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Minutes of the Financial Stability Oversight Council

Held June 11, 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) 

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 

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

Federal Deposit Insurance Corporation 

Art Murton, Director, Division of Insurance and Research

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

Garry Reeder, Senior Advisor, Office of the Director

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

Chris Ledoux, Senior 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, Government Relations Policy Counsel and Manager, 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:

Macro-environment Overview: Update on Europe

• Lael Brainard, Under Secretary for International Affairs, Treasury 

• Andreas Lehnert, Deputy Director, Office of Financial Stability Policy and Research, 

Federal Reserve

Update on JPMorgan Chase & Co. Trading Losses

• John Lyons, Senior Deputy Comptroller and Chief National Bank Examiner, OCC 

Update on the Council’s 2012 Annual Report

• David Marshall, Senior Vice President, Federal Reserve Bank of Chicago
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Tri-Party Repo Update

• Susan McLaughlin, Senior Vice President, Federal Reserve Bank of New York

Report to Congress on Actions Taken in Response to the U.S. GAO’s Report on the NCUA’s 

Supervision of Corporate Credit Unions and Implementation of Prompt Corrective Action

• John Worth, Chief Economist, NCUA

Executive Session 

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

Council (Council) to order at approximately 1:01 P.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) an update on Europe; (2) an update on recent

trading losses at JPMorgan Chase & Co.; (3) an update on the Council’s 2012 Annual Report; (4) 

a tri-party repo update; (5) consideration of, and a vote on, a resolution approving a report to 

Congress on actions taken in response to the U.S. GAO’s report on the NCUA’s supervision of 

corporate credit unions and implementation of prompt corrective action; and (6) consideration of, 

and a vote on, a resolution approving the minutes from the Council’s meeting on May 22, 2012. 

1. Macro-environment Overview: Update on Europe

The Chairperson turned to the first agenda item and asked Lael Brainard, Under Secretary for 

International Affairs at Treasury, and Andreas Lehnert, Deputy Director, Office of Financial

Stability Policy and Research at the Federal Reserve, to give an update on Europe. After the 

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

2. JPMorgan Chase & Co. Trading Losses Update

The Chairperson then raised the agenda item regarding an update on recent trading losses at 

JPMorgan Chase & Co. John Lyons, Senior Deputy Comptroller and Chief National Bank 

Examiner at the OCC, gave a presentation. The members of the Council asked questions about 

the presentation and had a discussion.

3. Update on the Council’s 2012 Annual Report

The Chairperson turned to the next agenda item regarding the 2012 Council annual report and 

asked David Marshall, Senior Vice President at the Federal Reserve Bank of Chicago, to give the 

presentation. Mr. Marshall explained that the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (the Dodd-Frank Act) sets forth requirements for the Council’s annual report to 

Congress. The Dodd-Frank Act requires the Council to report on, inter alia, its activities, 

significant financial market and regulatory developments, potential emerging threats to U.S. 

financial stability, all determinations made under section 113 or Title VIII of the Dodd-Frank 

Act, and the basis for such determinations, and recommendations to enhance the integrity, 

efficiency, competitiveness, and stability of U.S. financial markets, to promote market discipline, 

and to maintain investor confidence. Mr. Marshall explained that the staff proposes that the 
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2012 annual report will have the same seven sections as the 2011 report. These proposed seven 

sections are: 1) a letter from the Chair; 2) an executive summary; 3) recommendations; 4) the 

macroeconomic environment; 5) financial developments; 6) regulatory developments; and 7) 

potential emerging threats. Following Mr. Marshall’s presentation, the members of the Council 

asked questions and had a discussion.

4. Tri-Party Repo Update

The Chairperson then turned to the next agenda item and called on Susan McLaughlin, Senior 

Vice President at the Federal Reserve Bank of New York, to give a presentation. After the 

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

5. Report to Congress on Actions Taken in Response to the U.S. GAO’s Report on the 

NCUA’s Supervision of Corporate Credit Unions and Implementation of Prompt 

Corrective Action 

The Chairperson then raised the agenda item regarding a report to Congress on actions taken in 

response to the U.S. GAO’s report on the NCUA’s supervision of corporate credit unions and 

implementation of prompt corrective action. John Worth, Chief Economist at the NCUA, gave a

presentation. The National Credit Union Authority Clarification Act (the Act) requires the 

Comptroller General of the United States (the head of the Government Accountability Office) to 

report on the NCUA’s supervision of corporate credit unions and implementation of prompt 

corrective action. The Act further requires the Council to submit a report to Congress on actions 

taken in response to the Comptroller General’s report. After Mr. Worth’s presentation, members 

of the Council asked questions and had a discussion. The Chairperson then presented to the 

Council the following resolution approving the Council’s report to Congress. 

 

“RESOLUTION APPROVING A REPORT TO CONGRESS REGARDING ACTIONS TAKEN IN 

RESPONSE TO A COMPTROLLER GENERAL REPORT ON SUPERVISION OF CORPORATE 

CREDIT UNIONS AND PROMPT CORRECTIVE ACTION 

WHEREAS, section 4(d) of the National Credit Union Authority Clarification Act (the “Act”) 

requires the Financial Stability Oversight Council (the “Council”) to submit a report to the 

Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on 

Financial Services of the House of Representatives (the “Committees”) regarding the actions 

taken in response to a report conducted by the Comptroller General (“GAO”) on the National 

Credit Union Administration’s (the “NCUA”) supervision of corporate credit unions and 

implementation of prompt corrective action, including any recommendations issued by the 

Council to the NCUA under section 120 of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act; and 

WHEREAS, section 4(d) of the Act requires the Council’s report to be submitted not later than 

six months after the date of receipt of the GAO’s report; and

WHEREAS, on January 4, 2012, the GAO completed its report on the NCUA’s supervision of 

corporate credit unions and implementation of prompt corrective action; and
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WHEREAS, the staffs of the Council Members and their Agencies have reviewed the GAO report 

and have prepared a draft report from the Council that, consistent with the Act, describes the 

Council’s consideration of the report issued by GAO and actions taken by the Council and the 

NCUA in response to the GAO report; and

WHEREAS, staffs of the Council Members and their Agencies recommend that the Council 

approve the attached report so that the Chairperson may submit it to the Committees.

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

and authorizes the Chairperson, or his designee, to cause the attached report to be submitted to 

the Committees in accordance with section 4(d) of the Act and to otherwise make the report 

available to the public as the Chairperson deems appropriate, in a form and manner acceptable 

to the Chairperson, or his designee.

BE IT FURTHER RESOLVED, that the Council hereby authorizes the Chairperson, or his 

designee, to make technical, nonsubstantive, or conforming changes to the text of the attached 

report so that the Chairperson can submit the attached report, and to take such other actions 

and issue such other documents incident and related to the foregoing as the Chairperson, or his 

designee, deems necessary or appropriate to fulfill the Chairperson’s objectives in connection 

with its submission.”

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

The Council then approved the resolution by unanimous vote.

6. Resolution Approving the Minutes of the Meeting held on May 22, 2012

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

minutes attached hereto of the meeting held on May 22, 2012 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 vote.

The Chairperson asked for a motion to adjourn the meeting, and the Council voted to adjourn. 

The Chairperson adjourned the meeting at approximately 2:44 P.M. (EDT).