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Minutes of the Financial Stability Oversight Council

Held June 3, 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 

Neal S. Wolin, Deputy Secretary

Mary J. Miller, 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, Deputy Director for Complex Financial Institutions Monitoring

Securities and Exchange Commission 

Jennifer B. McHugh, Senior Advisor to the Director, Division of Investment Management
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Commodity Futures Trading Commission

Eric Juzenas, Chief Operating Officer and Senior Counsel

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

Federal Reserve Bank of New York

William Dudley, President and Chief Executive Officer

Office of Financial Research

Matthew Reed, Chief Counsel

Federal Insurance Office

John Nolan, Deputy Director (Financial Stability)

Louisiana Office of Financial Institutions

James Marion Cooper, Senior Vice President for Policy, 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:

Nonbank Financial Company Designations Discussion

• Maria Perozek, Senior Economist, Federal Reserve

• Jose Berrospide, Economist, Federal Reserve

• George Sacco, Senior Analyst, FHFA

• John Nolan, Deputy Director (Financial Stability), Federal Insurance Office, 

Treasury
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• Todd Cohen, Policy Advisor, Treasury 

• Diane Fraser, Senior Policy Advisor, Office of the Independent Member 

• Scott G. Alvarez, General Counsel, Federal Reserve

• Laurie Schaffer, Associate General Counsel, Federal Reserve

• Eric Froman, Deputy Assistant General Counsel for FSOC, Treasury

Executive Session 

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

Council to order at approximately 1:06 P.M. (EDT). He then outlined 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) proposed 

designations of nonbank financial companies and consideration of, and a vote on, a resolution 

approving the proposed designations of an initial set of nonbank financial companies; and 

(2) consideration of, and a vote on, a resolution approving the minutes of the Council’s meeting 

on April 25, 2013. 

1. Nonbank Financial Company Proposed Designations 

The Chairperson introduced the first agenda item, which was proposed designations of an initial 

set of nonbank financial companies that the Council previously had advanced to stage 3 of the

designations process. Amias Gerety, Deputy Assistant Secretary for FSOC at Treasury, provided 

an overview of the rationale for the proposed designation of each of the nonbank financial 

companies. Maria Perozek, Senior Economist at Federal Reserve; Jose Berrospide, Economist at 

the Federal Reserve; George Sacco, Senior Analyst at the FHFA; John Nolan, Senior Advisor in 

the Federal Insurance Office at Treasury; Todd Cohen, Policy Advisor at Treasury; Diane Fraser, 

Senior Policy Advisor in the Office of the Independent Member; Scott Alvarez, General Counsel 

at the Federal Reserve; and Laurie Schaffer, Associate General Counsel at the Federal Reserve, 

were available to answer questions. The members of the Council then discussed the proposed 

designation of each of the nonbank financial companies. Mary Jo White, Chair of the SEC, 

recused herself from participating in the discussion regarding two of the nonbank financial 

companies. 

The Chairperson then presented to the Council the following resolution approving the proposed 

designations of an initial set of nonbank financial companies. 

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

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

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

Reserve System (the “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 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 
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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 one 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; and

WHEREAS, the Council issued a final rule and accompanying interpretive guidance (the “Rule 

and Guidance”), codified at 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 Rule and 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 Council has evaluated a set of nonbank financial companies that the Council 

previously advanced to stage 3, in accordance with the DFA and the Rule and Guidance, 

including conducting an assessment of all of the considerations set forth in section 113 of the 

DFA; and 

WHEREAS, the Council has considered a broad range of information available through existing 

public and regulatory sources, as well as information collected directly from the set of nonbank 

financial companies; and 

WHEREAS, based on the stage 3 evaluations, the staffs of the Council Members and their 

Agencies recommend that the Council make proposed determinations regarding a set of nonbank 

financial companies; and 

WHEREAS, the Council provided the set of nonbank financial companies with notice when the

Council deemed its evidentiary record regarding each such nonbank financial company to be 

complete, in accordance with the Rule and Guidance; and

WHEREAS, under the provisions of the DFA and the Rule and Guidance, the Council is required 

to provide a nonbank financial company written notice of a proposed determination of the 

Council, including an explanation of the basis of the proposed determination.
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NOW, THEREFORE, BE IT RESOLVED, that, based on the information, considerations, and 

analysis set forth in the attached explanations of the basis of the proposed determinations, the 

Council hereby makes a proposed determination, pursuant to section 113 of the DFA, that 

material financial distress at any of the set of nonbank financial companies (identified in an 

attachment hereto) could pose a threat to the financial stability of the United States and that 

each such nonbank financial company shall be supervised by the Federal Reserve and shall be 

subject to prudential standards, in accordance with Title I of the DFA.

BE IT FURTHER RESOLVED, that the Council hereby approves the attached notice of proposed 

determination and the explanation of the basis of the proposed determination regarding each 

such nonbank financial company, and authorizes the notices and explanations to be sent to the 

set of nonbank financial companies.

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 notices and explanations and the attachments thereto.”

The Chairperson asked for motions approving the proposed designations and the resolution, 

which were made and seconded. The Council approved the proposed designations and the 

resolution. The votes on the proposed designations were unanimous with respect American 

International Group, Inc. and General Electric Capital Corporation, Inc. (GECC), with Chair 

White recused from the vote on GECC, and the vote was 7 to 2 with respect to another nonbank 

financial company, with Acting Director DeMarco and Mr. Woodall dissenting and Chair White 

recused from the vote, and Director Huff noting his disagreement with such proposed 

designation. As a result, each proposed designation fulfilled the requirement that a proposed 

designation of a nonbank financial company shall be made by a vote of not fewer than two-thirds 

of the voting members of the Council then serving, including the affirmative vote of the 

Chairperson of the Council. 

Following the votes, the Chairperson called on Eric Froman, Deputy Assistant General Counsel 

for FSOC at Treasury. Mr. Froman gave a presentation on, among other things, the statutory 

deadline for a nonbank financial company subject to a proposed designation to request a hearing, 

and the process for written and oral hearings under the Council’s hearing procedures. Following 

the presentation, Council members asked questions and discussed the process for hearings. 

2. Resolution Approving the Minutes of the Meeting held on April 25, 2013

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

minutes attached hereto of the meeting held on April 25, 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.
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3. Other Business

The Chairperson asked whether there was any other business before the meeting was adjourned. 

Chair White then provided the Council with an update on the money market mutual fund reform 

process at the SEC. 

The Chairperson adjourned the meeting at approximately 2:50 P.M. (EDT).