director for Research and Analysis

Federal Insurance Office

Steven Seitz, Deputy Director (Financial Stability)

Louisiana Office of Financial Institutions

Michael Stevens, Senior Executive Vice President, Conference of State Bank Supervisors

North Dakota Insurance Department

Mark Sagat, Counsel and Manager, Financial Policy and Legislation, National Association of 

Insurance Commissioners

Maryland Office of the Attorney General, Securities Division

Christopher Staley, Counsel, North American Securities Administrators Association

PRESENTERS:

Update on Annual Reevaluation of Nonbank Financial Company Designation

• Steven Seitz, Deputy Director (Financial Stability), Federal Insurance Office, Treasury 

• Eric Froman, Deputy Assistant General Counsel for the Council (available for questions)

Executive Session

Sarah Bloom Raskin, Deputy Secretary of the Treasury, called the executive session of the 

meeting of the Council to order at approximately 1:35 P.M. (EST). The meeting was conducted 

by telephone. Deputy Secretary Raskin noted that the Chairperson of the Council was unable to 

participate in the meeting due to official travel. She then outlined the meeting agenda, which had 
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previously been distributed to the members together with copies of the resolutions and other 

materials. The agenda for the meeting included the following subjects: (1) the annual 

reevaluation of a previously designated nonbank financial company, Prudential Financial, Inc. 

(Prudential), and (2) consideration of, and a vote on, a resolution approving the minutes of the 

Council’s meeting on November 2, 2015.

1. Annual Reevaluation of Designated Nonbank Financial Company

Deputy Secretary Raskin introduced the first agenda item, the annual reevaluation of a nonbank 

financial company, Prudential, that the Council had designated in 2013 under section 113 of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act. She said that the Council would 

vote on this annual reevaluation by notational vote, rather than voting during the meeting. 

Deputy Secretary Raskin also noted that Mary Jo White, Chair of the SEC, recused herself from 

participating in the discussion and vote. She then introduced Steven Seitz, Deputy Director 

(Financial Stability) of the Federal Insurance Office. Mr. Seitz explained that under the DoddFrank 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. 

He noted that annual reevaluations focus on material changes with respect to the companies or 

the markets in which they operate. Mr. Seitz also noted that staff had met with Prudential and 

had consulted with a number of the company’s state and federal regulators during the annual 

reevaluation. He then presented on the analysis and conclusions related to Prudential, including 

staff’s review of information submitted by the company to the Council during the annual 

reevaluation. He described changes related to Prudential over the previous year and since the 

company’s designation in September 2013. Based on the analysis, and in light of the standard 

for designations under section 113, staff recommended that the Council not rescind its final 

determination with respect to Prudential. Members of the Council then asked questions and had 

a discussion, including with respect to the company’s filing of its initial resolution plan with the 

Federal Reserve and FDIC in June 2014. During the discussion, Adam Hamm, Commissioner of 

the North Dakota Insurance Department, noted his disagreement with any Council vote to 

maintain the designation of Prudential. Michael McRaith, Director of the Federal Insurance 

Office, expressed his agreement with and support for the staff analysis and recommendation that 

the designation not be rescinded. Deputy Secretary Raskin said that if the Council votes not to 

rescind the designation, the Council would send the company a detailed written analysis to help 

the company understand the basis for the Council’s decision, in accordance with the 

supplemental procedures relating to nonbank financial company designations that the Council 

adopted in February 2015.

2. Resolution Approving the Minutes of the Meeting held on November 2, 2015 

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

minutes attached hereto of the meeting held on November 2, 2015 of the Council are hereby 

approved.”

Deputy Secretary Raskin asked for a motion to approve the resolution, which was made and 

seconded. The Council approved the resolution by unanimous vote. 
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3. Other Business

Deputy Secretary Raskin then asked whether there was any other business before the Council 

adjourned for the open session. Patrick Pinschmidt, Deputy Assistant Secretary and Executive 

Director of the Council at Treasury, provided a brief update on the interagency staff evaluation 

of potential financial stability risks arising from asset management products and activities. Mr. 

Pinschmidt said that staff were evaluating six areas as part of their work: liquidity and 

redemption risk; leverage; securities lending; data and disclosure; operational risks of service 

provider concentrations; and resolvability and transition planning. He noted that the focus is on 

analyzing the materiality of potential financial stability risks, considering how those risks may be 

mitigated by existing or proposed regulation, and considering whether there are any remaining 

risks to financial stability that the Council may want to address. He said that interagency staff 

meetings regarding these issues are ongoing and that there will be a discussion of the staff 

analysis at the next Council meeting to enable the Council to provide a public update on the 

analysis in the spring.

Deputy Secretary Raskin adjourned the meeting at approximately 2:03 P.M. (EST).