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Minutes of the Financial Stability Oversight Council

Held December 9, 2013

PRESENT: 

Jacob J. Lew, Secretary of the Treasury and Chairperson of the Financial Stability 

Oversight Council (Council)

Ben Bernanke, Chairman, 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) 

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

Richard Berner, Director, Office of Financial Research, Department of the Treasury (non-voting 

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)

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, Acting Deputy Secretary and Under Secretary for Domestic Finance

Christopher J. Meade, General Counsel

Amias Gerety, Deputy Assistant Secretary for FSOC

Patrick Pinschmidt, Executive Director of the Council

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 

Jennifer B. McHugh, Senior Advisor to the Chair

Commodity Futures Trading Commission

Eric Juzenas, Chief Operating Officer and Senior Counsel
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Consumer Financial Protection Bureau

Ron Borzekowski, Senior Economist in Research, Markets, and Regulations

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

Office of Financial Research

Matthew Reed, Chief Counsel (Executive Session)

Patricia Mosser, Deputy Director for Research and Analysis (Open Session)

Federal Insurance Office

John Nolan, Deputy Director (Financial Stability)

Louisiana Office of Financial Institutions

Margaret Liu, Senior Vice President, Conference of State Bank 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, General Counsel, North American Securities Administrators Association

PRESENTERS:

Housing Finance Update

• Jacob J. Lew, Secretary of the Treasury and Chairperson of the Council

• Richard Cordray, Director, CFPB

• Edward DeMarco, Acting Dirctor, FHFA

Cybersecurity

• Cyrus Amir-Mokri, Assistant Secretary for Financial Institutions, Treasury

• Kelly King, Chairman and CEO, BB&T Corporation

Office of Financial Research Update
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• Richard Berner, Director of the Office of Financial Research, Treasury

Executive Session 

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

approximately 1:32 P.M. (EST). He then outlined the meeting agenda, which had previously 

been distributed to the members together with copies of the resolution and other materials. The 

agenda for the executive session of the meeting included the following subjects: (1) a housing 

finance update; and (2) cybersecurity. The Chairperson recognized and thanked CFTC 

Chairman Gary Gensler, who was attending his last meeting of the Council, for his significant 

contributions to the Council. 

1. Housing Finance Update

The Chairperson introduced the first agenda item, which was an update on housing finance, and 

began with a presentation on the subject. He noted that significant progress had been made in 

the housing market, but that much work remains to be done. 

The Chairperson then called on Richard Cordray, Director of the CFPB, to give a presentation on 

certain CFPB housing finance rules. Director Cordray provided an overview of the ability-torepay/qualified mortgage rule and explained that beginning on January 10, 2014, mortgage 

lenders must make a reasonable and good faith determination that the borrower will have the 

ability to repay the loan. He also presented on the servicing rules, which apply to both banks and 

nonbanks and take effect of January 10, 2014. Director Cordray explained that the CFPB is 

working with the industry on the implementation of these rules. 

The Chairperson next asked Edward DeMarco, Acting Director of the FHFA, to give a 

presentation. Acting Director DeMarco provided an overview of the components of the current 

Fannie Mae/Freddie Mac securitization model, and the FHFA’s efforts to implement a common 

securitization platform that will focus on securitization functions that are routinely repeated 

across the secondary mortgage market. He also discussed the reduction of the footprint of the 

government sponsored enterprises. He then discussed mortgage data collection initiatives and 

issues associated with the changing landscape in the servicing industry. 

2. Cybersecurity

The Chairperson turned to the next agenda item, regarding cybersecurity, which he noted would 

also be discussed in the open session, and asked Cyrus Amir-Mokri, Assistant Secretary for 

Financial Institutions at Treasury and Chair of the Financial and Banking Information 

Infrastructure Committee, and Kelly King, Chairman and CEO of BB&T Corporation and Chair 

of the Financial Services Roundtable BITS Committee Board of Directors, to give presentations. 

Mr. Amir-Mokri presented on cybersecurity, the role of the public sector, and collaboration with 

the financial services sector. He noted that cyber threats to financial institutions and markets are 

ongoing and growing in both frequency and sophistication. He noted that a public-private 

partnership with respect to cybersecurity is necessary to protect the financial system. 
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Mr. King then presented on the financial services sector’s progress and needs with respect to 

cybersecurity. He explained that the financial services sector continues to raise awareness about 

cybersecurity issues within the industry and has made progress in helping to support the 

President’s Executive Order on cybersecurity. He also noted the importance of coordination 

between the financial services sector and U.S. government agencies dealing with cybersecurity. 

The Chairperson adjourned the executive session of the meeting at approximately 2:41 P.M. 

(EST).

Open Session

The Chairperson called the open session of the meeting of the Council to order at approximately 

2:46 P.M. (EST). 

The agenda for the open session of the meeting included the following subjects: (1) 

cybersecurity; (2) a research update from the Office of Financial Research; and (3) consideration 

of, and a vote on, a resolution approving the minutes of the Council’s meeting on October 31, 

2013. 

The Chairperson began by recognizing and thanking Chairman Bernanke and Chairman Gensler, 

both of whom were attending their last scheduled open session of the Council. He then 

recognized Chairman Gensler to offer remarks. Chairman Gensler thanked the members of the 

Council, noted improvements in the economy over the past five years, and highlighted several 

important areas of reform pursuant to the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act). After that, Chairman Bernanke thanked the members of the 

Council for the opportunity to work with them. Before proceeding to the agenda items, the 

Chairperson noted that the recent months had been one of the most active periods of financial 

reform implementation since the President signed the Dodd-Frank Act into law, but that more 

work remains to be done. 

1. Cybersecurity

The Chairperson introduced the agenda item regarding cybersecurity, and asked Mr. Amir-Mokri 

and Mr. King to give presentations. Mr. Amir-Mokri noted that cyber threats to financial 

institutions and markets are growing. He further explained that in response to these threats, the 

U.S. government and the financial sector have worked together to identify financial system 

vulnerabilities, to improve the resilience of the financial system, and to refine incident 

management protocols. He also highlighted some key aspects of the Treasury Department’s 

ongoing work on cybersecurity; as the sector specific agency for the financial sector, Treasury 

plays a leading role in policy development and a coordinating role in incident response. Mr. 

Amir-Mokri then noted the important role of other U.S. government agencies in the collective 

efforts to protect against cyber threats. He also noted the importance of cybersecurity legislation. 

Mr. King then presented on cybersecurity from the perspective of the financial services sector. 

He noted progress regarding cybersecurity that the financial services sector has made during the

last eighteen months. He explained three areas in which the sector is working to reduce the risk 
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of cyber threats: 1) attempting to secure the rights to own and operate two new Internet domains 

for banking and insurance to create more secure channels to conduct online financial activity; 2) 

working to automate the sharing of threat information to make it faster and more efficient across 

the sector; and 3) creating a more secure environment for payment transactions and information. 

He also stated that continuously improving the security and resiliency of the financial services 

sector against cyber threats was important, as was working with key U.S. government agencies 

on this effort. He said that it was necessary to focus on the cybersecurity needs of all industry 

participants, large and small. He expressed appreciation for the support that the industry had 

received from the government. He also stated that the financial services sector would continue to 

advocate for effective cybersecurity legislation that would allow for better information sharing. 

Following Mr. King’s presentation, the Chairperson also noted the need for cybersecurity 

legislation. The Chairperson then recognized Thomas J. Curry, Comptroller of the Currency at 

the Office of the Comptroller of the Currency. As the Chairman of the Federal Financial 

Institutions Examination Council (FFIEC), Comptroller Curry provided a brief update on the 

FFIEC’s actions regarding cybersecurity. He explained that the FFIEC had established a 

cybersecurity critical infrastructure working group, that it was committed to helping smaller 

financial institutions, and that cybersecurity is an ongoing issue that requires close cooperation 

between government agencies and the private sector.

2. Research Update from the Office of Financial Research 

The Chairperson then introduced the next agenda item, which was an update on research and 

analysis by the Office of Financial Research (OFR), and called on Richard Berner, Director of 

the OFR at Treasury, to give a presentation. Director Berner gave a presentation on three broad 

areas of OFR’s work. First, he discussed OFR’s efforts to analyze and monitor threats to 

financial stability. He stated that OFR was developing a new tool to monitor threats and has 

been using that tool to analyze five functional areas of risk. OFR has identified eight potential 

threats to financial stability, similar to those included in the Council’s 2013 annual report. 

Second, Director Berner reported on OFR’s financial data priorities, including how it is filling 

data gaps and some of the results of its data research. Third, he discussed the promotion of data 

standards and explained that data standards are essential to compare, aggregate, link, and analyze 

data. Director Berner also stated that OFR is seeking broader implementation of the Legal Entity 

Identifier, a data standards initiatives, in U.S. financial reporting.

3. Resolution Approving the Minutes of the Meeting held on October 31, 2013

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

minutes attached hereto of the meeting held on October 31, 2013 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.

The Chairperson adjourned the meeting at approximately 3:32 P.M. (EST).