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FEDERAL DEPOSIT INSURANCE CORPORATION

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ADVISORY COMMITTEE ON SYSTEMIC RESOLUTION

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MEETING

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THURSDAY,

DECEMBER 6, 2018

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The Advisory Committee convened at 9:00 a.m.

in the Federal Deposit Insurance Corporation

Board Room, 550 17th Street, NW, Room 6010,

Washington, D.C., Jelena McWilliams, Chairman,

presiding.

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PRESENT:

JELENA McWILLIAMS, Chairman, FDIC

ANAT R. ADMATI, George G.C. Parker Professor of

 Finance and Economics, Graduate School of

 Business, Stanford University

SHEILA C. BAIR, Former Chairman, FDIC

MICHAEL BODSON, President and CEO, Depository

 Trust & Clearing Corporation

CHARLES A. BOWSHER, Former Comptroller of the

 United States

SHELLEY C. CHAPMAN, United States Bankruptcy

 Judge, Southern District of New York

H. RODGIN COHEN, Senior Chairman, Sullivan &

 Crowell, LLP

PETER R. FISHER, Senior Fellow, Center for Global

 Business and Government, Tuck School of

 Business, Dartmouth University

MARTIN J. GRUENBERG, FDIC Board of Directors

RICHARD J. HERRING, Co-Director, The Wharton

 Financial Institutions Center and Professor

 of Finance, The Wharton School, University

 of Pennsylvania

DONALD KOHN, Former Vice Chairman, Board of

 Governors of the Federal Reserve System and

 Senior Fellow, Economic Studies Program,

 Brookings Institution

JOHN S. REED, Former Chairman and CEO of

 Citigroup and Former Chairman, Corporation

 of Massachusetts Institution of Technology

GARY STERN, Former CEO and President, Federal

 Reserve Bank of Minneapolis and Chairman of

 the Board of Directors, National Council on

 Economic Education

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ALSO PRESENT:

SUSAN BAKER, Deputy Director, Office of Complex

 Financial Institutions

ALEXANDRA BARRAGE, Associate Director, Office of

 Complex Financial Institutions

RONALD CRAWLEY, Senior Resolution Policy

 Specialist, Office of Complex Financial

 Institutions

RICARDO DELFIN, Director, Office of Complex

 Financial Institutions

ELIZABETH FALLOON, Deputy Director, Office of

 Complex Financial Institutions

JOANNE FUNGAROLI, Associate Director, Office of

 Complex Financial Institutions

HERBERT HELD, Deputy Director, Office of Complex

 Financial Institutions

BRUCE HICKEY, Supervisory Counsel, Legal Division

MICHAEL MORGAN, Corporate Expert, Division of

 Risk Management Supervision

ARTHUR MURTON, Senior Advisor to the Chairman,

 FDIC

PENFIELD STARKE, Assistant General Counsel, Legal

 Division

NATHAN STEINWALD, Section Chief, Office of

 Complex Financial Institutions

RYAN TETRICK, Associate Director, Office of

 Complex Financial Institutions

DAVID WALL, Assistant General Counsel, Legal

 Division

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 C-O-N-T-E-N-T-S

Welcome and Introductions. . . . . . . . . . . . . 5

Making Bankruptcy Work -- Title I Update . . . . .12

 Domestic G-SIBs

 Large FBO Update

 Complementary Regulatory

 Developments

 Bankruptcy Update

 Next Steps to Address Challenges

Title II Orderly Liquidation Update. . . . . . . 189

Building Cooperation for Orderly Cross-Border

Resolution Implementation. . . . . . . . . . . . 251

Closing Remarks. . . . . . . . . . . . . . . . . 308

Adjourn. . . . . . . . . . . . . . . . . . . . . 311

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1 P-R-O-C-E-E-D-I-N-G-S

2 9:01 a.m.

3 CHAIRMAN McWILLIAMS: Good morning,

4 everybody. So I have an opening statement but

5 before I get started I'm just really excited

6 because this has never happened before although I

7 do feel like I'm being watched so.

8 Good morning. I'm pleased to welcome

9 you to the 2018 meeting of the Systemic

10 Resolution Advisory Committee. I look forward to

11 the discussion on the progress the FDIC and G12 SIBs have made in navigating the unique

13 challenges associated with resolving the most

14 complex, globally active financial institutions.

15 We always should be direct and

16 specific as to how we define our goals and

17 progress. The fundamental goal of resolution

18 planning should be the same for institutions

19 large or small, enable failure in the least

20 disruptive manner.

21 Resolution planning should work to

22 minimize moral hazard and ensure that market

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1 discipline is real for all institutions. And I

2 think it goes without saying that everybody at

3 this table will agree that bailouts are not

4 right.

5 Our presentation this morning will

6 highlight the progress we have made in helping

7 the U.S. G-SIBs implement significant structural

8 and operational improvements that have enhanced

9 their resolvability in bankruptcy.

10 In the afternoon, our presentation

11 will focus on the agencies' work relating to the

12 Orderly Liquidation Authority. We have done a lot

13 of work to increase our operational readiness and

14 look forward to the presentation and the input of

15 the panel.

16 The final presentation of the day will

17 highlight the progress we have made in building

18 effective cross-border coordination with the

19 international community.

20 As both a home authority for United

21 States institutions and as a host authority for

22 foreign firms operating in the United States, we

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1 continue to build a strong foundation for

2 cooperation and planning with other resolution

3 authorities around the world, including the Bank

4 of England and the single resolution board.

5 While we will discuss progress made

6 today, SPOE in bankruptcy remains untested, and

7 there is still work to do to ensure that failure

8 is possible so that market discipline exists,

9 taxpayers are protected and insured depositors

10 have confidence they will receive their cash

11 quickly and orderly under any circumstances,

12 which requires continued effort.

13 I would also like to take a moment to

14 welcome two new members of the panel first. 

15 Former Chairman Sheila Bair, who formidably led

16 the agency through the most recent financial

17 crisis and has been a leader on this issue. And

18 when I first saw Sheila after I assumed my

19 chairmanship I said I have big shoes to fill.

20 Second, we are joined by The Hon.

21 Shelley Chapman, United States Bankruptcy Judge,

22 Southern District of New York. Judge Chapman is

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1 the presiding judge over the Lehman bankruptcy

2 and has been a great leader on developments in

3 bankruptcy planning. We'll just call her the

4 Lehman Judge.

5 I look forward to hearing your

6 thoughts on the progress we have made as well as

7 your recommendations going forward and to

8 everyone here today, thank you for taking the

9 time and welcome to this meeting.

10 MR. DELFIN: Good morning. Welcome. I

11 am Ricardo Delfin, the Director of the Office of

12 Complex Financial Institutions here at the FDIC. 

13 I'm joined by my colleagues, Art Murton, the

14 former director of OCFI and Deputy Chairman. And

15 our first panel is Alex Barrage with OCFI, Mike

16 Morgan in our risk management supervision, David

17 Wall in our legal division and Nathan Steinwald.

18 My goal is to sort of tee it up a

19 little bit. The SRAC was formed, as you may

20 remember, in 2011 right after the Dodd-Frank Act

21 was passed in order to assist the FDIC in

22 thinking through the unique challenges associated

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1 with the resolution of systemically important

2 financial institutions.

3 Under the Act, Dodd-Frank gave the

4 FDIC two new authorities that are central to this

5 role. The first Section 165(d) is the requirement

6 that large bank holding companies and designated

7 non-banks provide resolution plans or living

8 wills that outline how the firm can fail in an

9 orderly way under the U.S. Bankruptcy Code.

10 The second tool, the Orderly

11 Liquidation Authority, is a backstop resolution

12 regime run by the FDIC for circumstances when

13 failure in bankruptcy could threaten U.S.

14 financial stability.

15 Over the years we've met with this

16 group, and it has been enormously helpful in

17 thinking through some of these challenges.

18 We've talked about the challenges

19 associated with the entry strategies, like SPOE

20 versus MPOE. We've talked about ways to improve

21 the public sections of living wills. We've talked

22 about the challenges associated with cross-border

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1 coordination.

2 And over the years, we have changed

3 our strategies because of the input that we've

4 received from you also. We very much look forward

5 to that conversation here today.

6 In terms of structuring our day, we

7 wanted to start where we ended, which was April

8 2016. The Federal Reserve and the FDIC had

9 recently made a decision with respect to the

10 living wills filed by the eight U.S. G-SIBs.

11 And there's been a lot done since

12 April 2016 so sort of put your seatbelts on

13 because there's going to be a lot today.

14 First we'll start there. After lunch

15 we'll go and talk about the readiness efforts

16 that we've taken on our Orderly Liquidation

17 Authority, some of the steps including the recent

18 Treasury Report on orderly liquidation. And

19 finally we'll go to international and the

20 coordination and progress being made overseas.

21 We really hope that today will be open

22 and conversational so please feel free to jump in

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1 and ask questions along the way. That's how we'd

2 like to set it all up.

3 And Art and I will be here throughout

4 to answer any of the easy questions and the hard

5 ones. There never seem to be easy questions in

6 this group unfortunately.

7 So unless there are any easy ones, we

8 thought we might start straightaway with Title I.

9 Just to structure it a little bit, recall that

10 under the statute, firms file resolution plans

11 and the FDIC and the Federal Reserve review the

12 plans.

13 If the agencies jointly find that the

14 plans are not credible or would not facilitate

15 orderly resolution in bankruptcy, the agencies

16 are required to identify specific issues called

17 deficiencies that firms need to remediate in

18 order to avoid sanctions.

19 If they do not remedy these

20 deficiencies in a timely way, the agencies can

21 impose sanctions on the firms, such as heightened

22 capital and liquidity. And if after two years of

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1 imposing sanctions a firm still hasn't remedied a

2 deficiency, the agencies can take more dramatic

3 action, including divestiture.

4 In addition, just for lingo, there's

5 also smaller issues that we call shortcomings.

6 Shortcomings are issues that don't rise to the

7 level of deficiency for both agencies, but the

8 firms need to remedy in their next resolution

9 plan.

10 With that, I'll hand it over to our

11 first panel.

12 MS. BARRAGE: Great. Thank you very

13 much, Ric. My name is Alexandra Barrage. It's a

14 pleasure to be here. Welcome to all of you.

15 It's been about roughly two and a half

16 years since we had our SRAC meeting. So what we'd

17 like to do is kind of bring you all up to speed,

18 give you a sense of what we've done over the past

19 two and a half years focusing primarily on the

20 U.S. G-SIBs but also on the largest foreign

21 banks, which we'll touch towards the end of our

22 presentation.

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1 So basically for the U.S. G-SIBs,

2 there have been three key developments. The first

3 development has to do with the letters, the

4 feedback letters, that our agencies provided to

5 the firms back in April of 2016 when this group

6 last met.

7 In April 2016, the Federal Reserve and

8 the FDIC jointly determined that five of the

9 plans had deficiencies, that is that they were

10 not credible or would not facilitate an orderly

11 resolution in bankruptcy.

12 This was in many ways a unique turning

13 point in the sense that the letters were not only

14 tailored to each firm but they were made public. 

15 So it wasn't just a letter to the firms in many

16 ways, it was a letter to the public.

17 And so with that in mind the agencies

18 took the time to very specifically describe the

19 issues, the deficiencies and the shortcomings,

20 but also the remediation, the expectations that

21 the agencies had so that the firms could

22 individually address those deficiencies for their

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1 next plan.

2 MR. HERRING: Could I ask a question

3 here?

4 MS. BARRAGE: Sure.

5 MR. HERRING: I've always been a bit

6 curious about whether there might have been two

7 kinds of letters. There was a public one, which I

8 think was a huge advance and showed really quite

9 how serious you were about doing these things

10 very carefully.

11 But there's always been a tradition in

12 bank supervision of keeping some things really

13 quite secret. I didn't know whether there may be

14 two letters involved.

15 MR. DELFIN: It was all public.

16 MR. MURTON: This was it.

17 MR. DELFIN: And there were redacted

18 words in those letters. The Federal Reserve made

19 them public but that was it. Everything was made

20 public in April 2016, the letters -- well, we'll

21 talk about the framework document and the

22 guidance.

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1 (Simultaneous speaking.)

2 MR. MURTON: And internally there was

3 a lot of discussion about whether it was wise to

4 be that transparent, and there were some who were

5 very concerned about it.

6 MS. BARRAGE: I would say one of the

7 things that we had in mind knowing that these

8 letters would be public were things like making

9 sure we didn't use too much jargon.

10 We didn't rely on so many acronyms

11 that we in the everyday resolution world

12 understand and speak freely but maybe the public

13 wouldn't understand. So we took measures to try

14 and be as transparent about the issues and the

15 remediation as we could.

16 MR. HERRING: Thank you.

17 MS. ADMATI: I have another question. 

18 So I remember looking at those. I haven't looked

19 at them recently to remember the exact phrasing.

20 But I remember things like assumptions about, you

21 know, say Central Bank support that, you know,

22 they would assume something.

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1 Now how could they -- you know, so

2 then they wouldn't assume. But, I mean, what can

3 they assume? The Fed is there and so, you know,

4 what's the Fed thinking? How can they know?

5 That's one thing.

6 And the other is I remember in another

7 part of it you were saying that at least about

8 some company, I don't know who, that they didn't

9 even, you know, contemplate, you know, the kind

10 of structures. I mean, it was pretty heavy kind

11 of criticism.

12 MR. DELFIN: I think you are thinking

13 back to the 2014 one. So this has been a real

14 progression. When living wills first came out,

15 firms didn't know what a living will would look

16 like. We didn't know what we were reviewing for.

17 And so it has been, you know, a thought process

18 that has iterated over time.

19 And at each point, we've gotten more

20 specific about what we're looking for and the

21 firms have gotten better at thinking through the

22 unique challenges and obstacles.

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1 So in 2014, the FDIC and the Federal

2 Reserve identified the firms plans had relied on

3 unreasonable assumptions and had been conclusory. 

4 And so we asked the firms to provide significant

5 more detail for those plans. And those are the

6 plans that Alex is talking about here today.

7 MS. ADMATI: Still, I would just add,

8 how much do the firms know about, you know, the

9 counterparties of the rest of the system? 

10 Because what would make it credible to the public

11 or to the investors is that there isn't, like, a

12 systemic, you know, panic and all of that that

13 did happen after Lehman.

14 And so how would sort of bankruptcy

15 and Title I sort of not do that? How can they

16 assure you that that is not happening?

17 MR. DELFIN: Sure. So that's a lot of

18 what we're going to talk about today. In the

19 evolution of the process, originally we started

20 with scenarios, that is imagine what it looks to

21 put you into failure in terms of pick a scenario.

22 And they would really go through, these are the

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1 runways. What do you want to see? How bad is it?

2 Thirty day LCR plus XYZ.

3 And over time we learned that whatever

4 scenario the firm picks, it's most certainly not

5 going to be the real one. And so we actually

6 started taking ourselves out of the scenario

7 business and putting ourselves more in the

8 capabilities business, as could the firm identify

9 how much capital and liquidity it had at each

10 particular material entity?

11 Could it identify the frictions

12 associated with transferring funds? Could it

13 identify the steps that counterparties might take

14 in those counterparties' own interest that would

15 undermine the strategy? And then, regardless of

16 the scenario, can these pieces work?

17 So that's been the evolution as we'll

18 see when we get to the guidance. It's really

19 about making sure that you have the tools in

20 place so that whether the scenario comes from

21 here or there that you have a strategy that can

22 work under a reasonable range of circumstances.

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1 So that's certainly the goal.

2 MS. ADMATI: I'll ask more later.

3 MR. DELFIN: Sure. Please.

4 MS. BARRAGE: If we were going to

5 generally summarize the deficiencies that our

6 agencies found in April 2016, they ran the gamut,

7 everything from liquidity, operational issues,

8 making sure firms understood how to continue

9 their critical operations, the mapping that the

10 firms did on those issues. Divestiture options,

11 we felt a number of firms could do more in this

12 phase.

13 And so again, the letters were bespoke

14 to the firms, clear about the issues and clear

15 about the expected remediation. So this was

16 April.

17 In October, the firms that received

18 these joint deficiencies were asked to resubmit

19 plans addressing these very same deficiencies.

20 And so after October, or I should say leading up

21 to October, staffs from the Federal Reserve and

22 the FDIC met with the firms to walk through these

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1 issues to answer their questions, to clarify

2 anything in the letters.

3 After October, the teams took the

4 plans back. And in December of 2016, after the

5 review was complete, our boards determined that

6 four out of the five firms remediated their

7 deficiencies.

8 The last firm remediated their

9 deficiencies in April of 2016. So by April of

10 2016, those deficiencies from the prior year had

11 all been addressed by these five firms.

12 In 2016, one of the most, you know,

13 prominent important facts I think we'll touch on

14 throughout the presentation today is the fact

15 that six out of the eight U.S. firms have what

16 are called single point of entry resolution

17 strategies. And so we wanted to just plant the

18 seed here because that will come up a number of

19 times in our discussion today.

20 MR. MORGAN: So good morning. I'm Mike

21 Morgan. Nice to be here. I'm not the lawyer in

22 the group and a little bit new to the process but

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1 happy to be here.

2 I want to talk to your really briefly

3 about the framework document that Ric mentioned

4 earlier. April 2016 was a big month for the

5 agencies, especially in transparency. So in April

6 2016, jointly with the Federal Reserve, the

7 agencies, we released a document titled

8 Resolution Plan Assessment Framework in Firm

9 Determination.

10 This came out along with the

11 determination letters that Alex was just

12 mentioning. It's public and it's on the websites.

13 I'm just going to quickly go through some of the

14 elements of that framework document.

15 So the document covered the goals and

16 objectives of the resolution that kind of Ric

17 went over earlier but somewhat in layman's terms

18 so that it could be understood, a history and a

19 background of resolution and resolution planning.

20 It recognized the progress by the

21 firms up to that point of April 2016. And it

22 explained in a little bit of detail the review

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1 process of the independent decisions made by both

2 agencies but how the agencies were working

3 together in the review process of the plants.

4 It took, in my opinion, two very

5 important steps in transparency as well. It

6 provided some more specificity into what the

7 agencies were looking at for the 2015 plans in

8 the areas of capital liquidity, governance

9 mechanisms and operational capacity and some

10 other areas.

11 And a lot of those, of course, were

12 carried into the guidance that was also published

13 and we're going to speak about in just a moment.

14 And it also explained, you know, what

15 we were talking about in the letters when we were

16 talking about deficiencies which is, of course,

17 the legal term there, the statutory term, but

18 also shortcomings. And Ric explained those

19 earlier in his opening remarks.

20 So just very quickly on the framework

21 document, I think we could probably move into

22 what Alex mentioned earlier, which is the single

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1 point of entry concept.

2 MR. DELFIN: Before we switch to SPOE,

3 just on the framework document, we'll talk a lot

4 today about there's the substance. But there's

5 also the process. And the framework document

6 really teed up a turning point in the process of

7 plan review.

8 Do you remember early years plans

9 would come and firms would feel like -- and the

10 world would feel like black box. What does this

11 mean? How does it look? There wasn't a lot of

12 public transparency associated with our findings.

13 There wasn't public transparency about the plans

14 themselves. And the process within the agencies

15 was, let's say, disjointed.

16 FDIC would get a plan. We would review

17 it. The Fed would get a plan. They would review

18 it. We would find things. They would find things.

19 Then we would talk to each other, duke it out in

20 regulatory parlance and it would take a long time

21 to get feedback.

22 And sometimes the feedback differed.

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1 We found things. They found different things. And

2 there was confusion about what is it the

3 regulators are looking for?

4 So this framework document is really

5 a pivot point where our process really started to

6 become joint from the beginning. So after this

7 framework document came out, after we sent the

8 firms letters, we started meeting with the firms

9 jointly with the Fed every time.

10 We started review teams that were

11 joint FDIC Fed review teams. We started training

12 our staff in joint Fed FDIC trainings. We started

13 getting assessment memos from our teams that were

14 joint.

15 And it all started with this framework

16 document. It really started setting the stage for

17 a joint review process. It really helped speed it

18 along. Now our feedback is much faster than it

19 was in the early years, largely because the

20 process has evolved. And we'll get to that later,

21 but this framework document really helped set the

22 stage.

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1 MS. BARRAGE: Great. And thanks. And

2 the framework also summarized for the public what

3 the letter said. So that was another important

4 component.

5 So six of the firms have put together

6 these SPOE plans. And in thinking about the

7 challenges to resolution, both the firms and the

8 agencies had to grapple with this strategy and

9 think about what the specific obstacles were for

10 resolution generally, both for SPOE and for

11 multiple point of entry.

12 The slide that's here up on the screen

13 is a very simplified schematic of SPOE in

14 bankruptcy. So for those of you who may be

15 unfamiliar with it, we'll just talk about it at a

16 very high level as important context for the

17 remaining discussion.

18 So SPOE is designed to have the parent

19 company recapitalize and provide resources to its

20 material entity subsidiaries or its operating

21 companies prior to the parent company entering

22 bankruptcy, imagining in this stress scenario.

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1 So as you'll see on the diagram there,

2 the operating companies at the bottom are

3 recapitalized using the firm's total loss

4 absorbing capacity, or what we call TLAC.

5 The OpCos, or the material entities,

6 are transferred to a new debt free holding

7 company. That's represented by that green box

8 that says NewCo or NewHoldCo. And this NewCo is

9 owned by a trust for the benefit of the creditors

10 of the old holding company, which in SPOE would

11 be the entity that's in bankruptcy.

12 Okay. So at the operating subsidiary

13 level, internal TLAC is held by the parent or by

14 the IHC in some cases. This internal TLAC is put

15 into place in business as usual today. So these

16 firms have pre-positioned resources at their

17 material entities today.

18 Before bankruptcy in this scenario,

19 the internal TLAC gets contributed to the

20 operating subsidiaries. That internal TLAC

21 absorbs the losses of the operating subsidiaries

22 and satisfies, or it's designed to satisfy, the

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1 capital needs of those operating subsidiaries or

2 material entities in resolution parlance.

3 At the holding company level, external

4 TLAC, which my colleague David Wall will touch on

5 a little bit later, external TLAC basically

6 consists of external unsecured debt at the

7 holding company level. And the debt and equity

8 are held by third-parties.

9 So this debt is issued at the holding

10 company level. This debt is written off in

11 bankruptcy. And those holders understand what

12 SPOE is because it's all disclosed as part of

13 their external TLAC instruments.

14 And so external TLAC is designed to

15 absorb the entire firm's losses, which get

16 absorbed by the holding company prior to its

17 bankruptcy.

18 MS. BAIR: You say there are internal

19 TLAC arrangements now. Is that someplace? Because

20 we haven't done a rulemaking in the U.S. on

21 internal TLAC, is that right?

22 MR. DELFIN: That's correct.

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1 MS. BAIR: This is all done through the

2 living will process?

3 MR. DELFIN: Yes, so --

4 MS. BAIR: Are these legally

5 enforceable?

6 MR. DELFIN: Is that enforceable? Sure.

7 So under the living will process we require that

8 firms -- we'll get to balance and flexibility.

9 But firms need to solve the conversion problem.

10 How do you ensure that your material entities

11 have the capital they need in order to continue

12 functioning so you don't get ring fencing and

13 destroy the world.

14 And so what we did in our Title I

15 guidance, which we'll get to shortly, is we asked

16 the firms to think about the key challenges

17 associated with that. And they can address those

18 challenges in a couple ways.

19 They can pre-position. They could

20 establish an intermediate holding company that

21 holds it. Or they can have contractually binding 

22 mechanisms to downstream those funds in a timely

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1 way.

2 There are key obstacles associates

3 with each of those. Pre-positioning has the

4 benefit of being there, certain. But it also

5 reduces some flexibility because it's very hard

6 once it's there to ever get it back.

7 And if the loss occurs at a different

8 material entity and you have a surplus in

9 another, the likelihood of whichever jurisdiction

10 letting you move it when you're in crisis seems

11 unlikely. So you get the benefit of pre12 positioning, but you get the cost in terms of

13 flexibility.

14 You can have an intermediate holding

15 company. That's positioned. It can move it as

16 needed. That has a benefit. But there are costs

17 associated with creating an intermediate holding

18 company.

19 You could also consider a CBM that

20 would downstream the money when necessary to

21 where it's needed. There were legal obstacles

22 associated with CBMs.

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1 Well, first there were legal obstacles

2 of just promising to --

3 MR. KOHN: What's a CBM?

4 MR. DELFIN: I'm sorry. Contractually

5 binding mechanism.

6 MR. KOHN: Okay.

7 MR. DELFIN: So in the early --

8 MR. KOHN: Those guys do that all the

9 time.

10 MR. DELFIN: Sorry.

11 MS. BARRAGE: We try not to.

12 MR. DELFIN: I get in such a -- I get

13 in my game. But in the early days of single point

14 of entry, especially in bankruptcy, there was the

15 promise, we'll downstream it before we fail. So,

16 well, there are some obstacles associated with

17 that promise.

18 One is how do you know when before is? 

19 We'll get to that. Another is how are you going

20 to not get sued and lose? That is normally if

21 you're about to file bankruptcy and you transfer

22 a great deal of money from your holding company,

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1 you get sued for, say, fraudulent conveyance or

2 preference.

3 As we get through the day, you will

4 find that if you sign a contract in advance,

5 right now, for example, when you are solvent,

6 then that contract is perfected now. And so you

7 don't have a fraudulent conveyance or preference

8 claim at the time.

9 And so through these three different

10 choices, and we allowed the firms to make their

11 own choices as to which they do, it helps

12 mitigate the risks associated with achieving a

13 conversion of the internal TLAC.

14 But you're right that we don't have

15 right now a standard that says you have to put X

16 at this material entity or not. The Title I

17 process is only making sure you overcome the

18 obstacles. The Fed is looking at whether or not

19 to do an internal TLAC rule.

20 MS. BAIR: Yes. Well, they've not done

21 source of strength rules either I don't think.

22 But, you know, I'm just, you know.

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1 MS. ADMATI: Just looking at you.

2 MS. BAIR: The bankruptcy judge who is

3 going to have jurisdiction who's going to have

4 jurisdiction over the HoldCo is going to have an

5 obligation to protect creditors of the holding

6 company.

7 And so there are going to be issues

8 about this. And so I would just want to make sure

9 you've got this -- I don't know that you got this

10 locked in. I don't what actually happened in

11 bankruptcy under bankruptcy laws.

12 MR. DELFIN: Right.

13 MS. BAIR: So I just think this is

14 something that -- you know, where some belt and

15 suspenders of the rulemaking might be.

16 MR. COHEN: Absolutely. So for what it

17 is worth, I mean, an awful lot of brain cells

18 have been spent trying to assure this is a

19 legally binding commitment.

20 I think there is another facet of what

21 the agencies have done, which is very helpful.

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1 called clean holding company so you would have

2 the most unsympathetic possible plaintiffs if you

3 ever get into litigation.

4 MS. BAIR: Well, luckily we have

5 bankruptcy judge on our panel.

6 MS. ADMATI: Who seems to be chuckling.

7 MS. CHAPMAN: So I like to stay within

8 the confines of what I can and cannot do.

9 MR. COHEN: Well, if she's not worried,

10 I know we're not.

11 MS. BAIR: Yes, but on which side is

12 she now working?

13 MS. CHAPMAN: Well, just to chime in,

14 I think I was in the room when we -- it was prior

15 to 2016 when we spent probably a couple of hours

16 when we were trying to solve for this very issue.

17 Because the minute you talk about this type of

18 transfer, fraudulent conveyance is exactly what

19 comes to mind. So a lot of time was spent around

20 this problem, also bearing in mind the pre21 positioning issue that Ric was addressing.

22 So it was definitely solving some

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1 simultaneous equations. But I think there's a

2 high degree of confidence in the fact that what

3 we've come up with, you know, short of there

4 being legislation at the Chapter 14 level would

5 be effective. But nothing I say indicates how I

6 may rule if ever called upon which I so wish I

7 hope I won't.

8 MS. BARRAGE: Okay. So SPOE in

9 bankruptcy, in a nutshell, these are bail-in

10 plans, right? These are firms solving these

11 questions using their own resources in failure. 

12 And so --

13 MR. DELFIN: And just for any

14 reporters, they're bail-in good, bailout, bad.

15 MS. CHAPMAN: Yes.

16 MR. DELFIN: Bail-in means the market

17 is pricing in the cost of failure, which is much

18 better than taxpayers ever having to be on the

19 hook.

20 MS. BARRAGE: Right. Any questions

21 about SPOE?

22 MS. ADMATI: Well, I mean, you didn't

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1 talk about one side of the grain, which is those

2 guarantees. And that's where for the qualified

3 assets and all the repos and derivatives and all

4 of that, I mean, that could be a lot of stuff

5 because there's a lot of it.

6 MR. DELFIN: Right.

7 MS. ADMATI: So the stay and all of

8 that, can you speak to that?

9 MR. DELFIN: Sure. Okay.

10 MS. BARRAGE: I think the concern

11 you're touching on is related to the risk of

12 early termination of these QFC's?

13 MS. ADMATI: That's the one.

14 MS. BARRAGE: Right? And the cross15 default provisions that were built into these

16 QFCs, which we used the protocol and the QFC stay

17 rules of our agencies are specifically designed

18 to address.

19 I don't know, David, do you want to

20 touch on that?

21 MR. WALL: We think that the protocol

22 and the U.S. banking agency's rules which have

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1 now been put into place and are in the process of

2 being complied with by the firms over the next 18

3 months really solve both of those problems in

4 terms of avoiding cross-defaults and the early

5 termination of contracts at the company level.

6 MS. CHAPMAN: I think it's not clear

7 how, right? So if there's a failure of the

8 guarantor, it's not cross-defaulted to the

9 subsidiary that's the counterparty to the QFC as

10 it was in Lehman.

11 MR. WALL: The QFC counterparties have

12 now agreed to not do their exercise to early

13 termination rights so long as the transfer occurs

14 under certain circumstances that protect them.

15 MS. ADMATI: But some of the concern

16 would be about, you know, closing out, you know,

17 before, in other words moving the runs, the repo

18 runs, et cetera, to earlier kind of ahead of the

19 stay or any of that.

20 MR. DELFIN: Right. So a few things

21 that you can -- if you have a daily repo you can

22 always not do the repo, but that's not the same

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1 as a QFC termination.

2 To the degree the QFC has a cross3 default, right, those are the issues we're

4 particularly concerned about here. So there's no

5 doubt that in the pre-failure runway as we call

6 it, that counterparties will be running on the

7 firms. So if we assume anything otherwise, we're

8 wrong.

9 But the QFC issue, specifically, is if

10 a firm were to fail, then QFCs have termination

11 rights under the Bankruptcy Code. Under Orderly

12 Liquidation Authority, we have stay authority. So

13 we can transfer those QFCs to our new bridge

14 institution and avoid this problem.

15 Under the FDI Act, we have stay

16 authority. We can transfer QFCs. Under the

17 Bankruptcy Code, there's a challenge.

18 So the way this obstacle has been

19 mitigated is that large G-SIBs around the world

20 have signed on to use the protocol and agreed

21 that they will stay for failures of each other's.

22 That's a vast majority of the market

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1 that would stay under the ISDA protocol if those

2 QFCs are put in a financially equivalent position

3 in the new institution.

4 And so what this would do is it allows

5 them to transfer those QFCs if they're in the

6 same position to a new entity that has capital

7 and resources so they don't need to terminate.

8 If, however, if it terminates, if it fails, then

9 they can terminate.

10 (Simultaneous speaking.)

11 MS. ADMATI: Yes. I mean, of course,

12 the incentive is to ameliorate this to somebody

13 else instead of banking system that's not signed

14 so.

15 MR. DELFIN: I think innovations, we

16 talked about that a few years, but we also need

17 approval of the novating party. It would be

18 unlikely that one would approve the novation to

19 gain the system.

20 MR. COHEN: Ric, I'm sorry.

21 MR. DELFIN: Please.

22 MR. COHEN: I'm going to go back to a

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1 point you made earlier about pre-positioning and

2 the tension between flexibility and certainty. So

3 internal TLAC is the cousin. And there's no more,

4 I think, pronounced debate today than how much

5 that should be. Now, maybe we can get into that

6 when we get to the international cooperation, but

7 I do think that's a subject we really need to.

8 MR. DELFIN: That is definitely a hot

9 topic right now in the international community is

10 the degree to which one should rely on pre11 positioning or other venues for achieving the

12 strategy.

13 MS. BARRAGE: So, again, the idea here

14 is keeping the operating subsidiaries continuing,

15 preserving their going concern value and the

16 holding company as the debtor in bankruptcy.

17 So imagine this is the third key

18 development from 2016. It's about four years

19 after the rule, the resolution plan rule. We're

20 still grappling with so many of the same key

21 questions. What you see on the slide here is a

22 picture of the guidance document that we issued

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1 to the U.S. firms in April 2016.

2 In many ways, it's driven at these big 

3 questions. And getting firms to address the

4 problems, or I should say the obstacles, thinking

5 through ways firms can do that and very clearly,

6 we think, or maybe not so clearly, setting out

7 the supervisory expectations around their next

8 plan.

9 And so Ric is going to talk a little

10 bit about sort of the genesis of this important

11 document, including those key questions, and then

12 I'll explain a little bit about how the guidance

13 addresses those specific questions.

14 MR. DELFIN: This is where it really

15 gets good. You know, what we've talked about

16 until now has been sort of finishing up the 2015

17 plan review.

18 The firm has filed in July 2015. They

19 found deficiencies. They had to remedy those

20 deficiencies. They did that in October or March.

21 The framework document described the process, how

22 it worked.

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1 This document is sort of a watershed

2 in terms of being transparent and clear about

3 what the agency's expectations were for the July

4 2017 plan.

5 The agencies noted there was still

6 substantial work to be done, and they wanted to

7 be very specific about what it is they were

8 looking for.

9 As Alex alluded to, six of the eight

10 firms at that time had been single point of

11 entry. Now eight of the eight firms are single

12 point of entry strategy.

13 Now this guidance worked either way.

14 But I'm going to talk in SPOE terms just because

15 that's now the strategy for all of the U.S.

16 domestics.

17 So if we're in the world where you

18 have a holding company. And as, Rodgin pointed

19 out, now a clean holding company, failing. You

20 would expect the firm would be suffering massive

21 runs in the pre-failure period.

22 The plan is to downstream capital and

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1 liquidity to material entity subsidiaries so that

2 they do not fail. If our core goal here is

3 orderly resolution in bankruptcy, that is

4 bankruptcy without systemic risk, that's our

5 test.

6 Where is the systemic risk? And the

7 systemic risk at a firm with a HoldCo is at the

8 material entities. They're engaging in the

9 activities. They are the ones that are offering

10 critical services to the markets. They are the

11 ones that would dump assets on the markets and

12 run the risk of systemic risk.

13 So the core challenge is making sure

14 those material entities do not fail. So how do

15 you do that?

16 So step one, capital. Is there enough

17 loss absorbing capacity at those material

18 entities at that time to ensure that they can be

19 recapitalized so that foreign jurisdictions don't

20 need to shut them down or they don't need to go

21 into insolvency? So capital is dealing with that

22 challenge.

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1 Liquidity. Liquidity has always been

2 the seminal challenge in bankruptcy. And in order

3 for a firm to fail in bankruptcy, it needs to

4 solve its own liquidity problems.

5 And so the liquidity section is

6 ensuring that the firm had the capabilities to

7 identify the liquidity available at each material

8 entity and to understand their needs so that the

9 third question, so that they can take action when

10 required.

11 So governance mechanisms, a firm will

12 say, well, we're going to take the following 10

13 steps before we fail to make sure we do it right.

14 Well, we would logically ask, well, how will you

15 ensure that you will take those 10 steps looking

16 forward through time?

17 So the firm has established triggers.

18 Triggers for escalating to their board. Triggers

19 for downstreaming. Triggers for taking key

20 actions so they can achieve the two above in

21 time. So that's GovMec.

22 Then we get to all the operational

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1 pieces. How do you know that your collateral is

2 where it's supposed to be? How do you make sure

3 that you have the systems in place and the

4 services in place so that even if someone ring

5 fences or gets in the way, you can still achieve

6 your strategy.

7 And then we get to the structural

8 issues. How are you structured to achieve this

9 goal? Have you gotten clean funding lines? Have

10 you organized yourself in a resolution resilient

11 way?

12 And finally is the seminal challenge

13 of derivatives. How do you make sure that a firm

14 can wind down a derivatives book in a bankruptcy

15 situation, not just the transfer of the QFCs, but

16 what do you do after that?

17 You could assume that SPOE works and

18 that isn't a problem. And we wanted to make sure

19 that we had contingencies in place. And so that's

20 what the derivative section is about.

21 And then finally, you know, we really

22 wanted to go and make sure that these public

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1 sections were improved and strengthened. And so

2 we asked the firms to do a better job of

3 describing for the public how this would work

4 because this challenge is, in many respects, a

5 market challenge.

6 If the market believes these firms

7 will be bailed out, then they get funding

8 advantages and it makes it harder for the firm to

9 fail. And so the market needs to understand how

10 these strategies work. The market needs to help

11 us identify obstacles so that the market believes

12 this will work which actually helps it work.

13 So we really wanted to make sure there

14 was a key public transparency component to it.

15 MR. KOHN: So maybe you're going to

16 cover those pieces, so two questions. One is the

17 trigger. What's the enforceability? Can the FDIC

18 or the Fed force them to do what they say they

19 are going to do when the triggers are triggered?

20 MR. DELFIN: Sure.

21 MR. KOHN: And then the second point

22 was are you guys going to say more about

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1 liquidity and how that's --

2 MR. DELFIN: Of course, yes.

3 MR. KOHN: Yes, okay.

4 MR. DELFIN: So enforceability, we have

5 two different pieces here. One is the -- we have

6 the Title 1 enforceability. If a firm sets a

7 trigger that we find is based on an unreasonable

8 assumption or expectation, then we can say that

9 the plan has a deficiency and that's an

10 enforceable act in Title I pilots.

11 MR. KOHN: Right.

12 MR. DELFIN: We also supervise these

13 firms. And so to the degree a firm has a trigger,

14 and we will certainly be in the firm if a firm

15 were in runway, we would be looking very closely

16 to these triggers as supervisors.

17 MR. KOHN: And if they didn't do what

18 they said they were going to do, could you then

19 fail the firm right there or send to -- I mean,

20 what's your stick in the closet?

21 MR. DELFIN: So if a firm -- well,

22 let's see, two pieces. One is the core act that

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1 needs to take place is the downstreaming of

2 resources.

3 MR. KOHN: Right.

4 MR. DELFIN: And let's say the filing

5 of bankruptcy.

6 MR. KOHN: Right.

7 MR. DELFIN: Those are the key things.

8 If a firm is relying on, say, a contractually

9 binding mechanism in order to downstream, there

10 is a contract between a parent and a material

11 entity sub that is enforceable by the material

12 entity if you have a binding contract. If the

13 resources are in an IHD, it's already separate

14 from the HoldCo. If it's pre-positioned, you

15 don't have an issue.

16 MR. KOHN: So you talked about that for

17 capital, but I wondered about liquidity.

18 MR. DELFIN: Liquidity, too, same

19 thing.

20 MR. KOHN: The same thing, they're

21 binding.

22 MR. DELFIN: Same thing.

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1 MR. REED: CBM so --

2 MR. DELFIN: If the firm relies on

3 those. If a firm does not execute its own trigger

4 at the time, I would imagine our supervisory

5 tools and actions would be the key ones we would

6 employ. Luckily, we haven't been there yet to

7 test that assumption, but that's the on one which

8 I was thinking.

9 MR. REED: Does the intermediate

10 holding company have a board?

11 MR. DELFIN: Yes.

12 MR. REED: And those, are they external

13 or are they internal?

14 MR. DELFIN: So I think it varies. But

15 there are questions about making sure that there

16 aren't conflicts of interest of overlapping

17 boards when thinking about the downstreaming

18 because you could have.

19 MR. REED: So if you want to transfer

20 substantial assets and for some reason the board

21 says no, you've got a problem.

22 MR. DELFIN: So we think the incentives

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1 should be for yes.

2 MR. REED: Of course.

3 MR. DELFIN: So the CBM helps -- well,

4 pre-positioning helps what's already there. CBM

5 helps legally make it there. But the incentives

6 should be for making it there because the value

7 of this firm is dramatically improved by the

8 continuity of its material entity and

9 subsidiaries.

10 That is these things working is where

11 the value is. If you start having failures in

12 material entity subs, you're going to destroy

13 value. So there should be aligned interests of

14 the board in ensuring the strategy works. But

15 it's fair to say what if that doesn't happen and

16 that could be a challenge.

17 MR. REED: And you look at the

18 compensation of those boards?

19 MR. DELFIN: We do.

20 MS. BARRAGE: In fact, our guidance

21 suggests interlocking boards of directors. We've

22 asked firms to address this.

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1 MR. STERN: So the operating entity

2 will have the information it needs to pull the

3 trigger?

4 MR. DELFIN: Well, the pulling of the

5 trigger can -- sometimes the trigger is

6 automatic. Sometimes the trigger is by the HoldCo

7 or by the material entity executing. Or it's just

8 there. And then the conversion of the TLAC would

9 be based on whatever the requirements are at the

10 time.

11 So the pulling or pushing of triggers

12 is different based on the choices you make about

13 the allocation of resources.

14 MR. STERN: Are the triggers binary?

15 Did you build in any flexibility in terms of --

16 we can go through every scenario known to mankind

17 and the next failure will have nothing to do with

18 any of them.

19 MR. DELFIN: There's flexibility.

20 MR. STERN: And so you built in --

21 MR. DELFIN: We don't build the

22 triggers. The firms build the triggers.

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1 (Simultaneous speaking.)

2 MR. BODSON: I think there is a

3 question of as the supervisor, do you look at

4 them as black and white or do you look at them as

5 it's a series of decisions that may be made. It

6 could go either way depending on the

7 circumstances internally and externally.

8 MR. DELFIN: And so we don't want to

9 build the triggers or choose the actions the

10 firms take, that is we want to make sure they

11 overcome an obstacle.

12 So one obstacle is are the resources

13 where they need to be at the right time? And

14 another obstacle is can you be sued? Can somebody

15 get in the way of stopping it? We review the

16 steps the firms took to mitigate those obstacles.

17 The firms obviously care about

18 flexibility and ensuring that they have choices

19 in that. And we don't want to get in the way of

20 such flexibility.

21 MR. BODSON: How did you deal with

22 conflict between the two boards? If you have, you

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1 know, an intermediate board and a parent board,

2 it could get a situation where obviously there

3 could be conflict.

4 MS. BARRAGE: So the firms were asked

5 to address these interlocking board of director

6 real world issues. And they've developed

7 playbooks. Many of them have a set of independent

8 directors, you know, there in the event there is

9 an interlocking issue that would present a

10 conflict.

11 We also ask the firms to talk

12 specifically about fiduciary duties of their

13 directors, both at the holding company level and

14 at the operating subsidiary level.

15 So again here we put the obstacle

16 before the firms. And it's really up to the firms

17 based on their composition, based on their

18 entities how they want to address those issues.

19 But we review those.

20 MS. ADMATI: Can I say something? I

21 think that what's working here behind Don's

22 question and some of the other questions is the

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1 fact that the entire firm, within the entire firm

2 and the subsidiaries, there is sort of, in the

3 entire discussion, this issue of systemic risk.

4 Systemic risk creates a potential

5 conflict about losses between, you know, the firm

6 and its subsidiaries and kind of the rest of

7 society in the sense of spreading the losses on

8 the public because we're afraid to let them fade.

9 So that's kind of in the background of

10 all of this. So a fiduciary of the board is

11 obviously to try to get somebody else to bear the

12 risk. And so the question is how do you fight

13 that in actuality? In other words, that's why I

14 think enforcement issues are sort of here, like

15 what would you actually do to make them do that?

16 I remember a story about Continental

17 Illinois and apparently the provoker was the

18 chair of the Fed. And they wanted Continental

19 Illinois to recapitalize under prompt corrective

20 action, and they just didn't.

21 And then they ended up -- that was

22 well before. But I'm just saying that, you know,

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1 they were afraid to let Continental Illinois fail

2 and ended up -- the FDIC ended up absorbing a lot

3 of debt. People might remember that. I wasn't

4 interested in these issues. So it's a story I

5 heard later.

6 Just one quick other thing about

7 liquidity. There's some of the funding liquidity,

8 which is, you know, the funding running away. And

9 then there is the market liquidity, which is sort

10 of resources, you know, that you can employ.

11 Neither is saying something about markets so they

12 won't freeze. So things that were liquid became

13 illiquid quickly.

14 So how do you, when the institution

15 says, you know, I'm assuming that I will have

16 these resources of that, you know, are they in a

17 position to promise what they are promising? Or,

18 you know, in other words, aren't there still

19 assumptions is what I'm saying.

20 MR. DELFIN: So if the question is, are

21 there still assumptions? Yes, many. We don't know

22 the firm. We don't know the scenario. We don't

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1 know where the risk is.

2 And so what we try to do is, again,

3 build out capabilities for dealing with multiple

4 scenarios, ranges of scenarios, but, yes, there

5 are assumptions.

6 The firm has to put itself in a

7 failure state. It has to assume a pretty

8 Draconian state of the firm and of the world.

9 Whether that is the Draconian state that occurs

10 at the time, I don't know.

11 There are pretty significant

12 limitations on their ability to access funds. And

13 so in many respects we think of them as having to

14 self-fund their resolution in bankruptcy. It's a

15 challenge.

16 MR. COHEN: You know, you can

17 understand the concern that is being expressed.

18 There's this very elaborate mechanism but it

19 depends ultimately on individuals. I do think

20 what has been done is sort of belt, suspenders

21 and maybe something more because there are the

22 elaborate mechanisms.

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1 There are also, which we haven't

2 mentioned, liquidated damages if you fail to live

3 up to your contractual obligation, and they are

4 very severe damages in the contracts.

5 But above and beyond everything, I

6 think it's what Ric said more than -- it is

7 almost impossible to conceive of a scenario where

8 you wouldn't downstream. Because if the

9 subsidiaries fail, there is no value left in the

10 holding company. It's the only possibility of the

11 debtholders recovering anything is for those

12 subsidiaries to survive.

13 So there are built-in, I think, a

14 number of, again, support mechanisms to assure

15 this works.

16 MR. HERRING: Far be it for me to ever

17 question Rodgin about the law, but there have

18 been instances of failures of subsidiaries from

19 firms that have withdrawn. You can always argue

20 that it was something country-specific. But it

21 has nothing to do with the health of your firm.

22 And I can remember a case when an

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1 insurance subsidiary of a European firm was

2 permitted to fail. They wanted nothing to do with

3 it. They wanted to back out. Yet the parent was

4 in fine shape.

5 So I think we have to be a little bit

6 careful about assuming that the whole life of the

7 holding company depends on all of the material

8 entities. I think there are cases where you can

9 sort of walk away.

10 MR. DELFIN: Yes, on one subsidiary.

11 MR. REED: I think the word is off

12 because I do think you will be attempted to say

13 there is a subsidiary that you would not care

14 about. You know, sort of --

15 MR. HERRING: Now, I hope that's behind

16 the material entity definition because ideally

17 the material entities all ought to be contingent

18 and could not walk away from. But I'm a little

19 bit unclear about exactly what the definition of

20 what material entity is.

21 MR. FISHER: If you could just help me

22 with language as you go forward because I feel

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1 we've got two different sets of issues you've put

2 on the table and many more.

3 But there's a vertical issue that

4 we're sort of legislating as best we can to make

5 the holding company a source of strength. There's

6 a whole set of issues you're describing. We're

7 trying to make sure that the day comes when we've

8 got confidence we're not running some ridiculous

9 maturity smashed between the HoldCo and the

10 entities, falling short up here and lending long.

11 And I see all the things that living

12 wills and you're doing about that. But you

13 actually started to talk about the horizontal

14 issues and subsidiaries and whether we have

15 knowledge about whether there's too much

16 liquidity and maturity, volatility mismatch

17 there.

18 And that's where I think we're dragged

19 into the market expectations problem. And your

20 list you ran through up on the slide there was

21 all about, I'm thinking, it was a horizontal

22 issue within the operating subsidiary. Then how

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1 do we know?

2 And actually the conversation we all

3 are much more comfortable going back and talking

4 about the vertical issues where we're legislating

5 all of the clever -- we want to make sure the

6 holding company is not a source of weakness but a

7 source of strength. And that I see how the living

8 will process helps us articulate.

9 The complexity you got into when you

10 started touching on the outgoing horizontal

11 issues, that was kind of a black box to me. I

12 mean, we can go through all the lists of

13 derivative contracts and all. But I still want to

14 figure out how do we know -- there's a problem of

15 knowledge that we've got our hands around the

16 scale of maturity mismatch or volatility mismatch

17 or liquidity mismatch taking place at the

18 operating entity.

19 And the living will process is a

20 pretty imperfect way to get at that it strikes me

21 because we're imagining this future state of

22 knowledge.

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1 The vertical ones I can see we get

2 through to the living will. But I'm still

3 struggling with how we do it horizontally. I

4 don't know if that's helpful or just distracting.

5 MR. DELFIN: No, it's helpful. It is an

6 imperfect way of getting at the problem. It is

7 not the only tool. We do have supervisory tools

8 that take place and focus significantly on a

9 firm's liquidity and liquidity under stress and

10 those happen in parallel.

11 What we're trying to get at here is,

12 you know, what's the liquidity positioning for

13 each material entity under stress? What are the

14 frictions associated with moving that liquidity

15 and does the firm have the capabilities of

16 recognizing when there's a liquidity need at a

17 material entity so that it can get the resources

18 there in time to execute its strategy?

19 We can't, through this process -- I

20 mean, we could try, but we would probably fail

21 just from too much information, go with daily and

22 every conceivable daily liquidity flow for each

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1 of these entities.

2 So we need to make sure the firm can

3 understand the needs and availability of

4 resources at each material entity and that we

5 have the information to -- and they have the

6 information to make the decisions to execute the

7 strategy.

8 That's kind of where we are, I think.

9 But you're right that we don't have maximum

10 information about all of it all the time. I think

11 we're getting better but.

12 MS. BAIR: It's a really good question

13 because that's what we saw during the crisis,

14 right? So the banks had stable liquidity. So we

15 were under a lot of pressure to prove we were

16 moving up. So Nancy asked that centrally insured

17 bank -- you know, deposits were increasing

18 dramatically. Our exposure was increasing

19 dramatically.

20 I don't think you want a repeat of

21 that again. So are you confident that this living

22 will process is going to -- the securities

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1 affiliates, you know, the non-making affiliates,

2 will they still have liquidity or to what extent

3 are these firms still going to rely on moving

4 stuff into that nice safe FDIC insured thing

5 that's accumulating deposits in a crisis but

6 increasing the exposure here as well.

7 MR. DELFIN: I think through the living

8 will process, there's been substantial progress

9 on understanding the liquidity position of each

10 of those material entity subsidiaries and

11 addressing the liquidity need, if they need to,

12 through this process.

13 The specific capabilities of each

14 material entity, that's the place where this

15 needs to go.

16 MS. BAIR: Sure.

17 MR. DELFIN: That is right now there's

18 a structure. Let's say it works in theory or,

19 knock on wood, that is -- I think in terms of

20 what are the things that can go wrong.

21 MS. BAIR: Right.

22 MR. DELFIN: So we provide a list of

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1 here's everything we think of that can go wrong.

2 And from today maybe we'll add a few more things

3 to that list, and then how do we mitigate that

4 risk?

5 And so I think what we'll see is we've

6 done a lot, and the firm has done a lot to

7 address each of those issues. So you have a nice

8 structure.

9 MS. BAIR: Right.

10 MR. DELFIN: But you need to make sure

11 that the capabilities, that the models and the

12 assumptions underlying the models, are tested and

13 validated over time so that if that date comes

14 you can rely on it.

15 MS. BAIR: Right.

16 MR. DELFIN: Because we don't know the

17 scenarios now ,but you need to be able to have

18 models that can take in the world as it exists on

19 that day to work.

20 MS. ADMATI: I think Sheila was asking

21 specifically whether the FDIC having two hats.

22 You're systemically resolving a holding company,

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1 but you also have a subsidiary that's an insured

2 bank. And so the deposit insurance fund suddenly

3 might get a lot on its head.

4 MS. BAIR: Well, I think the -- well,

5 so in this scenario we're not -- this is not

6 Title I. So we're just, you know -- and I think

7 you also need to worry whether you've got an out. 

8 And it's your bank that's failing too --

9 MR. DELFIN: Of course.

10 MS. BAIR: -- and how that works. And

11 I wanted to ask you about separability in that

12 regard. But, yes, I mean, I think what I'm

13 hearing you saying is that there's a lot of rigor

14 going into breach of material entity, not just at

15 the HoldCo level, but at the material entity

16 level. How are they going to fund themselves in a

17 distressed situation without relying on insured

18 bank? I guess that's my question. Is that what

19 you're doing?

20 MR. DELFIN: Right.

21 MR. MURTON: That's what this is all

22 about.

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1 MS. BARRAGE: That is the crux of this.

2 MS. BAIR: Yes. Okay.

3 (Simultaneous speaking.)

4 MR. MURTON: We're not allowed to rely

5 on the kind of measures that you described in

6 order to solve their broker dealer problem.

7 MS. BAIR: So I just had another more

8 of a question. So one of the criticisms with

9 SPOEs, whether it's bankruptcy or Title II, is

10 that you're just kind of perpetuating, a big,

11 right, a big inefficient complex on a non12 transparent entity. And so you're just going take

13 all your TLAC, convert it to equity, re14 capitalize and in turn hold the company and prop

15 it up and back it goes.

16 So, I don't know if that's a good --

17 you know, I'd certainly take that over the

18 disruption was had after Lehman. But how do you

19 think about separability? And it seems to me from

20 the standpoint of maximizing value, too, these

21 large entities, especially one that's failed,

22 might be well worth a lot more in individual

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1 pieces than just propping it up and, you know,

2 keeping it the way it was with the new capital

3 base through TLAC.

4 So how do you think about separability

5 and does that factor into your thinking?

6 MR. DELFIN: Yes, yes. So a couple

7 things. The first is are you supporting big or

8 not?

9 MS. BAIR: Right.

10 MR. DELFIN: So nothing supports big

11 more than what we did in '08 and '09, right? 

12 MS. BAIR: Right. That's for sure.

13 MR. DELFIN: Just protect the creditors

14 so that they have an incentive to lend money to

15 these firms, and they get bigger.

16 MS. BAIR: Right.

17 MR. DELFIN: So through the TLAC, the

18 firms have to actually go to the market, and

19 market actors have to lend to these firms based

20 on the probability of default and the potential

21 losses.

22 MS. BAIR: Right.

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1 MR. DELFIN: So now there's a market

2 cost associated there that didn't exist before.

3 So that's a cost for being big that didn't exist

4 along with all the other regulatory costs like

5 the living will process and whatnot. There's that

6 part of it.

7 Now our test in Title I is orderly

8 resolution in bankruptcy --

9 MS. BAIR: Right.

10 MR. DELFIN: -- without systemic risk.

11 If a firm can achieve that, well, that's great,

12 right Taxpayers didn't step in Firm failed. The

13 creditors took losses. We move on. Public

14 interest has been served. That would be a

15 wonderful step forward.

16 We do, however, think about

17 separability because SPOE is untested.

18 MS. BAIR: Mm-hmm.

19 MR. DELFIN: And we want to make sure

20 that firms have what we call objects of sale.

21 That we have separability actions available to us

22 and to them.

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1 MS. BAIR: Right.

2 MR. DELFIN: First to avoid failure,

3 which would be our ultimate goal. If a firm has

4 an object of sale that is pre-identified, we

5 require that they have data rooms that actually

6 house the key information so that they can

7 separate these things more quickly.

8 If a firm can do that in recovery and

9 not fail, great. If the firm then fails in SPOE,

10 then there are choices available for the board or

11 for the FDIC if we were in a Title II world to

12 sell off those objects and wind down the firm.

13 So this is where, and we'll get to

14 later, where Title I and Title II kind of come

15 together. But we want to make sure these firms

16 are separable and have separability options

17 because they improve resilience and avoidance of

18 failure and give us choices in resolution if we

19 need them. Does that help?

20 MS. BAIR: It helps, but just what's

21 your comfort level of their ability --

22 MR. DELFIN: Comfort level --

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1 MS. BAIR: -- you know, how stable are

2 the major business units of these big --

3 MR. DELFIN: There's been a lot of

4 progress made on objects of sale and

5 separability. In our December findings, we noted

6 the work that the firms have done.

7 CHAIRMAN McWILLIAMS: You know, I

8 thought this was a great job until Sheila started

9 asking questions.

10 (Simultaneous speaking.)

11 MR. COHEN: I think Sheila is really

12 asking two important questions. One, if you wind

13 up in this situation, can the entity survive

14 after the recap? And the second is should it?

15 Should this big institution still survive?

16 And I do think on separability all of

17 the effort has appropriately been on could the

18 company separate itself out? But I don't think

19 much work has been done on whether there would be

20 any buyers for the pieces. And I do think that's

21 something which needs a lot of thought because

22 you've heard a lot of buyers out of 2008 saying

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1 never again.

2 MR. DELFIN: And there is a debate that

3 goes on about whether it's worth more in pieces

4 or not. There's definitely a school of thought

5 that says separating it would destroy value, and

6 there's a school of thought that separating it

7 would unlock value.

8 MR. COHEN: And isn't the basic point

9 you want the flexibility to be able to make the

10 decision at that point in time.

11 MS. CHAPMAN: But the proof is in the

12 pudding. And I'll touch on this in my remarks

13 later. The recoveries at the various Lehman

14 subsidiaries, the recoveries for the unsecured

15 creditors, there is a variance.

16 There were some subsidiaries, I think,

17 we went over the counter, affectionately known as

18 latzy comes to mind, where the recoveries exceed

19 100 percent. So it was all a question of the

20 degradation of value that occurred after the

21 filing and after determination of QFCs.

22 So a lot of what you've done to

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1 address not only the vertical problem but the

2 horizontal problem and in particular around the

3 issue of flexibility versus pre-positioning, I

4 think, helps ensure that there would be

5 maximization of value after a filing.

6 I think one question, which I'm

7 certainly not qualified to answer, is the value.

8 And the buyers are going to depend on the extent

9 to which there is stress more generally in the

10 markets versus whether the failure is for reasons

11 maybe we can't conjure, mostly focused on one

12 firm.

13 Certainly if there's general stress,

14 you know, you're not going to have people buying.

15 You know, what you're seeking to avoid is the

16 experience of, you know, a Barclay's sale, you

17 know, four days after the filing when people at

18 the time thought, you know, hold on. We shouldn't

19 do that. And I think not many people are in a

20 position to really second guess that at this

21 point.

22 So I don't know if that's responsive,

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1 but that's kind of from a bankruptcy perspective.

2 And most importantly is the understanding of

3 everything that's in the closets and the attics

4 of the firms in terms of their operating systems,

5 where they're booking their risk, how they're

6 booking their risk. Who controls their software,

7 their intellectual property?

8 And my understanding of the work

9 that's been done, there's been a lot of cleaning

10 up in that regard that would be value accretive

11 in the event of a failure, and you needed to

12 separate firms and ready them for the subsidiary

13 entities and ready them for sale.

14 MR. BODSON: Can I ask you a question?

15 When I look at this, and you see the term

16 maximization of value, I took a different

17 approach. I thought you were trying to minimize

18 disruption.

19 I mean, to me, it's how you keep the

20 operating companies alive long enough that if you

21 want to wind them down, you wind them. If you

22 want to sell them, you sell them. You figure that

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1 out in due course. But the point is to make sure

2 that the system is not disrupted by a Lehman type

3 collapse.

4 So whether or not there's maximization

5 of value, to me that's a secondary issue. It's

6 really how do you save the system, not how you

7 save the firm or the shareholder --

8 MS. BAIR: So the FDIC has got a public

9 policy mandate, but the bankruptcy court doesn't.

10 MS. CHAPMAN: That's the chance you

11 take.

12 MS. BAIR: That's exactly the chance.

13 MR. DELFIN: So I think what the

14 strategy is supposed to do is the strategy is

15 supposed to make sure that there isn't systemic

16 disruption. You know, if the strategy works there

17 isn't systemic disruption. Now in the bankruptcy

18 court at that point, maximization of value is the

19 goal.

20 MR. BODSON: But it's a two step and

21 the first step --

22 MR. DELFIN: Well, the first step is

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1 getting from failure on Friday to a --

2 MR. BODSON: Operating --

3 MR. DELFIN: -- stable trust on Monday

4 so that market destruction has been avoided and

5 now the bankruptcy court can do its process, but 

6 with a stable entity in trust that doesn't --

7 MR. BODSON: Okay.

8 MR. DELFIN: -- disrupt the markets.

9 But you're right.

10 MR. BODSON: I didn't want to put the

11 horse before the cart.

12 MR. DELFIN: No, yes.

13 MS. BARRAGE: Understood.

14 MR. DELFIN: So financial stability

15 should have been protected first and then you get

16 to the --

17 MS. BARRAGE: Claims.

18 MR. DELFIN: Yes, claims process.

19 MR. STEINWALD: In our calculations

20 that we ask the firms to make, we conclude a

21 consideration of the stabilization period. So

22 it's not just a point of time calculation, but

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1 it's an estimate of what it's going to need to

2 take you through a certain period in which you're

3 going to stabilize the operations.

4 MS. BARRAGE: So if we could go back

5 into our 2016 time capsule here because there's

6 quite a bit of stuff.

7 MS. ADMATI: Well, we're still in 2018,

8 right?

9 MS. BARRAGE: We promise. We'll bring

10 you to today. A lot of topics in this guidance

11 and a lot of questions from the firms. So we put

12 out what we call FAQs, frequently asked

13 questions, on the general level for all the

14 firms.

15 In some cases, there were firm

16 specific questions that they had, and they were

17 responded to by the agencies. And so remember

18 this is guidance that's really directed at their

19 2017 submissions.

20 And so I want to talk a little bit

21 more about the guidance itself and some of the

22 questions that have come up in our questions

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1 today. How did we deal with or how does the

2 guidance deal with the risk of multiple competing

3 insolvencies, right?

4 This is an obstacle that's time

5 immemorial. We addressed it in 2013. The Lehman

6 case is a prime living example of this risk. So

7 in many ways SPOE is what the industry and what

8 many of you, as addressing this multiple

9 competing insolvencies problem, again, with the

10 model that only the holding company fails and the

11 operating subsidiaries, which, of course, are

12 global, are sustained.

13 One of the biggest questions that

14 we've been grappling with, but I think we've made

15 a lot of progress on, is how could you resolve a

16 systemically important financial institution in

17 bankruptcy? And as a result of a lot of

18 engagement with bankruptcy experts, the guidance

19 actually discusses some of the legal obstacles in

20 detail.

21 So preference in fraudulent transfer

22 risk or what bankruptcy practitioners understand

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1 as avoidance action risk. How do you address

2 that?

3 We saw the development of

4 contractually binding mechanisms, secured support

5 agreements where there's definitely a source of

6 strength kind of theme built into those.

7 Guaranteed obligations to save the material

8 entities and stress and all of the mechanics

9 around that.

10 Bankruptcy playbooks were provided. So

11 bankruptcy playbooks describing and incorporating

12 things like draft first day motions.

13 So for any one of these U.S. G-SIBs if

14 there was ever a moment where we had material

15 stress and they would have to fail, the plans

16 that they provided to us actually provide draft

17 documents for what they would file. I mean, down

18 to the caption. I mean, it's descriptive. It's

19 got some placeholders for things. But that's a

20 huge development from even 2012 in the planning.

21 So we've got bankruptcy playbooks. We

22 have playbooks for the boards at the material

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1 entity levels. We have firms addressing the real

2 problem, or the real issue of interlocking boards

3 of directors and how would they deal with those

4 issues.

5 We have the issue that has come up, I

6 guess, a couple times today, on early termination

7 of qualified financial contracts. And this focus

8 on cross-defaults and the issues that we had in

9 Lehman were counterparties because they were safe

10 harbored under the Bankruptcy Code. Were able to

11 terminate their contracts notwithstanding the

12 bankruptcy filing of the holding company in

13 Lehman.

14 So, again, these are just some

15 examples of how the guidance directly tried to

16 have firms address these obstacles in specific

17 ways but also in ways that gave the firms the

18 ability to address them based on their operations

19 in their risk framework.

20 MR. KOHN: Can I ask a little --

21 MS. BARRAGE: Sure.

22 MR. KOHN: -- about the international

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1 dimensions here. So all these companies are

2 global companies --

3 MS. BARRAGE: Mm-hmm.

4 MR. KOHN: -- in one degree or another.

5 And I understand under Title II the FDIC has been

6 working with the Bank of England and the European

7 authorities, et cetera. What happens in

8 bankruptcy?

9 So, I guess, I'm looking at the judge

10 here. Any understandings between U.S. bankruptcy

11 judges and people in the UK? Why wouldn't this

12 just collapse for a global firm in bankruptcy?

13 MS. CHAPMAN: I can't promise anything,

14 but what happened in Lehman was quite

15 extraordinary, and I think it was unprecedented.

16 There was outreach and -- coordination is

17 probably too strong a word. But there was an

18 attempt to work together in a cooperative

19 fashion.

20 There was a protocol that was

21 fashioned that clarified whether in essence the

22 U.S. case would be the lead case, would be the

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1 host case and the UK case, which was the -- you

2 know, there were cases all over the world.

3 MR. KOHN: Right.

4 MS. CHAPMAN: And it was that

5 cooperation and frankly the two judges picking up

6 the phone to each other that really enabled some

7 stability and some order and enabled the firm to

8 emerge in the relatively short period of time it

9 did compared to what I would say is the garden

10 variety mega-multibillion dollar Chapter 11 case.

11 I think more importantly is the

12 communication that's happened between the

13 regulators to get comfortable, to get the foreign

14 regulators comfortable with the idea that there

15 would be some bankruptcy judge in the United

16 States more or less in charge of the global fate

17 of the firm.

18 I would say there's not 100 percent

19 comfort level with that. I've been involved in

20 some of these discussions. These folks have been

21 involved in a lot of these discussions. And we

22 have also talked about the role that the

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1 regulators themselves would play on the first

2 day.

3 Alex alluded to the first day motions.

4 That's shorthand for on the first day of a

5 bankruptcy the debtor presents motions that we

6 call the first day motions that are designed to

7 ensure that the firm in bankruptcy can continue

8 to operate.

9 And we've talked a lot about what that

10 would look like, who would appear, who would be

11 heard from. And I think the foreign regulators, 

12 their role, have figured into that conversation.

13 I hope that's responsive. I think probably Ric

14 and Alex can do a better job of answering also.

15 MR. DELFIN: I mean, this should be

16 better than the Lehman world because there's an

17 entire structure built around --

18 (Simultaneous speaking.)

19 MR. KOHN: There's not much of a hurdle

20 there.

21 MS. CHAPMAN: There has also been, I

22 will add, that there's been an explosion of

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1 developments in international insolvency since

2 2008. There are frequent meetings.

3 Singapore is trying to position itself

4 as the next place to go for global

5 restructurings.

6 There's something now called the

7 Judicial Insolvency Network. There's a memorandum

8 of understanding that's been signed between the

9 Seventh District of New York Bankruptcy Court and

10 Singapore and South Korea.

11 We've hosted -- I've personally hosted

12 judges from six nations, Saudi Arabia, Russia,

13 People's Republic of China, South Korea. So I

14 think since 2008 there's been more of a global

15 conversation around insolvency, and everyone

16 wants to the United States is what I would say.

17 So I think there are protocols that

18 have actually been implemented in bankruptcy

19 cases in both Delaware and the Southern District

20 of New York. So there are lines of communication,

21 I think, that didn't exist in 2008.

22 DIRECTOR GRUENBERG: If I could just

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1 make a point. I think there are two core issues

2 relating to the bankruptcy tied to division of

3 authorities. And I'm pretty clear that liquidity

4 and cross-border cooperation are the two core

5 challenges that the bankruptcy process has that

6 Title II is better positioned to address and thus

7 the foundation of the recognition of why you

8 would need a Title II backstop.

9 And indeed the National Bankruptcy

10 Conference wrote one of the strongest letters in

11 support of Title II in recognition that there are

12 inherent limitations in the bankruptcy process

13 that makes the existence of Title II necessary.

14 MR. REED: Can I ask a different

15 question? Do you know to what extent the

16 management of these entities are really familiar

17 with these submissions?

18 MR. DELFIN: Sure. Do you want to talk

19 about the governance process?

20 MS. BAIR: Good question.

21 MR. DELFIN: So they actually have a

22 governance process that has to go up through

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1 their board. So the firm's governance process, of

2 course, in submitting a plan is pretty

3 substantial. And the senior-most officials within

4 the firms are well aware of the resolution

5 strategies of the firm.

6 MR. REED: And so you've interacted

7 with them and supports are --

8 DIRECTOR GRUENBERG: If I can comment

9 on that. The experience of five of the eight

10 firms that have been jointly failed by the Fed

11 and the FDIC with the prospect of the statutory

12 consequences available are as a result of

13 failure. My perception was, because I was visited

14 by the CEOs of the firms.

15 MR. REED: They heard, huh?

16 DIRECTOR GRUENBERG: They definitely

17 had heard.

18 MR. REED: Because, you know, when

19 you're in these circumstances, it's the

20 management --

21 DIRECTOR GRUENBERG: Of course.

22 MR. REED: -- that really has to know

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1 what they're doing and have thought about it. And

2 if you've hired a bunch of lawyers and

3 consultants to write you're submission --

4 MR. DELFIN: It's not real.

5 MR. REED: -- it's not real. But you're

6 convinced because that ultimately is what counts.

7 MR. DELFIN: Right.

8 MS. BARRAGE: Yes. We meet with these

9 firms -- I'm sorry.

10 MR. WALL: For what it's worth it's a

11 legal matter. The rule does require that the

12 board of directors review and approve the plan.

13 MR. REED: But there are reviews and

14 approvals and reviews and approvals.

15 (Simultaneous speaking.)

16 MR. WALL: There are the governance

17 requirements that we've built into the --

18 MR. DELFIN: But we have pretty senior

19 legal engagements.

20 MS. BARRAGE: We meet with the firms,

21 yes.

22 (Simultaneous speaking.)

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1 MS. BARRAGE: And across the board they

2 are conversant in their plans. We meet with the

3 firms directly. We don't meet with their

4 consultants.

5 MR. REED: Yes. Do you --

6 MS. BARRAGE: They ask questions of us,

7 of our staffs.

8 MR. WALL: I should also say that the

9 firms have committed, I think, an extraordinary

10 amount of time and resources into their -- at

11 least most of them into their governance

12 procedures, into their resolution planning

13 processes.

14 So it's a significant cost centric to

15 them. And so I would -- you know, the management

16 has to pay attention to that if only from a

17 budgetary viewpoint.

18 MR. BOWSHER: Do you evaluate the

19 quality and the competence of the audit committee

20 chairman and the risk management chairman and the

21 board and some of those people that are really

22 key for the board doing the right thing?

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1 MR. DELFIN: I would just say that, you

2 know, as our public letters point out, the

3 submissions have improved substantially over the

4 last few years with substantial progress on each

5 of these areas. So I think that is a testament

6 that someone is doing the right thing.

7 CHAIRMAN McWILLIAMS: And also in the

8 supervisory side under the CAMELS rating. The M

9 would be the management. So we would have

10 combined the supervisory expectations with what's

11 happening in resolution planning so to make sure

12 that the board is competent and that the heads of

13 each of the committee and assigned persons are

14 adequately prepared for what may come down.

15 MR. FISHER: To answer John's question

16 a different way and some advice to the OCFI

17 staff, as a former director of a non-bank CFI,

18 what was once a non-bank. Another issue for the

19 board is to be able to take the plan and hold it

20 against a treasury function to think about

21 liquidity.

22 And so it's hard. You can read a plan.

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1 And the plan can seem very reasonable and well2 constructed and you interrogate all the lawyers

3 and the people who thought hard about it. But

4 what you worry about it is laying it against

5 liquidity in the treasury function of the holding

6 company and all of the subsidiaries.

7 That requires just making sure that

8 the CFO and the treasury operation line up, as

9 complicated as it will be -- legal entity,

10 operating entity. And it's very hard though.

11 And that's the nub of it, I think, to

12 John's question, is you can read a plan. The plan

13 looks good and you work hard, but you've got to

14 read the whole thing.

15 But if you're going to hold it up,

16 you're going to turn to the treasury or the

17 assistant treasurer and talk to that person about

18 it. And that's the conversation -- you know,

19 getting the CEO is one indicator, but you really

20 want to care about the deputy treasurer.

21 MS. ADMATI: I think what Peter is

22 bringing up is so now what we're going to discuss

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1 now is we're focusing now on, like, eight firms

2 and we forgot, and if so, we also forgot that,

3 you know, some of the failures would not have

4 been designated by now. Lehman would not have

5 been. AIG would not have been, et cetera.

6 So now we're talking about very few

7 firms and fewer by the day that we are talking to

8 the management and doing all of these things. And

9 then it will come from somewhere else.

10 So the question is how -- what happens

11 to a suddenly systemic company? Are we having

12 enough SRAC or monitoring of that? And, you know,

13 when we get to 2019 we were talking about Fed

14 regulators and others doing more to prevent you

15 being in this position. We're talking about the

16 grim situation.

17 MR. DELFIN: Right. So we're in Title

18 I land and under Title I, it applies to bank

19 holding companies designated non-banks. And so,

20 yes, living will is applied to those firms that

21 are excepted to the law.

22 MS. ADMATI: How many submit to living

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1 wills now?

2 MR. DELFIN: Well, we work on the

3 largest U.S. G-SIBs plus the four largest FBOs.

4 There are a number of other plan filers. That

5 recently changed. The Crapo legislation change.

6 The filers of U.S. firms that are smaller bank

7 holding companies. So I don't know the exact

8 number now.

9 MS. ADMATI: But that's banking hold

10 companies. That's not insurance company or --

11 MR. DELFIN: FSOC makes designation

12 under the designations.

13 MR. HERRING: Yes. And that's where

14 it's a very different universe than we even

15 thought we had five years ago.

16 CHAIRMAN McWILLIAMS: So I think we

17 should take a break.

18 MR. DELFIN: We are right on time.

19 CHAIRMAN McWILLIAMS: And I would just

20 ask the staff please come back.

21 MS. BARRAGE: We're just getting

22 started.

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1 CHAIRMAN McWILLIAMS: It has been a

2 very engaging endeavor. We'll continue after the

3 break. Let's break for 15 minutes.

4 MR. DELFIN: Perfect.

5 CHAIRMAN McWILLIAMS: And then let's

6 reassemble. And I need to ask the security guards

7 to make sure none of these people get on the

8 elevator.

9 (Whereupon, the above-entitled matter

10 went off the record at 10:18 a.m. and resumed at

11 10:34 a.m.)

12 CHAIRMAN McWILLIAMS: All right. So

13 we're going to resume. Marty would like to open

14 up the next session.

15 DIRECTOR GRUENBERG: Well now before

16 the day gets away from us, I wanted to take the

17 opportunity -- I wanted to thank this Committee.

18 And to make clear of what an impact

19 you all have had on our process. I just

20 mentioned to Dick Herring, without a doubt our

21 focus on transparency, which I think has been

22 central to trying to establish greater

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1 credibility to the work we've been doing, has

2 directly resulted in his committee making clear

3 how important it's been.

4 And if I may say, Dick in particular 

5 contributed in that regard. I just wish you guys

6 were not so hesitant and reluctant --

7 (Laughter.)

8 DIRECTOR GRUENBERG: It is with this

9 committee sort of like pulling teeth.

10 But before the day gets away, I wanted

11 to, if I may acknowledge two, former members of

12 this committee.

13 One, Paul Volcker, who is an original

14 member of this committee. And if I may say,

15 really had a formative impact on our strategic

16 approach to the resolution of systemically

17 important financial institutions.

18 And I also wanted to acknowledge Mike

19 Bradfield. Who you all knew of course, was

20 general counsel for the Fed for a long time under

21 Chairman Volcker.

22 He also served as general counsel at

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1 the FDIC. I believe the only person to have held

2 both of those positions.

3 I may say one of the really

4 influential banking lawyers of his time. And

5 sadly since this committee last met, Mike passed

6 away.

7 So I just want to take a moment here

8 to acknowledge both Chairman Volcker and Mike

9 Bradfield's contributions.

10 CHAIRMAN McWILLIAMS: Thank you Marty. 

11 All right, you may continue.

12 MR. MORGAN: All right. So, I think

13 I'll pick it up from here. We're going to close

14 out the discussion of the 2016 Guidance.

15 But not before we introduce you to a

16 couple of acronyms, right? And I'll try to

17 define those as we go through here.

18 But we want to spend just a couple of

19 moments on liquidity and capital. We've had some

20 discussion about that.

21 And to explain the concepts. Not

22 getting too deep into the details. Explaining

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1 the concepts of what we're talking about and what

2 the Guidance is expecting of the firms or the

3 plans.

4 Which is in a nutshell, and Rick spoke

5 to it earlier, you know, you need to estimate how

6 much capital you need to get into and through

7 resolution. And, you also need to understand

8 where it is.

9 And then you need to have a process

10 for understanding how much liquidity and capital

11 you would need after filing. And so that's --

12 those are the concepts that I'm going to speak

13 about briefly.

14 So, here are the acronyms. We have in

15 liquidity something called RLAP. Resolution

16 Liquidity Adequacy Position. Right?

17 And this is what Rick, and it's -- we

18 have another one in capital as well, RCAP,

19 Resolution Capital Adequacy Position. Similar

20 concepts in that -- but I'll talk more

21 specifically about liquidity.

22 How much liquidity can the firm --

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1 does the firm need at the material entity level? 

2 Right, so it's measured at the material entity

3 level, to get them into resolution and through

4 resolution.

5 And so the concept is, taking internal

6 liquidity stress tests that the firms, you know,

7 have designed, at the material entity level that

8 they have designated, through a 30-day stress

9 test. It's an internal scenario.

10 And measuring those outflows with some

11 assumptions and some constraints. Treat

12 affiliates like a third party.

13 And don't -- at the end, don't assume

14 that surplus liquidity and one material entity

15 would be easily transferred or transferred to

16 other material entities.

17 That's RLAP, right. So it's about

18 figuring out about how much you need and the

19 position of those within the material entities. 

20 Either in it or close to those material entities,

21 readily available to those.

22 RLEN, another acronym, Resolution

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1 Liquidity Execution Need. So this is post2 bankruptcy.

3 As the -- we are asking the firms,

4 look at each material entity again. And for each

5 material entity, look at minimum operating

6 liquidity that would be needed in a stress

7 situation.

8 That would be your inter-day

9 liquidity, your operating expenses, whatever for

10 that company, plus a peek funding need as the

11 turmoil or the bankruptcy is going on. 

12 Especially in the early days.

13 How much liquidity do you need to get

14 to a stabilization period for that material

15 entity. Those are two separate models and two

16 separate numbers.

17 And we have the same concept for

18 capital as well for resolution capital execution

19 need. Right? Same concept post-bankruptcy, how

20 much to make sure that those surviving entities

21 can remain going concerns.

22 The key, and Rick said it earlier, is

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1 that we don't know the scenario. And the firm

2 doesn't know the scenario that failure will

3 occur.

4 And it's about capabilities. And a

5 lot of these models, RLEN and RCEN, which is kind

6 of post-filing estimation of what you need, are

7 built on what the firms are already doing in a

8 lot of ways.

9 But we're asking them to do it at the

10 material entity level. Short term cash flow

11 estimation. Right? The models are already

12 developed around stress testing.

13 So, the key for capabilities is

14 getting at the material entity level and

15 understanding that.

16 But also, weaving this into, and it

17 goes to a question or a comment that we had

18 earlier, weaving these concepts of RLEN and RCEN

19 into management reports. And having the treasury

20 functions calculate these on an ongoing basis.

21 And as the firm is moving through

22 stress into recovery, their ability to calculate

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1 a number that's so important like RLEN, which is

2 how much you need to get into -- survive through

3 bankruptcy in an orderly way.

4 To be able to calculate that number

5 for management with accuracy and reliability, so

6 that they can have it on a very frequent

7 interval. So that management and boards know,

8 and again it ties into the governance mechanisms

9 that we spoke about earlier.

10 So management and the boards

11 understand, when I get here with some buffer over

12 here, right, I need to start taking some actions.

13 So, those are kind of the liquidity

14 and capital getting just a little bit into the

15 details without, you know, needling it all out.

16 MR. KOHN: So Anat asked -- Anat asked

17 earlier about whether they can assume access to

18 the Federal Reserve. They don't, right? No. So

19 this is their own liquidity.

20 MR. MORGAN: Right.

21 MR. HERRING: And the 30 -- the

22 assumption on 30 days is by the end of 30 days

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1 these subs will be recapitalized.

2 They will regain access to the -- the

3 wholesale financial markets, because they'll be

4 so well capitalized, stabilized.

5 MR. DELFIN: Well, no. There's a few

6 that the RAPs, RCAP, RLAP, the RAPs as are

7 consisting, think of those as how much do you

8 have under stress.

9 So, how much do you have with a 30-day

10 stress using an internal liquidity stress test

11 bad world. Where you can't move it back and

12 forth. There are frictions, because there will

13 be.

14 And think of the RENs that liquidity

15 execution needs, that capital execution needs, as

16 the -- how much do you need? This is what I have

17 under stress with friction. Here's what I need.

18 The importance of these two, they're

19 independent of each other.

20 MR. KOHN: Um-hum.

21 MR. DELFIN: Is you need to file when

22 you have what you need.

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1 MR. KOHN: Right.

2 MR. DELFIN: That gets you through. 

3 The 30 days is just in the determining how much

4 you have. Do you have what you need for 30 days.

5 Does that make sense? Do you --

6 MR. KOHN: But the need is confined to

7 30 days.

8 MR. DELFIN: I'm sorry, in the -- this

9 is the -- we should have been more subtle. But,

10 when we wrote these guides, when we wrote the

11 RAPs, we could have said how much HQLA do you

12 have?

13 But we -- that would have not provided

14 the under stress problem we were trying to get

15 at. So, how much HQLA do you have under at 30-

16 day stress, material entity by material entity

17 where you can't move it back and forth.

18 MR. KOHN: Right.

19 MR. DELFIN: That's a much harder

20 number. That's the RAPs. The RENs are how much

21 do you need to protect your strategy. When you

22 have meets need, is when you file.

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1 In terms of stabilization, you -- your

2 need takes it. The market is not going to come

3 back to you day one. Even if you recap.

4 Even if your material entities recap. 

5 Even if you leave your long term debt behind. 

6 Even if we all believe this is great. Sorry.

7 MR. KOHN: Right.

8 MR. DELFIN: Stabilization is going to

9 be a while along. So you still have to deal with

10 the troth post-filing before stabilization.

11 Firms then need to support the

12 stabilization period. And why there is any

13 return from outside sources.

14 If they can support the return from

15 outside sources, that's fine. But they need to

16 support it and meet with realistic assumptions

17 and based on facts that actually exist. Not

18 fanciful assumptions that they'll just magically

19 get x, y, or z.

20 MR. HERRING: Could I raise an issue

21 with regard to how you measure liquidity?

22 I can understand why you've adopted

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1 high quality liquid assets. It is after all,

2 something we have to measure anyhow.

3 But we should bear in mind that that's

4 a politically negotiated amount that has a lot of

5 very dubious assumptions in it about how much you

6 can get out of selling a junk bond. It has a lot

7 of assumptions about what the asset markets will

8 be like when you want to actually get liquidity.

9 And that's very troubling. Because it

10 was set up for -- well, for a very political

11 purpose, basically to help the Europeans meet a

12 liquidity standard.

13 And I'm unhappy about it being used as

14 kind of the absolute gold standard of liquidity.

15 MR. DELFIN: Understood. There are

16 arguments actually for being able to rely on

17 other sources of liquidity. That is if you can

18 take the discount.

19 MR. HERRING: Um-hum.

20 MR. DELFIN: Other things may be

21 available. But, what we try to do in the RAPs,

22 was use a fairly conservative thinking about what

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1 available resources would be.

2 But they're not perfect. They're not

3 easy.

4 MR. HERRING: Yeah. No, I just think

5 -- I just think for your purposes you might be

6 able to get at it.

7 MS. BAIR: Yeah. And he's so right. 

8 That you're going to be dealing in an economic

9 tumultuous time if this happens.

10 And so whatever those HULAs are, are

11 going to -- probably a lot of the corporate's

12 going to be downgraded to junk. I mean, so you -

13 - you've thought about taking an extra haircut,

14 in gauging the adequacy of liquidity in this kind

15 of post-failure environment.

16 I mean, it seems like, you know, I

17 agree with you completely. But, just you're

18 going to use it because it's there.

19 And the firms are used to it. Just

20 take an additional haircut against it. Or maybe

21 or something like that.

22 MR. DELFIN: Yeah. I didn't think we

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1 hardwired it terribly strongly.

2 MS. BAIR: Yeah.

3 MR. DELFIN: But I'll acknowledge

4 that.

5 MR. BODSON: So Ric, did you say you

6 assumed no access to Fed window?

7 CHAIRMAN McWILLIAMS: I think -- no,

8 I mean it -- I'm not saying what happened in

9 2008, if you had a car you could get a loan.

10 But are you talking about like

11 Treasuries? You know, you are -- that's a pretty

12 severe assumption.

13 MS. ADMATI: Well, I don't think that

14 the assumption is no access. The assumption is

15 more correctly, I think for a status of not

16 relying on that access. Right. So, we're not

17 making, you know, it's --

18 MR. DELFIN: Yeah. We're not saying

19 that the Fed will or will not do anything at the 

20 time.

21 MR. BODSON: Okay.

22 MR. DELFIN: What we're saying is when

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1 the firm writes its plan, it can't rely on as

2 public sources their support.

3 MR. HERRING: I think a strong --

4 MS. ADMATI: Bonds are their friends,

5 will decide.

6 MR. HERRING: It goes back to some

7 initial filings where some firms were planning to

8 rely on the Fed for a year or so.

9 MR. DELFIN: Yeah, yeah. No, I mean

10 -- 

11 MS. BAIR: That's easy.

12 MR. DELFIN: To say -- but to say no

13 to -- to say no is not as draconian, right.

14 MS. ADMATI: Yeah. And we don't have

15 that vocalized. So we wouldn't, you know, we're

16 just assuming that that's not. Yes.

17 (Simultaneous speaking.)

18 MS. BARRAGE: So to Director

19 Gruenberg's earlier point, one of the things we

20 want to highlight before moving to 2017, is what

21 does the public understand about this Guidance?

22 What does the public understand about

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1 these firms? And so in this Guidance, we

2 actually put some specific markers for firms to

3 hit in their public sections then.

4 And my colleague, Nathan Steinwald

5 will walk through those.

6 MR. STEINWALD: Thank you Alex. So,

7 since the living will rule was issued, it

8 contained a portion of requiring the firms to

9 prepare public sections of their plans.

10 And include those with the filings. 

11 And since every time we get a plan, we make those

12 public sections available to the public.

13 As Director Gruenberg mentioned, in

14 late 2014 we received a presentation at this

15 Committee from Professor Herring. And he had

16 some constructive suggestions about the then

17 current state of the public sections.

18 So following that meeting, and working

19 with the Federal Reserve, we provided additional

20 guidance to the firms on the public sections. 

21 And what they should contain in their 2015

22 filing.

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1 And in those 2015 filings we did see

2 more information about the firms, including their

3 material operating entities. What they did, how

4 they engaged with the larger firm as a whole.

5 We saw more information about the

6 strategies. And we saw additional information

7 about what sort of firm they envisioned emerging

8 at the end of the process if they were able to go

9 through their preferred strategy.

10 In the 2017 Guidance, or Guidance for

11 2017 that was issued in April 2016, we also

12 provided a little additional guidance to the

13 firms. And in the 2017 filings we received still

14 further information.

15 So the public plans now also describe

16 the management process that the firms will go

17 through in managing the stress into runway, into

18 resolution. They describe the mechanisms that

19 they built to support it.

20 So they described the contractually

21 binding mechanisms, the calculations that they

22 incorporate into the various triggers and

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1 decisions that they'll have to make at a high

2 level.

3 And they describe how they responded

4 to the shortcomings, to the deficiencies, and the

5 individual elements of the Guidance for each of

6 their plans.

7 So we think that overall, over the

8 past three years, the public sections have

9 improved. We think there's some evidence of how

10 they're being used.

11 We see that the rating agencies have

12 now adjusted their methodologies for evaluating

13 the holding companies and the subsidiaries.

14 They've removed some of the systemic

15 uplift that they provide to the holding

16 companies. Because they have come to feel that

17 there's enough support for the idea of the single

18 point of entry strategy.

19 Where you would have a holding company

20 fail, and the operating entities would continue. 

21 So there's some difference in how they've been

22 rating those different entities.

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1 But, we think that the public sections

2 along with some of the other transparency have

3 improved. Public understanding especially from

4 market participants. But we'd be interested in

5 additional thoughts on how to continue to improve

6 those efforts.

7 MR. HERRING: I would certainly

8 applaud what you've done. And it is orders of

9 magnitude more informative then the first round

10 for sure.

11 It's also longer and more detailed. 

12 I'd like to see a little more standardization of

13 reports that's a little easier to make

14 comparisons.

15 But I think the really lamentable

16 thing is that nobody in the rest of the world has

17 followed your lead. There is absolutely no

18 transparency in what would happen anywhere else

19 as far as I can tell.

20 There may be some documents somewhere. 

21 But, you know, I think you've led the good fight. 

22 I just wish you had more followers.

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1 MR. DELFIN: There is some work

2 overseas. So to come to the aid of our foreign

3 friends, in hopes they come to mine one day.

4 The Bank of England has done a pretty

5 good job of providing transparency on its

6 resolution strategy. It's called the Purple

7 Book.

8 It's a nice book that we actually look

9 to in thinking of ways to improve some of the

10 understanding of the strategies.

11 I think what's different though,

12 because we have Title I, we have firm developed

13 plans.

14 MR. HERRING: Yeah.

15 MR. DELFIN: And you're right that

16 other jurisdictions do not have a parallel

17 processes that we have. So, you don't have

18 transparency regarding firm created plans plus

19 their plans.

20 Now I do think other jurisdictions are

21 looking at the progress that we've made under

22 Title I and thinking about that. But, their

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1 transparency has been on the other side. But it

2 has been quite good.

3 MR. HERRING: Well, yes and no. You

4 really don't know how much progress they've made

5 in terms of restructuring and rationalizing

6 firms.

7 And you know, it's not helping the

8 market much to have some sense that regulators

9 have thought about it, and they think they know

10 what they're doing.

11 MS. ADMATI: Well, Europe is just at

12 the beginning of the banking unit. And we do

13 have some of these banks in this country,

14 Deutsche Bank or a lot of these European banks.

15 So, and they're, you know, they're not

16 able to do much at all. They don't even have

17 deposit insurance.

18 And then they, you know, they're at

19 the beginning of the resolution. They hardly are

20 able to do it on small banks, you know, the kinds

21 that FDIC does for breakfast, so.

22 MR. HERRING: But one of the good

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1 things about requiring larger foreign banking

2 operations to file living wills and have a public 

3 section is it really has raised the attention of 

4 their loan supervisors and regulators about what,

5 you know, their direct disclosures ought to be.

6 And it's going to be too much for many

7 of them to meet the standards. And as you know,

8 some of them are still struggling.

9 But I think even though people could

10 argue that it maybe once again the U.S. asserting

11 extraterritorial powers, it really is having a

12 balance of a very positive effect.

13 MR. COHEN: You know at the risk of

14 piling on on this issue, I have always thought

15 that 2008 was more a function of contagion then

16 interconnectedness. And contagion in itself is a

17 function of lack of information.

18 So, I think what Dick has been pushing

19 for is very valuable. Now, there are many parts

20 of bank supervision which have to be, should be

21 confidential.

22 This is not, I think, one of them,

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1 because of the systemic issues. And to pick up

2 with something Dick said at the very beginning,

3 what's going to be important is if there ever is

4 the need to actually implement one of these

5 plans, that the foot not come off the gas in

6 terms of disclosure.

7 Because for systemic reasons, it's

8 critical that everybody understands what is going

9 on.

10 MS. ADMATI: But the disclosures to

11 the public just on a regular basis as

12 corporations, are poor for the large ones. I

13 mean, we've heard it from many investors, you

14 know, Paul Singer and Kevin Warsh says that, you

15 know, black boxes investors, you know, don't like

16 them.

17 So there's sort of, you know, there's

18 a mutual hate between the banks and the equity

19 investors because of the disclosure being

20 forward. So those are accounting disclosures.

21 You know, and there are footnotes that

22 you can't understand what the risk is. You know,

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1 there's what's inside the big banks like Eisinger

2 and Pecnori (phonetic), where would it be just

3 trying to read the disclosures of Wells Fargo

4 back in 2014, '13?

5 MR. DELFIN: Yeah. I haven't been at

6 the SEC in a couple of years.

7 (Laughter.)

8 MS. BARRAGE: We've, you know, been

9 the beneficiaries of a lot of the feedback. 

10 We've gotten a prior SRAC.

11 So, it's important to tie that

12 progress back. But also to think about, you

13 know, future developments in this area.

14 So, thank you -- thank you both for

15 your feedback.

16 MR. HERRING: If I may make one

17 suggestion about additional clarity I would like

18 to have. It's interesting to know about why the

19 nonmaterial entities, and apparently some of them

20 really are things you do worry about, are

21 nonmaterial.

22 We don't really know about that

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1 sector. There's a huge number of nonfinancial

2 subsidiaries.

3 And you know, I take it on faith that

4 there probably are good reasons that they don't

5 matter. But it would be really nice to have

6 broad categories explaining this is irrelevant

7 because it's a leasing subsidiary and nothing

8 much happens.

9 I don't think that would be -- risk

10 proprietary information. But I think it would

11 help round out the picture and make people feel a

12 little more comfortable that they could match

13 what you're saying with the other data we have,

14 which indicates there's still thousands of

15 subsidiaries out there.

16 MS. BARRAGE: Right. Well, to address

17 your earlier question on the definition, you

18 know, firms -- firms designate their material

19 entities based on whether they support a core

20 business line or a critical operation.

21 So, that's kind of the fork in the

22 analysis. And we've actually done a lot of work

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1 with firms directly to understand their thinking

2 on that.

3 MR. HERRING: But isn't their thinking

4 the same? Could we -- could somebody on the

5 outside know, is that material just for you or

6 for everybody? 

7 MS. BARRAGE: Um-hum.

8 MR. HERRING: You know, if there's --

9 there's a sense in which it would be nice to have

10 a little more clarity in the definitional lines. 

11 So that you aren't surprised if something goes

12 under.

13 MS. BARRAGE: Yeah. That's fair.

14 MR. FISHER: Yeah, Dick's putting a

15 finger on what I was calling the horizontal

16 problem inside a subsidiary. How do we know

17 whether the volatility, liquidity, maturity,

18 mismatch inside that are something we should

19 worry about or not.

20 MS. BARRAGE: Um-hum.

21 MR. FISHER: It's a much harder

22 question to get your hands around, especially

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1 outsiders, but you as well, then the sort of

2 vertical problem of the relationship between a

3 holding company and the big subsidiaries.

4 Right, that's sort of a neat

5 epistemological problem.

6 MS. BARRAGE: Yeah.

7 MR. FISHER: The deep question of

8 what's going on down there in the subsidiary is

9 much harder for us to be confident of.

10 MR. KOHN: So the banks themselves or

11 the holding companies decide what's a material

12 entity? So, I can see the potential for

13 disagreement about the goal of financial

14 stability, and what they think maybe immaterial

15 to them, maybe important to the financial system.

16 So do you guys have --

17 MR. DELFIN: So we, as Alex said, we

18 have requirements about a material entity should

19 be X. And the firm describes, what are their

20 material entities.

21 We ask, how did you get to this? Why

22 not that.

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1 MR. KOHN: Okay.

2 MR. DELFIN: And then that points out

3 whether there is a basis for making information

4 their self.

5 MR. KOHN: And you evaluate it in

6 terms of your -- the goal, the government's goal

7 of the stability?

8 MR. DELFIN: Um-hum.

9 MR. KOHN: Okay.

10 MR. WALL: And we have the authority

11 to tell them if any entity is material.

12 MR. KOHN: That's what I was trying to

13 get at, yes.

14 MR. HERRING: So, you look at the ones

15 that they've deemed not material, and say, uh,

16 I'm not so sure about that?

17 MR. STEINWALD: So, prior to receiving

18 the 2017 plans, we worked with the firms. We got

19 an assessment of their -- we got a preview of

20 their methodology of how they make these

21 determinations.

22 And then we looked at the actual data. 

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1 And the data is both financial and operational. 

2 So, it's not just transactions or obligations,

3 but service dependencies.

4 So you make sure you're getting all

5 the service entities. You know, it might not

6 make a big mark on the balance sheet, but it

7 could be important for the operations of

8 different components.

9 And then we evaluate it in the context

10 of the whole firm. And with the single point of

11 entry strategy and the need to maintain

12 continuity, it puts a risk on, you know, any

13 entity that fails and is no longer meeting its

14 obligations to the firm or providing the services

15 that it was providing, puts the strategy of

16 continuity at risk.

17 So, we evaluate the methodology and

18 then we've looked at the actual data.

19 MR. MORGAN: So, I think that's a good

20 segue from moving from the 2016 Guidance to where

21 we are on this slide, which is the 2017 plan

22 we'll review and the findings.

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1 So I'll just cover a little bit of how

2 we got into the review process for the 2017

3 plans. The Guidance, as you remember, was issued

4 in April 2016.

5 And it was for the July 2017 filings. 

6 So the Guidance was available, of course, as a

7 reference for the firms.

8 In the interim period between the

9 Guidance being published and the filings, a lot

10 of interaction as we discussed already between

11 the agencies and the firms. A lot of engagement

12 and meetings.

13 We issued frequently asked questions,

14 I think it was in September of the 2016. And met

15 with the firms to kind of explain those FAQs to

16 them.

17 As Nathan said, there were surveys

18 conducted by the joint teams of the Federal

19 Reserve and the FDIC, digging in a little bit

20 deeper into some specific areas. And getting

21 some more information to preview information for

22 us before the plans.

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1 And then as the plans were filed, the

2 teams were -- the integrated teams from the FDIC

3 and the Federal Reserve, started the work. We

4 had weekly touch points with the firms through

5 that process of the review.

6 And then, you know, finally kind of

7 fast forward now from July to December, that's

8 when the findings of the December -- of the July

9 2017 plans were released.

10 And the result of that you could read

11 from the letters, is that we noted significant

12 progress that the firms had made in the areas

13 that we were kind of signaling and talking about

14 in the Guidance.

15 We had no deficiencies, fewer

16 shortcomings in the letters as well. But we did

17 flag and identify a couple of areas that need to

18 continue work.

19 And as a matter of fact, I think

20 there's always work that's going to be needed in

21 these areas. So, it's not a stopping point, but

22 just a point to move forward from.

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1 And Alex, I think, is going to cover

2 some of those other areas that we identified.

3 MS. BARRAGE: Right. Thank you Mike. 

4 So, December 2017, here again, we're drafting

5 letters to each of these firms. Public letters.

6 No deficiencies. So you've taken the

7 Guidance. They've incorporated into their BAU,

8 or business as usual.

9 And many ways the first part of the

10 letters for each of these firms is highlighting

11 the significant developments they've made to make

12 themselves more resolvable in bankruptcy.

13 So, they really range across a number

14 of areas.

15 MR. MORGAN: And those are the only

16 letters. There weren't secret letters.

17 (Laughter.)

18 MS. BARRAGE: Yes. This is the

19 official public letters.

20 MR. MORGAN: Just so you're aware of

21 that.

22 (Laughter.)

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1 MS. BARRAGE: So, they've now proved

2 their liquidity and -- excuse me, liquidity and

3 capital forecasting capabilities and resolution.

4 They've developed play books to ensure

5 continuity of access to their payment, clearing

6 and settlement services. They've funded

7 subsidiaries.

8 They've prepositioned a number of

9 their material entities, as we touched on

10 earlier. They've entered into secured support

11 agreements or contractually binding mechanisms to

12 guarantee these applications as a kind of source

13 of strength in resolution concept.

14 They've modified their services

15 contracts to include what we call resolution

16 friendly language. Which basically says, if

17 you're a counter-party on a contract to one of

18 these G-SIBs, as long as you continue to get paid

19 in resolution, you'll continue to provide the

20 services.

21 So, these are in many ways belts and

22 suspenders provisions. But fintech largely

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1 incorporated these provisions into their

2 agreements.

3 Separability, and Mike Morgan actually

4 is our resident expert on separability. They

5 have identified objects of sale across all of

6 their organizations.

7 They've set up due diligence virtual

8 data rooms. And Mike, why don't you talk about

9 that.

10 MR. MORGAN: Yeah. So we spoke about

11 that earlier. So I think it's a good point to

12 come back to with a little more information.

13 The Guidance does require firms to

14 identify objects of sale. And that would be

15 whether it's in their preferred strategy or not

16 their preferred strategy. It could be as a

17 contingency for what they want to do.

18 And some of the expectations that are

19 in the Guidance is they have a process that kind

20 of is ongoing for this identification. It's not

21 kind of a one and done. It's a refresh.

22 And then once they're -- and there's

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1 governance associated with that. That kind of

2 goes up to the top level, the top levels of the

3 organization for those objects of sale that are

4 selected.

5 And then once they are selected, play

6 books that describe actionability. So not did

7 you just, you know, select it, but have you

8 identified the impediments? Operational,

9 financial, or legal, whatever impediments maybe

10 there for that object of sale. Have you

11 identified them and mitigated them if you can? 

12 Right.

13 And a buyer analysis is also a part of

14 that. Now, I would admit that there's more work

15 to be done there.

16 I think we could probably do more work

17 around buyer analysis as well. But, it is part

18 of what we did expect for the firms in

19 separability.

20 MR. HERRING: Are these subjects of

21 sale subsidiaries? Or can they be trademarks or

22 other assets they have on their balance sheet

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1 that aren't necessarily legal entities?

2 MR. MORGAN: They can be a

3 combination. We did not specify.

4 So -- and we'd like a range, right. 

5 So some firms can give us a range.

6 MR. HERRING: No, I was just curious

7 about the --

8 MR. MORGAN: You know, it can be an

9 equity sale. Right, because it's a discrete

10 entity. Or, you can imagine, you know, it could

11 be portfolios that can be easily scalable as

12 well.

13 MR. HERRING: Okay.

14 MR. FISHER: Could I press you? I

15 mean, it's wonderful to make that process more

16 efficient and to have data rooms set up. And

17 think of all the ways you can make the asset more

18 liquid.

19 In those moments though, if you turn

20 that into pressure of time that speed is good,

21 you're not going to get as much money as you

22 could if you could take longer.

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1 So, I just want you to think about

2 removing frictions is good. Insisting on speed

3 is value destruction. Because you get a smaller

4 and smaller buyer base the faster you insist on

5 acting.

6 MR. DELFIN: Well, but we're not

7 requiring the sale.

8 MR. FISHER: No, I know. But, even in

9 your modified plans, you might be implicitly

10 imposing assumption that speed is always good.

11 And their aspects of efficiency is

12 good. And efficiency of identification and ease

13 of severing. And there are lots of frictions

14 that you want to remove.

15 But I don't think you quite want to

16 adopt the assumption that speed is always good. 

17 Because you'll define the buyer universe in too

18 small a way.

19 A good sale is going to take place

20 with someone who's not in their obvious buyer

21 universe.

22 MR. BODSON: Which states the obvious. 

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1 Problems are fast. Solutions are slow.

2 MR. FISHER: Yeah.

3 MR. BODSON: Right. And that's what

4 you see in any wind down situation is they keep

5 on coming at your one after the other.

6 And trying to work your way through

7 the solution, to your point, is always going to

8 take, I think, with all these plans you've got to

9 recalibrate all of them to take that into

10 consideration.

11 Because it's not going to happen the

12 way you expect it to happen.

13 MR. REED: And careful on relying too

14 much on that as a solution to the problem. My

15 experience is when somebody knows you have to

16 sell something, you don't get any money.

17 MR. FISHER: Yeah. That's my point.

18 MR. MORGAN: I think the point, a good

19 point that I didn't make, I should have made up

20 front, is that we're looking at the plans to see

21 if the resolution plan itself relies on the sale. 

22 And they do not.

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1 So this is about optionality. And if

2 there were a reliance on the sale, it would be

3 factored into the capital and liquidity modeling

4 and forecasting.

5 But these are options, right. This is

6 optionality. But the plan doesn't swing that.

7 MR. REED: And I assume it's global.

8 MS. BARRAGE: Yes.

9 MR. REED: In other words you might

10 sell subsidiaries in Brazil or something.

11 MR. MORGAN: Yes. The -- you could

12 include the entire operation.

13 MR. DELFIN: And just to reiterate,

14 it's the board that's making the actual sale

15 decision if they choose. We just want them to

16 have choices and to eliminate the frictions.

17 But when they sell, how they sell, and

18 if they choose to sale, that's their choice.

19 MS. BAIR: But if the -- if they need

20 to raise the cash and if they don't, you're going

21 to risk a system of disruption of an op sub going

22 down, right?

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1 So you've had all this planning, but

2 maybe it's not going to work. So, beggars can't

3 be choosers. And so the thing that's making me

4 uncomfortable in this conversation is I'm going

5 back to the Lehman Brothers days, in the summer

6 when they just couldn't get their price.

7 So, you know, and beggars can't be

8 choosers. And we're talking by definition about

9 a mismanaged firm.

10 MR. MORGAN: Yep.

11 MS. BAIR: Got himself into a

12 difficult situation to begin with.

13 So, my only caveat is, yeah, that

14 shouldn't be the resolution strategy. They

15 should be prepared to be able to do it if that is

16 a necessary step to avoid the system disruption.

17 MR. DELFIN: Right. But Mike's point

18 is that the strategy doesn't rely on it.

19 MS. BAIR: I get it. And I get that's

20 absolutely right.

21 MR. DELFIN: So this is in addition,

22 --

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1 MS. BAIR: Right.

2 MR. DELFIN: As optionality.

3 MS. BAIR: But -- yeah, I just don't

4 want --

5 MR. DELFIN: If they can't do it,

6 strategy still is available.

7 MS. BAIR: Right. And with that, you

8 should -- the regulatory shouldn't step in and

9 force sales.

10 MR. DELFIN: Right.

11 MS. BAIR: Because they wouldn't get

12 a good price. That's the only thing I want --

13 MR. DELFIN: Got you. Understood.

14 MS. BAIR: I think is popping up. 

15 That's also a bad thing to say though as well.

16 MS. BARRAGE: So again, major

17 enhancements to the plans for the U.S. firms. We

18 want to spend a little bit of time addressing the

19 largest foreign banks.

20 Again, similar joint review process. 

21 Same statutory standard. And for that Mike will

22 lead us in that.

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1 MR. MORGAN: Right. So, the large

2 FBOs were provided an extension from the 2017

3 plan to be able to file in July of this year,

4 2018.

5 And that was because of the Federal

6 Reserve's Reg YY, and the requirements around

7 that. Including the requirement of a formation

8 of an intermediate holding company.

9 And in addition, the Federal Reserve

10 and the FDIC jointly released Guidance for the --

11 the four large FBOs that we're talking about

12 here.

13 And that was released in April 2017

14 for the 2018 plans. The Guidance is similar in

15 many ways to the domestic guidance.

16 But it's got some important

17 distinctions of course. A fundamental assumption

18 is no foreign parent support.

19 And the scenario is that the U.S.

20 operations experience material financial stress. 

21 And the foreign parent was unable or unwilling to

22 provide sufficient financial support for the

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1 continuation of U.S. operations. And at least

2 the U.S. IHC files for bankruptcy.

3 In addition, the Guidance included a

4 section on branches. So we wanted the firms to

5 describe for us their branch network in the

6 United States.

7 And how it interacted with the IHC,

8 the legal entities within the United States. And

9 the connectivity and the services that are

10 provided from the branches to the IHC to look at

11 alliance.

12 And then a section on the group plans. 

13 Which these are, of course, pieces of a larger

14 group, foreign group.

15 And to try to at least get an

16 understanding at least as the firms know, of how

17 they're fitting into the larger strategy from the

18 foreign parent or the home country.

19 So, the -- we've had a lot of

20 engagement before the July filing period, as we

21 did with the domestics. A lot of touch points

22 along the way.

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1 The plans came in in July. Our teams

2 again have been working collectively in an

3 integrated fashion, the FDIC and the Federal

4 Reserve.

5 And we are finalizing our review.

6 MR. HERRING: Will there be public

7 releases of whether it's regarding lease as well?

8 MS. BARRAGE: That's our expectation.

9 MR. REED: You know, one issue, which

10 is, and we're going to go again later today into

11 international, but it's clearly a friction point

12 with the foreign banking community.

13 Is they do not believe they are being

14 fairly treated under Crapo, which was referred to

15 earlier. I don't think that quite yet that's a

16 fair analysis, because they aren't treated at

17 all.

18 I mean, there's just been no

19 resolution. And I think that the absence of a

20 defined approach is worse than any -- almost than

21 any approach could come out.

22 So, I would urge that there be a

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1 decision made on how you're going to treat the 50

2 to 250 IHCs. And articulate it as soon as

3 possible.

4 MS. BARRAGE: Thank you. So, I don't

5 think our Title I discussion would truly be

6 complete until we go back in time again, and talk

7 about in many ways the reasons that we do this

8 work. Which is, to avoid another situation like

9 the Lehman bankruptcy case in 2008.

10 For that we have Judge Chapman, one of

11 our newest SRAC members, along with former

12 Chairman Sheila Bair.

13 And I'd like to introduce Judge

14 Chapman as someone who's been intimately engaged

15 on these efforts to address bankruptcy issues,

16 both within her fellow judge community, but also

17 with the agencies.

18 And so, we are infinitely grateful for

19 the contributions of someone who has a very

20 unique perspective on this work. And so with

21 that, I give it Judge Chapman.

22 MS. CHAPMAN: Thank you Alex. Good

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1 morning everyone. It's great to be here. And

2 thank you Chairman McWilliams for affording me

3 the opportunity to speak to everybody today.

4 So, as you've heard and by way of

5 background, and most importantly, in order to

6 provide the Committee with context for my

7 remarks, I'm going to talk about Lehman. One of

8 my favorite -- one of my favorite subjects.

9 And I apologize -- am I on now?

10 MS. BARRAGE: I think so. Is she on? 

11 Okay.

12 MS. CHAPMAN: All right, is that

13 better? Okay. Very good. So, I have been

14 providing over the liquidation of the Lehman

15 Estates for almost five years now. I looked a

16 lot younger when I started.

17 (Laughter.)

18 MS. CHAPMAN: And I assumed the reins

19 of the case when Judge James Peck retired in

20 January 2014.

21 In addition to handling Lehman, I have

22 a full docket of Chapter 11 cases, large and

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1 small. Over the years I've presided over the

2 reorganization of many firms that are familiar to

3 you.

4 Perhaps one of the larger ones that

5 you have heard about is Ambac. I was the

6 presiding Judge in the Ambac case.

7 So Lehman's Chapter 11 cases have

8 often been described with superlatives. And here 

9 I love to quote Judge Peck.

10 Judge Peck has called Lehman "the

11 biggest, the most incredibly complex, the most

12 impossibly challenging international bankruptcy

13 that ever was."

14 I think the proceedings now for Puerto

15 Rico are going to be right up there as well in

16 the annals of history.

17 CHAIRMAN McWILLIAMS: Do you have that

18 one too?

19 MS. CHAPMAN: I do not have that one.

20 (Laughter.)

21 MS. CHAPMAN: My very good friend,

22 Laura Taylor Swain was selected by the Chief

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1 Justice to preside over that. And it couldn't be

2 in better hands.

3 But as we mark the ten-year

4 anniversary of the collapse of Lehman, I believe

5 it is vitally important to reflect on certain

6 aspects of the Lehman demise that have informed

7 the path forward as we continue to work on

8 resolution planning.

9 So I'm not telling you anything you

10 don't know. But I think it's important to repeat

11 it.

12 The collapse of Lehman Brothers

13 unleashed a financial crisis around the world. 

14 Credit markets froze. Global trade all but

15 ceased. Asset values plummeted. And jobs

16 vanished. Lives were ruined. And I've seen that

17 in the last few years.

18 In bankruptcy court during that

19 historic week, the drama of Lehman's sale of the

20 headquarter -- of its headquarters and its

21 broker/dealer business to Barclays unfolded.

22 And again to quote Judge Peck, "there

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1 was a sense that if the sale didn't go through,

2 what was already horrible, would just get much

3 worse."

4 There was the pressing question of

5 whether a transaction that massive and

6 complicated could be approved on such short

7 notice. The due process rights of the creditors

8 and all the stakeholders had to be considered and

9 respected.

10 The day before the filing, on

11 September 14, 2008, Lehman was an integrated

12 global enterprise. It was the fourth largest

13 investment bank in the United States.

14 The next day at 1:10 a.m., and yes, I

15 know the exact time, without preparation, it

16 devolved into adverse factions of affiliates and

17 third-parties competing over hundreds of billions

18 of dollars of assets, and a vast universe of

19 undetermined liabilities that ultimately exceeded

20 one trillion dollars.

21 More than one hundred Lehman

22 affiliates became the subject of foreign

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1 insolvency proceedings in more than 16

2 jurisdictions.

3 I'd like to say this is Lehman by the

4 numbers. And I think the numbers are very

5 powerful.

6 Lehman counter-parties themselves

7 filed Chapter 11 cases of their own across the

8 United States. Ultimately, after the bar date

9 was established, there were over 67 thousand

10 claims filed against the 23 Lehman Chapter 11

11 debtors, asserting in the aggregate more the 1.2

12 trillion dollars in both direct and guaranteed

13 liability.

14 There were many novel questions of law

15 to be determined. Including, but certainly not

16 limited to, questions related to Lehman's

17 derivatives portfolio. Which was comprised of

18 over 10 thousand contracts and over a million

19 transactions.

20 Perhaps the numbers that say the most

21 about the enormity of Lehman, are the docket

22 numbers. That's the number of entries on the

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1 dockets of each of the cases.

2 As of last week, and I checked, we are

3 up to docket number 59,113 in the main LBHI case. 

4 Docket number 14,799 in the LBI SIPA case. And

5 thousands more in the more than 300 adversary

6 proceedings that have been filed.

7 So just by way of comparison, in a

8 typical mega, multibillion dollar Chapter 11

9 case, it's hundreds of filings. Maybe a

10 thousand. But nothing, nothing like this.

11 In my opinion, and admittedly I'm

12 biased, the Lehman cases reflect the highest and

13 best use of Chapter 11 in the public interest.

14 Against the back drop of the global

15 financial crisis, the stakes could not have been

16 higher.

17 And yet, through the work of hundreds

18 of talented and dedicated professionals,

19 including some who have, I think, lent invaluable

20 advice to the agency and to this Committee, and

21 guided by the calm but steady hand of the

22 presiding judge, the parties achieved what I

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1 consider to be a truly remarkable global

2 consensus that enabled Lehman to emerge from

3 Chapter 11 in just three and a half years.

4 A very long time in terms of the

5 economic health of the world. But for a case of

6 this complexity, suffice to say there are longer

7 stays in Chapter 11 then three and a half years.

8 Specifically, with the help of the

9 court, protocols were developed for the efficient

10 administration of the cases, cooperation with the

11 creditor's committee and its representatives, and

12 to Professor Herring's point transparency for

13 parties in interest, and for the public.

14 The parties took full advantage of the

15 flexibility of the Bankruptcy Code and the

16 Bankruptcy Rules. And what's more, as we've

17 discussed, a cross border protocol was

18 negotiated. Which provided for the orderly and

19 efficient administration of proceedings around

20 the world.

21 Apropos to what we're talking about

22 today, it's important to bear in mind that the

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1 filing on September 15, 2008, and what I would

2 say the first three years of the cases, was just

3 the beginning.

4 Among other things as I've mentioned,

5 the Lehman filings have reached a tsunami of

6 claims against the Lehman Estates, as a result of

7 the termination of Lehman facing derivatives.

8 While over 10 thousand counter-parties

9 asserted claims against the Estates that arose

10 from one million derivatives trades, in addition,

11 there were the billions of dollars of mortgaged

12 backed securities claims asserted against the

13 Estate by Fannie Mae and Freddie Mac, and the

14 identification claims that flowed downstream from

15 them.

16 There were complex claims of every

17 imaginable sort. And some you can't even

18 imagine, lodged by former employees, trading

19 partners, customers, everyone who had a

20 relationship with Lehman as of September 15,

21 2008.

22 In addition, the Lehman Plan

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1 Administrator has had to initiate hundreds of

2 lawsuits against parties from whom Lehman needed

3 to recover assets or assert damage claims.

4 Here's my favorite number. To date

5 over 124 billion dollars has been distributed to

6 creditors. With more distributions to come.

7 That number I should add, is net of

8 the many billions of dollars of costs and

9 professional fees that have been incurred in the

10 cases.

11 As of now, the level of unsecured

12 creditor recoveries are over twice what was

13 projected as of the time the plan was confirmed

14 in 2011.

15 Generally speaking, unsecured creditor

16 recoveries are now at approximately 40 cents on

17 the dollar. And substantially more than that in

18 the aggregate for holders of claims that also

19 hold guarantees from LBHI.

20 Of particular relevance to the issue

21 of the resolvability of U.S. G-SIBs in

22 bankruptcy, is the use of the SPLE structure

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1 along with the ISDA Protocol to help avoid

2 massive claims related to derivatives

3 terminations and the concomitant degradation of

4 value associated with wide-scale terminations

5 such as occurred in the Lehman file.

6 I have to say that resolving the so7 called big bank derivatives claims were the

8 biggest challenge I have faced as the Lehman

9 Judge.

10 All of those claims have now been

11 resolved. But the human and economic cost was

12 substantial. 

13 During one two-year period of time, I

14 presided over six lengthy trials to fix the

15 amounts of almost 10 billion dollars of

16 derivative claims asserted against Lehman. The

17 longest of those trials, Lehman versus City Bank,

18 lasted 42 days, and it was only half done when

19 thankfully the parties settled.

20 The Lehman case has unquestionably

21 stressed the Chapter 11 bankruptcy process. From

22 a very narrow creditor perspective, the

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1 bankruptcy process worked reasonably well.

2 Perhaps most importantly though the

3 myriad causes and effects of the Lehman filing

4 have informed many of the aspects of resolution

5 planning.

6 Here are some salient examples. First

7 and foremost, as we've discussed, Lehman was in a

8 liquidity crisis.

9 Second, the filings resulted in a

10 balkanization of the dozens of Lehman entities

11 around the world.

12 Third, the Lehman filings revealed

13 internal organization and operational structures

14 that were severely lacking.

15 Finally, the Lehman filings revealed

16 that large financial institutions were carrying

17 enormous risks on their books that they did not

18 understand or have the ability to quantify

19 remotely accurately.

20 I believe that the work that the FDIC

21 and the firms have done since 2008 has gone a

22 long way to address each and every one of these

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1 issues.

2 It has been my privilege to work with

3 the FDIC staff, sophisticated and dedicated

4 practitioners, and very smart and interested

5 academics to ensure that resolution works from a

6 bankruptcy process perspective.

7 Active engagement with regulators,

8 members of the judiciary, and academic experts

9 have also formed the predicate of significant

10 judicial outreach efforts.

11 Two years ago under the auspices of

12 the Wharton Financial Institution Center, and

13 Professor Herring, a symposium was held at the

14 University of Pennsylvania to discuss and debate

15 the resolution readiness of U.S. G-SIBs, to

16 explore and detail the SPOE strategy and hurdles

17 to its success, and to outline how this all would

18 work under the current Bankruptcy Code, and

19 perhaps under legislation yet to be passed.

20 Building on the success of Wharton

21 Symposium, we have sense held day long

22 educational sessions for the bankruptcy judges

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1 from the Southern District of New York and the

2 District of Delaware.

3 The judicial session I believe, were

4 particularly valuable exercises. Not only were

5 the judges very engaged and incredibly curious,

6 but they were able to become generally familiar

7 with SPO resolution.

8 And the practitioner and agency

9 participants gained valuable insights into areas

10 of concern raised by the judges around both

11 process and substance.

12 In addition, during this past year,

13 under the auspices of the Federal Judicial

14 Center, we have presented an overview of the SPOE

15 resolution to bankruptcy judges nationwide.

16 And while we all hope that SPO

17 bankruptcy remains untested, our mission has been

18 to ensure that any judge who might face the next

19 Lehman, is prepared to the greatest extent

20 possible, to act swiftly, and have an

21 understanding of the resolution process.

22 To that end, we are now working with

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1 the Federal Judicial Center to create a guide to

2 judicial management of the U.S. G-SIB bankruptcy.

3 So as I've said, it's been my pleasure

4 to work with the agency, with the folks that I'm

5 smiling at here today. And to help contribute to

6 the education of the judiciary, something I

7 believe is a critical component of resolution

8 planning.

9 Thank you so much. I'd be happy to

10 answer any questions that you have.

11 CHAIRMAN McWILLIAMS: I like that she

12 delivered all that with a smile.

13 (Laughter.)

14 MR. HERRING: Judge Chapman, is it --

15 would it be unfair to characterize the new guide

16 for judges as sort of a play book for judges?

17 MS. CHAPMAN: Yes. It would be

18 entirely fair to characterize it as a play book

19 for judges.

20 And I think as Alex and Ric have

21 talked about, the firms have gone very far down

22 the road in their play books. Right down, I

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1 believe, to the level of thinking about and

2 drafting what their first emotions would look

3 like.

4 No judge can be in the position to

5 make a decision other then based on what's a

6 record before them. But having general

7 familiarity with what may come before them on

8 resolution weekend, is very important.

9 MR. HERRING: So it will not be a deer

10 in the headlight situation for them. That's the

11 plan.

12 MS. CHAPMAN: The hope was -- yes. 

13 The hope is to avoid a deer in the headlight

14 situation. But by all means, for all the judges.

15 Now the judges who sit in certain

16 jurisdictions have more familiarity with complex

17 cases then others. But we're talking about a

18 bankruptcy on an entirely different scale.

19 I think the largest concern that we

20 have, and the play book, I think, would help, is

21 the timing pressure. You're talking about an

22 exercise that would occur over resolution

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1 weekend.

2 And the concept of having to be ready,

3 thoughtful, with an understanding of what's

4 riding on your decision on that Monday, is very

5 daunting.

6 And that's one of the many drivers of

7 this education process. So that everybody is

8 generally familiar.

9 Just as they are generally familiar

10 with what they need to do in any large filing. 

11 For example, most recently the filing of Sears,

12 which required access to tremendous amounts of

13 debtor in possession financing on a very, very

14 short time frame.

15 MS. ADMATI: I have a question.

16 MS. CHAPMAN: Yeah.

17 MS. ADMATI: So actually you're

18 speaking about Lehman, you know, and it brings me

19 back to the very first Sheila led committee

20 meeting. Where we had the hypothetical of what

21 would have happened, and the smooth way in which

22 this process would have dealt with Lehman.

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1 And I remember Paul Volker asking,

2 okay, so you're going to resolve Lehman in two

3 days. And what are you going to do with all the

4 others that -- because Lehman was the only

5 bankruptcy, because that's the only one that was

6 allowed into bankruptcy. The rest were not.

7 But, if we don't want to have

8 bailouts, then we may have to have a whole lot of

9 these. And, I should say, much bigger then

10 Lehman. Because JP Morgan Chase has, I believe,

11 a million, at least a million contracts of

12 derivatives open in one snapshot, so.

13 MS. CHAPMAN: I think the numbers that

14 I talked about though were in 2011, in the

15 discouragement stage. And I believe FDIC put out

16 a report at the time indicating that everyone

17 thought the recoveries would be 20 cents.

18 So what you see though, what I've seen

19 in going through all the derivatives cases, is a

20 tremendous degradation of value that occurred as

21 a result of the termination of all the Lehman

22 facing derivatives.

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1 And everybody during that week was

2 trading, trying to figure out what their books

3 looked like. Trying to match up their risks.

4 And I hope that as a result of the

5 process that's occurred, they're much better than

6 that. Systems were all over the place.

7 It was my experience that people had

8 no idea what the risk was. What trades were

9 open. What trades were not.

10 And had Lehman been able to be

11 stabilized, had -- I mean, it's all what if, what

12 if. Had those contracts not terminated, there

13 might not have been a bankruptcy matter.

14 MS. ADMATI: Maybe those deficiencies

15 would also --

16 MS. CHAPMAN: What Lehman -- what --

17 even as "good" as these numbers are, it's

18 important to remember, all of the equity like

19 claims, including the deferred compensation and

20 retirements of all of those employees, are gone.

21 And they were -- and I've had to rule

22 that they're gone. Notwithstanding, you know,

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1 tearful testimony from a lot of folks.

2 So even if you had managed to

3 stabilize it from a value proposition, that would

4 have -- it would -- value would have never flowed

5 down that far.

6 MS. ADMATI: Well, it's definitely

7 capital, I think they were listed as.

8 MS. CHAPMAN: Yeah.

9 CHAIRMAN McWILLIAMS: Any other

10 questions for Judge Chapman?

11 MR. KOHN: So I guess -- just so I

12 understand a little better. So what happens on

13 that first weekend, and I'm looking at the chart,

14 the flow chart from earlier.

15 MS. CHAPMAN: Right. Right.

16 MR. KOHN: Is the New HoldCo is set

17 up. So you're not dealing with --

18 MS. CHAPMAN: Right.

19 MR. KOHN: Thousands of -- so there's

20 the hold -- the New HoldCo assumes the qualified

21 financial contracts.

22 MS. CHAPMAN: Yes.

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1 MR. KOHN: And it guarantees them.

2 MS. CHAPMAN: Yes. Once that order is

3 signed. That's the key.

4 MR. KOHN: Once that order is signed,

5 right.

6 MS. CHAPMAN: Right. Right. So you

7 have everything. There's a standstill over the

8 weekend. The status quo is preserved.

9 MR. KOHN: Right.

10 MS. CHAPMAN: You have the transfer to

11 the -- to the bridge company. You have the

12 elevation or the transfer and assumption of the

13 guarantee liabilities.

14 MR. KOHN: Right.

15 MS. CHAPMAN: And then in conjunction

16 with how the ISDA contracts work, those then are

17 not terminable. You have all of the action, if

18 you will, is then up at newly recapitalized

19 holding company.

20 And then the idea is, things settle

21 down relatively speaking. And then the process,

22 the bankruptcy process plays out at the holding

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1 company level.

2 Creditors are all there. And then

3 decisions are made whether or not you're going to

4 sell a material sub. And all that would depend

5 on the facts on the ground at the time.

6 MR. DELFIN: And I think David might

7 join us in a bit. But -- and the creditor issues

8 are also simplified by the clean holding company

9 rule. Which requires that the firm have certain

10 -- minimum amounts of long term debt available.

11 But also minimize the amount of short

12 term creditors that might be there. So the

13 creditor stack is simplified so that if the QFC

14 is transferred -- if you're in a new trust, then

15 the bankruptcy case should be, knock on wood,

16 much simpler.

17 MS. CHAPMAN: Right. But to the point

18 about the importance of there not being pressure

19 to sale or an imperative to sell, you would avoid

20 the fire sale to Barclays on day five.

21 So, that wouldn't happen.

22 MR. KOHN: Because the New HoldCo

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1 would be so well capitalized.

2 MS. CHAPMAN: Yeah. There's no debt.

3 MR. KOHN: It's the theory.

4 MS. CHAPMAN: That's the theory.

5 MR. KOHN: It would be able to access

6 the market and re-enter into new derivative

7 contracts. Because of what -- and so I guess to

8 Marty's two points earlier, were on my mind too.

9 So you've already addressed the cross10 border issues. There's just more -- it's not

11 solved yet.

12 But there's a lot more cooperation and

13 understanding. And then the record --

14 MS. CHAPMAN: I mean, there's the hope

15 that the balkanization would occur less than it

16 did, yeah, to the file too.

17 MR. KOHN: And the other one was the

18 liquidity issue.

19 MS. CHAPMAN: Right.

20 MR. KOHN: So, basically having 30

21 days of high quality liquid assets should get you

22 to the point where this -- this new institution

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1 can access --

2 MS. CHAPMAN: Right.

3 MR. KOHN: The markets. That's the

4 theory.

5 MS. CHAPMAN: Right.

6 MR. WALL: But also, you're preventing

7 the early terminations of the debt.

8 MS. CHAPMAN: Right.

9 MR. WALL: And that would lead to a

10 huge liquidity drain. It did in this case. Or a

11 lack of liquidity.

12 MS. CHAPMAN: Right.

13 MR. WALL: And that actually, I will

14 say, goes to another point. Which is, so the

15 knock on effects, the contagion effects of that

16 kind of -- of those kinds of fire sales.

17 And therefore hopefully immunized or

18 stopped. Because that was part of that. It was

19 part of the Lehman transaction, was that you've

20 got the other funds and others that were severely

21 impacted by the depression of asset prices.

22 MR. KOHN: Right. Now the liquidity

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1 draw on AIG was because it was downgraded. So,

2 this new entity will have to have a pretty high -

3 - I don't know what's assumed in the -- about

4 what the rating of the new entity is.

5 But that would be absolutely critical

6 for the amount of liquidity it needed.

7 MR. DELFIN: Right. So remember that

8 the material entities underneath continue to be

9 open and operating. They're funded. They're

10 recapitalized.

11 Part of the dire for the public plans

12 is for the rating agencies to be able to see more

13 and work with the first in order to steer the re14 rating, because that is a key part of the

15 stabilization post resolution.

16 MR. KOHN: Yeah.

17 MS. DELFIN: Yeah. Remember also that

18 we're talking about those RENs at the liquidity

19 needs, the capital needs.

20 If that's -- the firm fails with a

21 buffer. So that day one it's not going to the

22 market.

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1 MR. KOHN: Right.

2 MR. DELFIN: Day on it's -- so it has

3 time to let its book, you know, come back. 

4 Stabilize, work with the credit rating so you can

5 go back to market.

6 That's where that stabilization period

7 is.

8 MR. REED: My experience is you should

9 double.

10 (Laughter.)

11 MR. REED: You always end up biting

12 off more than you thought. And you really do

13 have to have the liquidity.

14 I mean, it can't be some minimal ratio

15 that sounds good until you need it. Because the

16 markets won't provide it.

17 MR. DELFIN: And that is it. There

18 are many challenges.

19 (Laughter.)

20 MR. DELFIN: The biggest challenge is

21 to what degree can you relay on the assumption

22 that the model can really fit? You have comfort

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1 in the number.

2 And right now things are good. So the

3 numbers are easy.

4 MR. REED: Sure.

5 MR. DELFIN: It's whether you can get

6 those numbers right at the time. It's a

7 challenge.

8 DIRECTOR GRUENBERG: There's going to

9 be an essential judgement made by the public

10 agencies. The Fed and the FDIC trying to make a

11 judgment -- oh, sorry.

12 MR. MORGAN: It maybe on. There we

13 go.

14 DIRECTOR GRUENBERG: Under the

15 statute, the Fed and the FDIC have to make a

16 judgement, can the bankruptcy process handle this

17 in an orderly way or not.

18 That's really the threshold. And if

19 not, then we utilize Title II and order a public 

20 liquidation authority.

21 If you have any, it seems to me, any

22 significant doubts. Because I think it's fair to

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1 say, you only get one shot at this game. Right?

2 MR. MORGAN: You only get one shot.

3 DIRECTOR GRUENBERG: And you've got to

4 have a pretty high level of confidence.

5 MR. COHEN: Ric, to be clear though,

6 on the plans, I have not thought that New HoldCo

7 was actually supposed to access the market for

8 quite some time.

9 It's really the market is at the

10 operating system. Yeah.

11 MS. BARRAGE: So, in recognition of

12 the development of these plans, our guidance, we

13 think another important piece of the puzzle and

14 the patchwork here is the regulatory development.

15 So we'll spend a little bit of time

16 talking about external TLAC, the holding company,

17 and the ISDA, QFC tables, and then we'll complete

18 our discussion with next steps.

19 So, David Wall?

20 MR. WALL: Yeah. So I know we're

21 bumping up against their lunch deadline. So I'll

22 try to be pretty brief.

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1 Indeed, and then we've talked about

2 sort of the -- what the agencies have done kind

3 of administratively, or you know, internally up

4 to this point. 

5 I think it's also important to give a

6 full context of where the regulatory developments

7 have gone over the last couple of years since we

8 -- since the Committee has met.

9 All right, so we're going to focus on

10 two things. One is the development of the TLAC

11 rule under the -- by the Fed. And I know we've

12 discussed some of that already in some degree.

13 And also then talk about what's going

14 forward under the -- with the Banking Agency's

15 rules on QFC termination and stay and transfer

16 rules.

17 So, first of all, as you're no doubt

18 aware, the Board of Governors on December 2016

19 put out its final rule for total loss absorbing

20 capacity for the G-SIBs. The rule also applies

21 to top carry and U.S. intermediate holding

22 companies of FBOs.

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1 But, the ones that are required to

2 establish those holding company under Reg YY,

3 we'll talk about those later on when we get into

4 the international area.

5 But so I'm just going to focus on the

6 U.S. banking, U.S. bank holding companies'

7 requirements under the Rule. The objective

8 basically of the Rule is to provide this kind of

9 capacity in order to improve the resiliency of

10 those covered companies.

11 And to avoid the kind of stress that

12 would lead to insolvency. And if they do enter

13 into insolvency or face material financial

14 distress, to improve their resolvability in that

15 event.

16 To this end, the Rule the TLAC Rule

17 imposes certain requirements under liability

18 structures of the covered DHCs. And covering in

19 real the part for our purposes, two areas.

20 One is the requirement to maintain the

21 loss absorbency capacity through the issuance of

22 eligible capital and long term debt instruments,

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1 together with a parallel requirement to meet a

2 certain -- to maintain a certain amount of

3 eligible long term debt.

4 And the second aspect is, as we've

5 talked about, alluded to earlier, the clean

6 holding company requirements.

7 And these are generally limit --

8 prohibit bank holding companies from incurring

9 certain types of liabilities and entering into

10 certain arrangements that we think -- or at least

11 the Federal Reserve thought could exacerbate

12 systemic risk in the case of the firm's distress

13 or failure.

14 I want to go over briefly each of

15 those in turn. With regard to the TLAC and LTD,

16 that is total loss absorbing capacity in long

17 term debt. Keep the acronyms a little bit in

18 check here, requirements for the holding

19 companies.

20 The basic requirement, is that covered

21 bank holding companies have to maintain a minimum

22 ratio of TLAC and a minimum ratio of eligible

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1 long term debt in addition to certain buffers

2 that are added onto them.

3 And calculations are a little

4 complicated. But they are based off of both risk

5 weighted assets, and leverage assumptions.

6 But, they -- one of the important

7 points to note here is that there are -- this is

8 a parallel structure. You've got the TLAC

9 instruments that the bank holding company has to

10 issue and maintain.

11 You've also got long term debt. Which

12 is a related but separate requirement. And one

13 might ask why did we end up in that situation?

14 Well, you've got -- you have to have

15 a certain mix that includes long term debt. And

16 that was because there was a thought that

17 imposing a separate long term debt requirement

18 helps to ensure that a firm has loss absorbing

19 capacity in excess of the going concern equity

20 capital.

21 Which debt capacity is not the same

22 risk of depletion before the firm enters into

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1 resolution or volatility for that matter. And

2 that will go towards enhancing a successful

3 resolution in the event or in the end, I guess.

4 The TLAC is -- what's eligible for

5 TLAC or what counts for TLAC is Tier One capital

6 and the unpaid principal amount of eligible debt

7 securities. There's a haircut for amounts that

8 are due to be paid within one year.

9 Similarly, the eligible instruments

10 for counting as long term debt consists of the

11 unpaid principal amount of eligible debt

12 securities. In this case they are subject to

13 haircuts for amounts due to be paid within the

14 next two years.

15 The -- for both of these requirements

16 the securities that are eligible have to comply

17 with certain criteria that are designed to make

18 sure that they can be easily marketable.

19 First of all they have to be governed

20 by U.S. or Federal law. They are obviously

21 unsecured. To do so otherwise would reduce your

22 loss absorbency considerably because you have to

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1 deal with the collateral offset.

2 The securities also have to be what

3 the Fed call plain vanilla. Which I thought was

4 an interesting term. But, has nothing to do with

5 ice cream. It has to do with the fact that they

6 are limited acceleration rights for this debt.

7 So, the debt should be sticky. It

8 doesn't have features that reduce it as a result

9 of credit events that happen at the bank holding

10 company level. And not convertible to equity. 

11 That makes sense.

12 And then there has been a whole debate

13 about whether structured notes would qualify for 

14 TLAC or LTD. And in the end, the idea was that

15 structured notes are, since they're bespoke or

16 unique and hard to value, they were going to be

17 restricted from eligibility.

18 And there are some ways in which some

19 of them could be possibly counted. But by in

20 large, they're eliminated from the category.

21 And as was mentioned before, the Rule

22 itself actually requires that bank holding

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1 companies publicly disclose a description of the

2 financial consequences to holders of the debt if

3 the covered BHC goes into resolution or

4 bankruptcy.

5 And therefore, I think, we're not

6 relying solely on securities log disclosures to

7 make sure that the market is aware of what the

8 consequences would be. And what -- and where

9 these instruments are positioned within the

10 structure.

11 Full compliance with the law is --

12 with the Rule is required by this January 1. 

13 That this January will be regarded as not going

14 to be much of an issue for U.S. bank holding

15 companies, because as their current liability

16 structures are set out. They pretty much meet

17 and actually generally exceed the TLAC

18 requirements by a good margin, so.

19 Now, onto the clean holding company

20 requirements. These again, are part of the --

21 are part of an effort to facilitate an efficient

22 and successful resolution.

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1 They're designed basically to prevent

2 or eliminate as that Rule comes into effect, bank

3 holding companies which would be subject to the

4 SPOE action, from being party to transactions

5 that could impede that resolution, increase the

6 risk that the resolution would create some kind

7 of contagion and -- destabilize the financial

8 system by their -- by the fact that they create

9 interconnections with other institutions.

10 The -- more specifically, the covered

11 -- the bank holding companies are prohibited from

12 issuing short term debt, creating set off rights

13 against subsidiaries, entering into QFCs other

14 then credit enhancements with third parties,

15 which are, let me just put it simply, are already

16 accounted for by the ISDA Rule.

17 And -- or and also prohibited from

18 accepting or being -- back the shares of upstream

19 guarantees by the -- by their subsidiaries.

20 I think there is a small, 5 percent

21 aggregate amount of non-contingent liabilities

22 that may exist in the system for, you know, sort

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1 of prey predators. And those are sort of

2 accepted from the eligible debt requirement rule,

3 even though they will -- would be pari passu with

4 the -- with that long term debt.

5 But, the --

6 MR. HERRING: David, what's the

7 rationale for having trade creditors involved and

8 come in? It's sort of a -- it's purely financial

9 what kind of -- they don't really have the kinds

10 of regular expenses you would expect.

11 MR. WALL: You know, I think it's

12 really a catch all for them. I mean, there are

13 going to be some -- some services that need to be

14 provided by the holding company.

15 So, I think they have a complete --

16 MR. HERRING: So it's going to be like

17 if you have accounting receivable?

18 MR. WALL: Yeah. You know, paper

19 suppliers, utility companies, those sorts of

20 things can be.

21 MR. HERRING: Okay.

22 MR. WALL: But don't -- so they can be

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1 accepted from what would otherwise be a short

2 term debt. To the extent that they had those,

3 you know, those short debt arrangements, they can

4 be accepted from the -- from requirements.

5 So, let me stop there and see if

6 there's -- and I know that was a lot in a short

7 amount of time.

8 But, if there's anything, any other

9 questions or thoughts on the TLAC Rule, or the

10 clean holding company requirements?

11 (No response.)

12 MR. WALL: Okay. If not, let me turn

13 it over to my colleague Ron Crawley to talk about

14 where we are with the ISDA and U.S. stay rules.

15 MR. CRAWLEY: Thanks David. In the

16 next few minutes, in a few minutes, I'm going to

17 quickly discuss the recent ISDA U.S. stay

18 Protocol, which was published in response to

19 banking regulations meant to address this

20 disorderly unwind of qualified financial

21 contracts, which are QFCs, due to early

22 termination.

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1 We all know this, we've been

2 discussing this this morning. Historically,

3 counter-parties can rely on safe harbors under

4 the U.S. Bankruptcy Code to terminate certain

5 financial contracts upon the insolvency of a

6 financial entity.

7 The term -- these termination rights

8 can have a destabilizing impact, as we know from

9 the Lehman case.

10 The exercise of cross default rights

11 and Lehman matter resulted in a seizure and

12 liquidation of collateral. I also understand

13 there were substantial losses we all know, and

14 significant outflow of liquidity.

15 As an industry led initiative, the

16 international Swaps and Derivatives Association

17 known as ISDA, consulted with consulting the

18 FDIC, the Federal Reserve, and the OCC along with

19 foreign regulators, established in 2015 the

20 Universal Protocol as a way to begin to address

21 these issues, including too big to fail.

22 In 2017, the U.S. Banking Regulators

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1 took an even further step to address too big to

2 fair. Specifically, the FDIC, the Federal

3 Reserve, the OCC issued final rules requiring

4 U.S. G-SIBs, their affiliates, and certain

5 foreign G-SIBs to amend their QFCs to include

6 certain provisions designed to limit the ability

7 of counter-parties to close out these contracts

8 in the case of a G-SIB resolution.

9 In particular, I'll be very quick

10 here, in particular, the QFC stay rules require

11 QFCs of certain G-SIB entities to contain

12 provisions requiring or providing for cross

13 border recognition of U.S. special resolution

14 regimes such as Title II and the FDIA, along with

15 stay and transfer provisions leading to cost

16 defaults arising from the entry of an affiliate

17 of a G-SIB entity into certain insolvency

18 proceedings, in particular, the U.S. Bankruptcy

19 Code.

20 For G-SIB entities to comply with the

21 QFC stay rules, all G-SIB counter-parties,

22 including buy side and smaller sell side market

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1 participants, are effectively required to either

2 adhere to the Universal Protocol that was

3 established in 2015, or a newly developed U.S.

4 Protocol.

5 There was also -- there is also an

6 opportunity to comply with the Rule by lateral

7 amendments.

8 In 20 -- I'm sorry, in July 2018, just

9 a few months ago, in response to these rules,

10 ISDA published the 2018 U.S. Protocol after

11 consultation with the FDIC, the Federal Reserve,

12 and the OCC.

13 The U.S. Protocol is a tool really to

14 assist market participants adhere to compliance

15 states required by the QFC stay rules. They -- I

16 want to just mention quickly, there are certain

17 tier compliance states which begin on January 1,

18 2019 under the Rule.

19 It is important to note finally that

20 the U.S. Protocol is offered as an option to

21 address buy side firms' concerns of potential

22 over-compliance via the Universal Protocol. And

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1 to incentivize buy side firms' compliance with

2 the QFC stay rules.

3 It is important to note that U.S. G4 SIBs have adhered to the U.S. Protocol. And by

5 my count last night looking at ISDA's website, it

6 appears that over three thousand market

7 participants, including the U.S. G-SIBs, have

8 adhered to the protocol. Thank you.

9 MS. BARRAGE: Thank you very much Ron. 

10 Earlier I promised I'd bring this group to today. 

11 So here we are today. Welcome.

12 What's next? For the U.S. firms,

13 remember the Guidance document we had up there? 

14 When it was originally issued in 2016, it was

15 issued publically.

16 This year in July, we issued -- we

17 reissued that Guidance with some additional

18 updates on key areas for public comment.

19 We received public comment from the

20 industry and other players in September. Staffs

21 at the FDIC and the Fed have been reviewing the

22 Guidance.

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1 A lot of that Guidance, I have to say

2 was pretty helpful. We are very close to

3 reissuing the final Guidance, having considered

4 those comments, along with an accompanying

5 preamble. So that's to come.

6 The U.S. firms will be filing their

7 next resolution plans in July of next year. So,

8 hopefully they'll be able to use this reissued

9 Guidance in that endeavor.

10 For the foreign banks, as Mike Morgan

11 mentioned, staffs are completing their reviews of

12 those plans. And we expect to have feedback

13 letters for those firms in the short term.

14 And finally, in this era of tailoring,

15 resolution planning and the resolution plan rule

16 will be tailored in the future. Our Chairman has

17 been public about those ongoing efforts. And so

18 that's another upcoming feature of resolution.

19 So, with that, I want to thank

20 everyone on the panel today. And the Committee

21 for your very insightful questions. Ric or Art?

22 MR. REED: Can I ask a question? You

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1 know, traditionally banks get into trouble or

2 financial institutions, because of asset

3 problems, which then triggers liquidity and so

4 forth.

5 Have you looked at the risk of an Uber

6 moment? You get a non-financial institution that

7 really disrupts the business of the established

8 players?

9 And the question would go across to

10 all institutions. And so the established players

11 lose the revenue, have the expenses, and become

12 unviable economically. Much like owning a taxi

13 company when Uber comes into the market.

14 But there's a substantial, I think,

15 risk in the financial world. And these changes

16 tend to occur quickly.

17 You know, a new product offering comes

18 in. Gets good acceptance, as Uber did. And the

19 established entities are at severe risk.

20 And I wonder, do any of your models,

21 matching that the nature of the problem is

22 revenue disappears, expenses stay?

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1 MR. DELFIN: So, our models aren't

2 based on the cause. We don't know what that

3 would be.

4 But we want to make sure the firms

5 have the capabilities and systems in place to,

6 whatever the cause is, adapt to it, and apply

7 their regulations that way.

8 MR. REED: And so it would say it

9 would crash all institutions.

10 MR. DELFIN: Right, so we can't, or we

11 don't, we work with our supervisory and our

12 colleagues at the Federal Reserve on risks more

13 generally.

14 Our focus here is about --

15 MR. REED: If it happens, what do you

16 do?

17 MR. DELFIN: And making sure that if

18 a firm fails, whatever the cost, we can't adjust

19 the cost. It's -- mortgage backed securities. I

20 can't do anything about mortgage backed

21 securities.

22 But, the exaggeration or the increase

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1 in risk that flows from fair, really we're the

2 first, fair to Lehman to the rest of the G-SIBs,

3 we can help mitigate that contagion associated

4 with the cost from resolution.

5 That's the -- that's where we play. 

6 Is that hoping whatever the risk is, apply. It

7 applies to the system. It applies to the firm.

8 But it's not made worse by contagion

9 and by disorderly resolution. That's where --

10 that's where this work is.

11 So making sure we don't worry about

12 this.

13 MR. REED: You do worry about those.

14 MR. DELFIN: We worry a great -- I

15 worry about everything.

16 (Laughter.)

17 MR. DELFIN: I'm a professional

18 worrier. But the tool --

19 MR. MORGAN: I can testify to that.

20 (Laughter.)

21 MR. DELFIN: But the tool that I'm

22 applying today, is the resolution and process. 

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1 And having each of these firms take the steps to 

2 and get the results of the backup rule. It's a

3 tool that I'm applying here.

4 I worry about every single little

5 something, unfortunately.

6 MS. BAIR: So yes, so Rick used to

7 work for me. So I can attest to the fact that he

8 was -- and that way we were in a partnership

9 because I worry about everything too.

10 You know, I think though, we talked

11 about this a little bit a zillion years ago when

12 I was involved in that.

13 But I think if it's a competitive

14 instruction, where you've got a new fintechs

15 coming in or whatever, so the service is still

16 being provided to the public. It's just by a

17 different competitor.

18 And so really the objective of this is

19 not to prop up the banks or keep them around if

20 they don't need to be around. It's just to make

21 sure whatever those services that are needed for

22 the public continue.

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1 So that might -- I think that scenario

2 is a little bit different from, you know, the

3 kind of meltdown we had in 2008. But yeah, the

4 corporate data only knows who, wherever it might

5 come.

6 I just wanted to make a little

7 advertisement for the Systemic Risk Council. We

8 have a couple of our members here. But we --

9 CHAIRMAN McWILLIAMS: We don't like

10 competition.

11 (Laughter.)

12 MS. BAIR: Okay. Sorry about that. 

13 So, we filed a comment -- so as you all know the

14 Fed and the OCC have proposed some significant

15 reductions to the largest FDIC insured banks. 

16 About 121 billion of capital.

17 But it relates to if they change the

18 enhanced supplementary leverage ratio. So,

19 that's tied to TLAC. So that will reduce TLAC

20 too, I assume if that happens. And I don't know

21 if that happens, and I hope it doesn't happen.

22 The one point -- so, I'll just refer

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1 people to the SRC comment letter on that. I

2 think it takes away the well why we think that's

3 a bad idea.

4 But also to underline the point, back

5 to the internal TLAC comment earlier, if the Fed

6 and OCC do that, and gosh, I hope they really

7 don't do that, because that's going to increase

8 the risk of a large FDIC insured bank failing.

9 But if they do, it's going to make it

10 even more important to have -- so you're going to

11 release that capital back up. And then you're

12 going to have to bring it back down if there's a

13 distress situation.

14 So to make sure you have rock solid,

15 legally enforceable commitments to get that

16 capital back into the insured banks. And again,

17 I would -- if you haven't read our SRC letter, I

18 think I sent it to you all on that.

19 I think this is extremely important. 

20 And I wanted to make clear that those two issues

21 are related.

22 MS. ADMATI: Can I make another

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1 comment? Because I see that the afternoon is on

2 Title II. And this is still a Title I comment.

3 So, we're trying to stop too big to

4 fail here by making fail possible. But, you

5 know, fail is sort of the pound of cure.

6 And so going back to Sheila's comment

7 versus the few ounces of prevention that we have. 

8 And obviously, to the extent that it's part of

9 resolution and failure, it's not going to be, you

10 know, pretty to convert and all this other stuff.

11 So, the question I've been asking, and

12 last week Ron (phonetic) asked the same question,

13 why isn't TLAC, TLAC? Why since you have to

14 force them to issue it anyway, why is it not the

15 gold-plated loss absorption that Sheila was

16 mentioning?

17 We're talking not any regulatory

18 capital, but equity capital. So, you know, I

19 told somebody who is not over here from the Vice

20 -- your Vice Chair this year, this year, 2018 at

21 Stanford of saying too big to fail list stays

22 here. And then you don't solve the problems of

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1 too much debt with more debt.

2 So, he didn't like TLAC as a solution

3 to resiliency, stability. And I think that

4 there's still a challenge of justifying that.

5 MS. CHAPMAN: Yeah. And I think, you

6 know, to the point you made earlier in that is

7 the question is well, what if this isn't one off? 

8 Right? What if the, you know, --

9 (Simultaneous speaking)

10 MS. CHAPMAN: And that leads to the

11 question about, you know, the adequacy of the

12 post crisis reforms put into place.

13 If we feel confident that the system

14 is a lot more resilient now, then there should --

15 there will be a couple of these credit vendors

16 probably will get into economic distress, because

17 there are always a couple who don't manage well.

18 But if we've not done as good a job as

19 we should with post crisis reforms, then you're

20 going to have across the board thing. And you

21 won't have to have bail outs again.

22 Probably the Fed this time. Not

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1 taxpayers. And that's not a happy situation for

2 the Fed. But, I think that's -- it's inevitable.

3 You can't take all eight into a Title

4 II or a Title I. It just can't happen.

5 MR. HERRING: I'd like to piggyback on

6 John's comment and I think Anat's really as well. 

7 And that is that there may be some entities that

8 are not in our, you know, but that do become

9 systemic --

10 MS. BAIR: Well, that's also great and

11 on and on, right.

12 MR. HERRING: And we have sort of

13 nothing set up to deal with them. In principal

14 FSAC was supposed to be active in this area.

15 But, --

16 MS. BAIR: They don't want to anymore.

17 MR. HERRING: Just based on what I can

18 see of what they're reporting, it's been pretty

19 low level activity. And they're certainly not

20 aggressive in trying to --

21 MS. BAIR: No, because they dropped. 

22 They keep dropping.

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1 MR. HERRING: Yeah, well they've

2 dropped a number of people that are designated. 

3 But, I think it is an important problem, not in

4 protecting the profitability of the banking

5 system, but in trying to make sure that we have

6 tools to deal with systemic risks wherever it

7 ends up in the system.

8 And it -- I mean, I'm worried that we

9 didn't really address that as we got right there.

10 MS. BAIR: Well that's funny. I think

11 that just gets back, you know, where the post

12 crisis reform is adequate.

13 And Title I was meant to address that. 

14 And it's -- if there are truly no systemic

15 entities outside of those eight, then it's fine

16 we don't have any Title I designation.

17 But who in this panel is confident

18 that there is truly nobody that's systemic

19 outside of those -- those few --

20 MR. HERRING: Well, I would like to

21 inquire about the mechanism we have for making

22 that decision.

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1 MS. BAIR: Yeah.

2 MR. HERRING: I'm not sure that it's

3 actively enforced.

4 MR. DELFIN: Wow. Really. I hope you

5 found that we've made substantial progress on it.

6 MS. BAIR: Yes.

7 MR. DELFIN: A number of these things

8 that were central the previous financial crisis. 

9 I do think we've walked through a lot of that

10 today.

11 And that maybe a different --

12 CHAIRMAN McWILLIAMS: Oh good. Lunch

13 people.

14 (Laughter.)

15 (Whereupon, the above-entitled matter

16 went off the record at 12:06 p.m. and resumed at

17 1:30 p.m.)

18 CHAIRMAN McWILLIAMS: Hello, everybody. 

19 We're going to make the trains run on time. So

20 it's our Part 2 of today which is appropriately

21 Title II. Given how long we spent on Title I, I

22 anticipate this is going to be another very

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1 engaging and deep conversation because now we --

2 if some of the stuff in Title I has not been

3 tested, stuff in Title II definitely has not been

4 tested, so I'm dying to hear what you have to say

5 about it. Without further ado, please.

6 MR. MURTON: Okay, great. Yes, we're

7 going to talk about the Orderly Liquidation

8 Authority which has been mentioned as the back

9 stop that Dodd-Frank provided in the event that

10 bankruptcy would be judged to have unacceptable

11 systemic consequences.

12 Since this Committee met last time,

13 the U.S. Treasury issued a report on Orderly

14 Liquidation Authority and we'll touch on that a

15 little bit. But mainly I think we'll talk about

16 the work that we've done to prepare for the

17 eventuality that we would actually have to do a

18 Title II resolution. So we'll hear about that

19 work and we welcome your reaction to that and

20 feedback in the work that we've done.

21 After that session, we'll go to the

22 international segment of it, and as was mentioned

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1 before, global cooperation is key to the success

2 of one of these and we'll talk about the work has

3 been done both bilaterally with the other key

4 jurisdictions and also on a multilateral basis. 

5 So with both of these efforts, the

6 Title II and the international, we'd like to find

7 ways to be more transparent about what we've

8 done. You've heard a lot on the Title I front,

9 the progress that we've made in transparency

10 there and we're thinking about ways we can do

11 more of that on the Title II space as well.

12 So with that, let me introduce the

13 panel. Rick and I are joined by Herb Held, Ryan

14 Tetrick, Betsy Falloon, and Pen Starke. And

15 we'll start by turning it over to Herb.

16 MR. HELD: So one of the biggest helps

17 for working on Title II has been the advances

18 that have taken place in Title I. And all the

19 Title I planning has put us in a much stronger

20 position if we are ever called upon to exercise

21 our Title II authority.

22 We hark back to the early years of

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1 this Committee. We came here and presented our

2 SPOE strategy and that was SIFI fails, all the

3 assets go to the bridge financial institution,

4 liability is left behind. We do evaluation of

5 the firm at that point, evaluate and we do claims

6 for equity exchange, hopefully exit six to nine

7 months, I think we might have said in the first

8 one, pretty optimistic.

9 One of the members of the Committee at

10 some point -- one who is not here -- said I don't

11 think that's a liquidation. In our next meeting

12 of the Committee, we instituted -- we showed you

13 a different schematic where we put into the

14 bridge and you have optionality on what happens

15 to the various operating entities under the

16 bridge, and an optionality that maybe the broker

17 dealer has wound down, sell off the asset

18 manager, possibly break up the bank. 

19 And so after that, the firms all moved

20 to SPOE and they developed optionality within

21 their plans in a much more detailed way which

22 feeds back into our planning, giving us many more

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1 options that have been worked out in detail by

2 the firms on possible exit strategies for a

3 bridge financial institution. 

4 What will actually happen is really

5 going to be dictated by the economy and the

6 problems in the firm at the time. But it gives

7 our board the option to choose which method works

8 best at that time. 

9 We've done a lot of work trying to

10 come up with how you implement a Title II

11 resolution, so there's here's the strategy and

12 you figure out all the steps necessary to

13 implement that strategy. I think we talked about

14 that at our last Advisory Committee, and then how

15 you do each one of those steps, all of the

16 procedures, all of the people involved, all the

17 legal documents. And we've done a lot of testing

18 of that work with our board and inter-agency.

19 And then on transparency, we've done

20 work in the space with other regulators and

21 foreign regulators. We've not done a great deal

22 in outreach other than chairman speeches on what

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1 we would do in detail in a resolution.

2 So OLA really builds on our long3 standing tradition here at the FDIC and it was

4 really written from the FDI Act. And the bridge

5 financial company is really just our old bridge

6 bank that we've used a number of times blown up

7 to the largest possible size it could be.

8 It gives us tools to implement an

9 orderly resolution for a failing firm in

10 scenarios where the bankruptcy just didn't work

11 out or it doesn't appear it will work out. The

12 statute and the Treasury report that Art

13 mentioned just a minute ago does reiterate that

14 bankruptcy is the first resort in any resolution

15 and that there's a high bar to actually

16 implementing a Title II. 

17 One of the key considerations is that

18 failure within bankruptcy would have caused

19 systemic risk to the country. And pretty much

20 everybody on this side of the table and I'm sure

21 our board members would highly prefer a

22 bankruptcy to a Title II.

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1 CHAIRMAN McWILLIAMS: Funny that you

2 say that.

3 (Laughter.)

4 MR. HELD: Title II, just because the

5 bankruptcy hasn't worked means that something is

6 really horribly wrong both with the firm and that

7 their plan isn't going to work. So we're handed

8 the worst possible situation to deal with.

9 What we've seen is that the work in

10 Title I, I've always wanted to do a slidometer

11 and that my percentage of scenarios where Title I

12 would work or the opposite end of it is where

13 Title II is necessary. So if you look at that

14 meter and say 2011, we're pretty much at zero on

15 Title I working. The plans really didn't address

16 resolving the firms. And I think that that meter

17 has moved dramatically over. 

18 There are still scenarios where Title

19 II is going to be necessary and I think that you

20 never get to 100 percent. It's somewhere less

21 than that. So we need to engineer a plan for a

22 Title II resolution. As the plans become more

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1 and more mature and robust, that possibility

2 becomes less.

3 MR. KOHN: What indicators would you

4 be looking at to see whether you should shift

5 from Title I to Title II? What would be the --

6 liquidity would be one?

7 MR. HELD: I think liquidity is the

8 key.

9 MR. KOHN: Yes.

10 MR. HELD: The firms have developed 

11 the measures of we need so much liquidity and we

12 need so much liquidity when we go into

13 bankruptcy. If you're far beyond that number, if

14 the firm has not acted, it's an indication that

15 bankruptcy is not going to work. If there are

16 measures that say we need $100 billion in

17 liquidity to go into bankruptcy and you're at 50

18 --

19 MR. KOHN: I guess the question would

20 be how did that situation arise and would the

21 FDIC and/or the Fed intervene -- when it got to

22 99?

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1 MS. ADMATI: Well, it says that the

2 supervision regulation is vague because these are

3 all bank holding companies. They do have access

4 to liquidity supports. So in a scenario where

5 it's really a liquidity problem and not a

6 solvency problem, then so now, you know, we can't

7 have it both ways. 

8 If the regulation has failed to

9 prevent insolvency, then we're insolvent. Now we

10 have a hole somewhere.

11 MR. DELFIN: If we go on a time line

12 and we just talked about Title I. We've talked

13 about the models and the methodologies. We've

14 talked about the governance mechanism, the

15 triggers. You would imagine a firm suffered some

16 sort of stress and the first state is obviously

17 bankruptcy, so the firm would have its models. 

18 They'd be assessing their liquidity needs. Is

19 there liquidity availability, their capital

20 needs, their capital availability, and their

21 governance triggers?

22 And we don't know the scenarios. 

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1 Again, that's part of what this is all about. 

2 But if for some reason there was a shortfall in

3 the amount of liquidity necessary, that is a

4 place where again policy makers would make

5 choices and one of those choices might be well,

6 what does Title II add that bankruptcy doesn't

7 have? And liquidity would be one of those

8 things.

9 That being said, if the models work,

10 if the liquidity is available, then that's much

11 easier to think about bankruptcy. I think those

12 are the kinds of trade-offs.

13 You also don't know, we get asked

14 sometimes well, what if you're dealing with two

15 or three at the same time? You know, if I were a

16 policy maker and the first one maybe bankruptcy

17 was going pretty well, and then another one comes

18 along or a third, at this point maybe, one thinks

19 about a different choice. I want to give maximum

20 optionality to the folks that would be making

21 those calls at the time and then do what I'm

22 told.

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1 (Laughter.)

2 MS. BAIR: What about if the

3 regulators, the foreign regulators are telling

4 you, we're going to ring the fence if it goes

5 into bankruptcy? Would that be a factor? I mean

6 I don't think that should be in the realm of

7 possibility.

8 MR. DELFIN: I think it's safe to say,

9 obviously, would prefer Title II to Title I.

10 MS. BAIR: Right.

11 MR. DELFIN: And so if it gave them

12 the keys, you know which key they choose. They

13 don't get a key.

14 MS. BAIR: Right.

15 MR. DELFIN: So what we've tried to do

16 in Title I is reduce the probability of that

17 happening.

18 MS. BAIR: Yes.

19 MR. DELFIN: And then the impact if it

20 did happen so that we have choices. 

21 MS. BAIR: But they did have the keys 

22 on that. They could ring the fence in their

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1 jurisdiction.

2 MR. DELFIN: They could, but what ring

3 fencing means --

4 MS. BAIR: Yes?

5 MR. DELFIN: Is different. So if the

6 operating company pursuant to Title I has capital

7 and liquidity, yes, they could put it into

8 resolution, but on what basis? It has recap. It

9 has liquidity.

10 MS. BAIR: So that will depend on

11 their perception of the credibility of the Title

12 I process.

13 MR. DELFIN: True.

14 MS. BAIR: Which may be different from

15 yours. So I'm just saying if that's their

16 perception, and you think you can survive Title

17 I, does that push you into Title II? How would

18 you handle that?

19 I mean because a ring fenced bank with

20 a lot of non-U.S. operations, a substantial ring

21 fence could really destroy a lot of value very

22 quickly.

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1 MR. DELFIN: Sure. But you would --

2 I would think in incentive terms, the foreign

3 regulator also doesn't want to destroy value.

4 MS. BAIR: Right.

5 MR. DELFIN: And so --

6 MS. BAIR: They want to protect their

7 home --

8 MR. DELFIN: Of course. But if they

9 have in their jurisdiction a material entity with

10 capital and liquidity --

11 MS. BAIR: Right.

12 MR. DELFIN: -- and a functioning

13 resolution regime.

14 MS. BAIR: Right.

15 MR. DELFIN: Would they want to spike

16 it? That is, with a premature ring fence? And

17 then what does ring fencing mean? There's hard

18 ring fencing and soft ring fencing.

19 MS. BAIR: Right.

20 MR. DELFIN: You might reduce the

21 amount of flow back and if our regime isn't

22 reliant on that flow which is what we're trying

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1 to build, a regime that doesn't rely on the flow

2 back, then we're in some way protected from that

3 risk. But obviously --

4 MS. BAIR: But they're going to -- if

5 they've got a lot of capital liquidity in their

6 home jurisdiction that gives them an added

7 incentive to ring fence, doesn't it? They may be

8 worried about you trying to pull it back or the

9 Bankruptcy Court trying to pull it back. You

10 don't think that's why they do it in the first

11 place? I think you could argue that both ways.

12 MR. DELFIN: You could. And part of

13 the work we're doing and we'll talk about

14 internationally, is to make sure that all

15 jurisdictions understand single point of entry

16 whether they're in Title I or Title II, whether

17 folks are comforted by the steps that are being

18 taken, the firm's work with foreign jurisdictions

19 on their Title I plans, talk about them with

20 them, to mitigate the likelihood of that

21 happening, can't guarantee it, but that's the way

22 we've tried to approach it is reducing the

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1 incentive to doing ring fencing and then reducing

2 the impact were it to happen. But if it did,

3 that's a risk.

4 MR. TETRICK: I think just to connect

5 back to the morning conversation, too, right, one

6 of the assumptions that they have to build into

7 their modeling tools is that they don't have

8 these inter-group inter-affiliate flows,

9 particularly across borders. So in bankruptcy,

10 that sort of soft ring fencing, hopefully,

11 they've built a machine that can deal with that.

12 CHAIRMAN McWILLIAMS: Marty, you have

13 something?

14 DIRECTOR GRUENBERG: I was simply

15 going to say I think it's a fair question to

16 raise. It's something we'd have to deal with. I

17 would assume one, there would be on-going

18 collaboration between the key jurisdictions. And

19 if our agencies, it's a big judgment call to

20 believe that the bankruptcy process can handle

21 the failure in an orderly way, that there's

22 sufficient capital and liquidity to meet the

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1 needs with a sufficiently high level of

2 probability. This is not -- I don't view this as

3 something you allow for a close call. You have

4 to have a high degree of confidence to consider

5 this. As we said, you only get one shot. And

6 if, hypothetically, that's where our agencies

7 were with a substantial degree of confidence and

8 we were engaging in consultations with our

9 counterparts that said we think this will work

10 for the following reasons and we think this could

11 go forward with stability for our system and

12 yours, I think that's something, based on my

13 experience, the foreign jurisdictions would take

14 pretty seriously. I don't think they're going to

15 at this stage of the game, reflexively ring fence

16 which is not to say it wouldn't happen or that

17 it's not a consideration. We would have to do a

18 lot of work across border. I think that's the

19 scenario. 

20 I don't think they would do it

21 reflexively, but it's fair to say they may also

22 have a higher level of skepticism in regard to

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1 bankruptcy as well because it's not the way their

2 systems would work. So it would have to be an

3 on-going engagement to see if we could get to the

4 same place. And the bottom line is we really --

5 given some of the substantial operations in both

6 jurisdictions, we've got to get to the same

7 place. That's got to be done.

8 MR. COHEN: Could I suggest this is a

9 question that it is not in anybody's interest to

10 answer?

11 (Laughter.)

12 And the reason is, it's not against

13 transparency. It's because I don't think anybody

14 can sit here and know all the factors and all the

15 circumstances at the time as to which are going

16 to weigh heavily and which will lead to the

17 conclusion between Title I and Title II. So the

18 more you start to secure the criteria, the more

19 you're going to be boxed in when there may be

20 criteria you have no idea today are going to be

21 relevant.

22 MR. HERRING: I certainly agree with

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1 that position, but I think it's also true that

2 the people who are opposed to Title II and there

3 are a number of those, you know, worry about the

4 fact that risk aversion on the part of policy

5 makers which is entirely understandable, will

6 mean that bankruptcy really is never tried, that

7 when you're at the brink, nobody wants to take

8 the step into the unknown if you think you have a

9 fallback position. 

10 To me, part of the problem is that we

11 haven't yet figured out how you apply liquidity

12 under bankruptcy. And so there might be a

13 tendency to go to Title II simply because we

14 don't know how to solve the liquidity conundrum

15 in a bankruptcy filing. There's no amount of DIP

16 financing that could possibly do it. And so, we

17 really need to address that under Title I, it

18 strikes me, to make it much less likely that

19 we'll ever go to Title II. Otherwise, it's hard

20 for me to believe that we wouldn't simply because

21 we just don't know. It might happen.

22 MR. COHEN: And I agree. That's a

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1 very valid point, but then you can go on the

2 other side, and the Senator said it, there's

3 going to be a lot of politics at this time, and

4 so maybe you have a Treasury Department and

5 administration which just doesn't want to take

6 the blame for this, so they say try bankruptcy. 

7 We're not going to do -- to put it -- it's just

8 so hard to figure out.

9 DIRECTOR GRUENBERG: If you're dealing

10 with an institution of this magnitude, I don't

11 think there's anywhere to hide meaning if there's

12 a bad outcome, whether it happens under

13 bankruptcy or Title II, the responsible

14 authorities are going to have some accountability

15 here.

16 I think it becomes a judgment call as

17 to which --

18 MR. COHEN: At the time.

19 DIRECTOR GRUENBERG: Yes.

20 MR. HERRING: That's why some

21 political people will want to remove the option

22 because they think they know exactly how that

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1 will play out at the time.

2 MR. HELD: That always creates the

3 third option of if you remove OLA, then you bring

4 back bailout. 

5 CHAIRMAN McWILLIAMS: Then they say

6 it's the courage to act. 

7 MR. FISHER: The question I brought up

8 before lunch is relevant here which is we've

9 officially made two promises to ourselves

10 collectively. We're never going to bailout

11 again, never taxpayers. And we're never going to

12 run an entity like Lehman with a set of fragile

13 liabilities through bankruptcy. The systemic

14 consequences of doing that are pretty bad. 

15 Well, the choice here just described

16 is exactly this problem. The confidence with

17 which you are choosing to let it go through

18 bankruptcy and we'll see, it isn't just the

19 political awkwardness of that. It's the real

20 uncertainty question about whether that's going

21 to work, whether collapsing maturity

22 transformation into a bankruptcy process is

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1 something the world is going to let you get away

2 with, I mean the rest of the market or whether

3 you're going to be forced into Title II. That's

4 the substance of the choice, put all politics

5 aside, that has to be made at the moment you're

6 describing.

7 MR. DELFIN: And what we've tried to

8 do and the statute clearly has bankruptcy as the

9 first option and increase the range of scenarios

10 where bankruptcy can work and certainly the

11 Lehman world is radically different now than it

12 was then because of the Title I planning and the

13 work we've done.

14 MR. FISHER: It's still the same

15 threshold. That's the choice. Which path are

16 you going down, one of risking another Lehman

17 chaos by going to bankruptcy or are you going to

18 go to Title II and try to think you can do a

19 better job of preventing that.

20 MR. TETRICK: I definitely don't want

21 to answer the question that nobody should answer

22 --

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1 (Laughter.)

2 -- but I do want to bring in another

3 element to the conversation on risk aversion

4 pushing you to Title II. Just acknowledge that

5 the Treasury report, one of the ways that they

6 looked at this was that the presence of Title II

7 could give you more confidence to allow

8 bankruptcy to work, that is knowing that there's

9 a back stop would allow you to try your first

10 option of more circumstances than you otherwise

11 would.

12 MR. DELFIN: So is it envisioned that

13 you'd start with a bankruptcy procedure and three

14 days in you'd say oh, this isn't working --

15 MR. HELD: The law allows that, but

16 pulling a firm out of bankruptcy after the first

17 --

18 MS. CHAPMAN: That's not even a thing.

19 (Laughter.)

20 MR. DELFIN: But no, I think the

21 argument that the National Bankruptcy Conference

22 made was that when you're in runway, certainly

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1 right now runway should be different than the

2 Lehman runway because there is TLAC. There is an

3 opportunity to recap. There is these mechanisms

4 in place which should reduce the likelihood of

5 large scale runs, because the material entity

6 should be recapitalized. That's step one.

7 But second is the argument that if OLA

8 is available, if it goes sideways, then that

9 reduces the desire to run further because you

10 know that there is an option necessary. That's

11 not to say try it out by going to one and then

12 pull out with the other, but just existence of

13 that backstop gives one comfort to try SPOE and

14 bankruptcy. That was the argument the Bankruptcy

15 Conference made.

16 MS. BAIR: But you probably have a

17 pretty good sense of whether you couldn't arrange

18 debt financing in Title I before you have to make

19 a decision?

20 MR. DELFIN: So the governance

21 mechanisms are designed to give firms time to

22 make the decision.

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1 MS. BAIR: So you could have a market

2 test. If you can get market funding, then

3 bankruptcy would probably work. If you can't,

4 then you're probably going to be stuck with Title

5 II. It's ironic, there's going to be the

6 distressed institutions to deal with in Title II. 

7 It's just as simple as that.

8 MR. HERRING: It all comes down to

9 trying to figure out if you can have enough

10 liquidity under bankruptcy and we don't really

11 have a very good answer to that. The Fed claims

12 that it can't do extraordinary funding to this

13 new institution, even though it's pristine by

14 design. You can't really get the orderly

15 liquidation facility unless you've got Title II,

16 so once you commit to bankruptcy, you're kind of

17 stuck.

18 MR. DELFIN: But stuck if the firm has

19 the liquidity --

20 MR. HERRING: Yes, yes, yes. But

21 that's the big uncertainty that I think will make

22 it very difficult.

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1 MR. DELFIN: Getting confidence in

2 those numbers I think is the key.

3 MS. BAIR: Which is why John is right,

4 doubly.

5 (Laughter.)

6 MR. STERN: This is a probability game

7 and you want to make the probability darn high

8 that bankruptcy is going to succeed. In some

9 sense, that's what a lot of this is about.

10 MS. ADMATI: Can I say something? So

11 the Senator was telling us about a particular

12 bill that he's championing and I was referring to

13 his testimony which I just read on the way here,

14 so the testimony says for macro and again I'm not

15 a bankruptcy expert, so I'm looking at -- and it

16 says that this bill, this bill called S.1841 is

17 not -- the bill's title to provide for the

18 liquidation is misleading. There's no direct

19 liquidation mechanism. It says this will not

20 establish a robust mechanism for bankruptcy. A

21 robust bankruptcy for too big to fail bank that's

22 viable is not on the policy agenda and he wants

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1 to call it -- a more accurate title would be a

2 bill to amend Title 11 to provide a narrow and

3 limited special purpose recapitalization. So

4 it's a two-day recapitalization and it emerges

5 with capital debt that is only the conversion of

6 TLACs to equity and that's all it's doing as

7 opposed to like the whole bankruptcy.

8 CHAIRMAN McWILLIAMS: If I can just

9 ask that we not -- I want to make sure we focus

10 on the existing tools, not prospective or

11 possible tools. The framework we have is you

12 can't pull a company out of bankruptcy. It's not

13 a thing.

14 (Laughter.)

15 And Title II is the law of the land,

16 so let's just work with those and bankruptcy, as

17 we know it, is what it is.

18 MR. STARKE: Well, you can't pull a

19 thing out of bankruptcy. Title II provides that

20 you can pull a thing out of bankruptcy. So

21 factually, maybe that -- right, I understand, but

22 the law says so.

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1 (Simultaneous speaking.)

2 MR. HELD: The law provides for it,

3 but it would be such a horrible solution.

4 MS. CHAPMAN: That's my point.

5 CHAIRMAN McWILLIAMS: All right,

6 please proceed.

7 MR. HELD: So OLA provides some clear

8 restrictions on our operations that losses are

9 going to be borne by the shareholders and

10 creditors and now we have TLAC and LTD

11 requirements that require that those be there at

12 the time of resolution. Culpable management is

13 removed and their compensation is clawed back,

14 and that funding is available on a limited and

15 secure basis and the firms would have to pay a

16 premium rate, probably akin to DIP financing.

17 And there's an absolute prohibition

18 against the cost being borne by the taxpayers so

19 that the industry, if all else fails, the

20 industry would have to bear the cost.

21 In the Treasury Report, there was a

22 few things that were mentioned that are within

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1 the -- our purview that would not require

2 legislation and we kind of welcome these. One

3 was to finalize the SPOE notice that we issued in

4 2013. Lots has changed since 2013. Firms have

5 changed. Lots of regulations in place. We did

6 get comments back then and we're considering

7 that.

8 Disparate treatment. In 2011, we

9 issued our claims rule and it singled out short10 term debt of less than one year at origination as

11 possibly being preferred, really was targeted at

12 commercial paper issued by the firms that was

13 outstanding at that time and was the cause of

14 major problems during the crisis. It doesn't

15 exist anymore in our firms and that's an area

16 where we could work to change our reg.

17 And then the third area was on

18 protecting the OLF to ensure that our advances

19 from the OLF are secured in a short term as

20 possible and that we try to use guarantees to

21 limit the OLF's cash needs and then figuring out

22 what that premium interest rate would be and what

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1 the guarantee fee would be.

2 MR. DELFIN: But maybe just to flag

3 overall the Treasury Report looked at bankruptcy

4 and OLA and also suggested that we should improve

5 the range of scenarios where bankruptcy is

6 available. And so they also highlighted some

7 recommendations for Congress to improve

8 bankruptcy. So those sort of work together, I

9 think, with a lot of what we've said today.

10 MS. CHAPMAN: And they were convinced

11 that the way OLF is structured, it would be

12 ultimately repayable. It would not put -- it

13 would be budget neutral. It would not put tax

14 dollars at risk, given robust planning and the

15 SPOE structure, and the implementation of the

16 stay on QFC termination. So all those things

17 combined makes OLF money safe.

18 CHAIRMAN McWILLIAMS: You just made

19 everybody be very silent.

20 (Laughter.)

21 MR. TETRICK: So I'll pick up from

22 here. I won't spend a lot of time on Slide 5,

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1 just to again do a little bit of time travel. 

2 These are the five sort of core obstacles to

3 resolution planning generally that we put forward

4 to the firms in our 2013 Title I guidance. 

5 And I think one of the things we want

6 to emphasize here is that these obstacles we

7 found that they're universal, whether we're

8 thinking about the issues that the firms need to

9 solve in bankruptcy, the things that we need to

10 solve in our Title II planning and in fact, when

11 we're working with foreign regimes, we're all

12 working with a slightly different tool set trying

13 to solve basically the same problems. 

14 And on the right hand side, a lot of

15 the things that have been done, we've talked

16 about today in one form or another, either

17 regulatory developments or Title I planning

18 developments that have addressed a lot of these

19 obstacles.

20 I think international engagement,

21 we're going to spend a little bit more time on,

22 including on the next slide, so I'll come back to

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1 that, but just to acknowledge that we've made a

2 lot of progress on these sort of core fundamental

3 challenges. 

4 And what I want to spend a little bit

5 more time on on the next slide is talking about

6 going into a little bit more depth on the

7 operational planning that we've done to be

8 prepared to execute this authority should we need

9 to do so.

10 So the graphic that you've got here

11 represents the systemic resolution framework that

12 we've developed to exercise this authority. The

13 top two layers are the generic part of the

14 framework that apply to any institution and the

15 bottom layers the firm-specific planning that

16 we've done. 

17 And so at the top level we have the

18 framework that we've built. It's designed to be

19 -- we've identified the core steps just in

20 responding to the heightened stress in an

21 institution and then moving through the process

22 to prepare for resolution, getting into

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1 resolution through resolution weekend and

2 executing the authority. Those core steps would

3 apply just as a function of using the Title 2

4 authority to any type of firm and in a variety of

5 scenarios. 

6 On the right side of the pyramid, some

7 of the things that we've done around that sort of

8 top level framework are exercises at really the

9 principal level to establish how this process

10 would work. So around the time of the SRAC, we

11 were between two internal FDIC operational

12 exercises. We spent a full day with the FDIC

13 Board, division directors across the corporation

14 going through how each of these steps would

15 operate. And the real goal of those two

16 exercises was to establish this operational

17 framework, did we have the right steps? Did we

18 know who was responsible for carrying it out? 

19 What the interaction points would be with other

20 authorities, both domestically and abroad.

21 And then, in addition to the internal

22 FDIC work that we've done, we've also held a

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1 number of -- a series of principal level inter2 agency and cross-border exercises. So we held

3 the first of those in 2012, just domestically. 

4 That was really about how the key turning process

5 would work between agencies and how the decision

6 might be made to get into a Title II resolution

7 or evaluating other options and how we expect

8 that interaction to work at the principal level. 

9 And then starting in 2014, we held a

10 cross border principal level exercise with

11 authorities in the United Kingdom where we

12 considered a resolution of a systemic firm under

13 our authorities in the U.S., one of their firms

14 under their authorities in the U.K. You know,

15 those exercises are useful because there's some

16 reciprocity. We're thinking about it both, both

17 of us in those jurisdictions from a home and host

18 perspective. And so, everybody knows that they

19 need to potentially give a little bit and get a

20 lot in terms of how the coordination would work.

21 In 2016, we extended that principal22 level exercise to include authorities in the

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1 European Banking Union and had a similar sort of

2 exercise adding a third G-SIB, hopefully, only

3 doing one at a time in one jurisdiction, not

4 ours. 

5 (Laughter.)

6 And then that's led to an on-going

7 work program and we continue to have engagement

8 including at the principal level and expect to

9 conduct another further exercise where we're

10 really exploring the decisions that principals

11 would need to make at the time that they're

12 responding to one of these firm's failing and

13 setting, to the extent we can, some expectations

14 for how we're going to engage what we're going to

15 permit in terms of information flow and what -- I

16 think importantly what the expectations are on

17 the part of host authorities to support a home

18 authority resolution.

19 Moving down a layer on the pyramid are

20 the still generic tools, but supporting the broad

21 framework, all the different sort of staff level

22 operational tools you need to execute this

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1 process, so there are a number of legal documents

2 that are specified and the law that we would need

3 to complete either internally or in coordination

4 with other agencies, for instance, to access the

5 order of liquidation fund or just establish a

6 bridge financial company. 

7 There's also just sort of staff level

8 procedures. How do we estimate funding needs? 

9 How do we coordinate with a firm to deliver

10 communications upon entering to resolution? So

11 going across all those different functional

12 areas, establishing the standing set of documents

13 and the procedures to go with them.

14 Around that layer, we have done

15 exercises in a number of different venues. So

16 just recently, last month, we did an internal

17 staff level FDIC exercise on all, what I call the

18 back office functions of Title II, how do you

19 form a bridge, claims administration, actually

20 going through nuts and bolts in terms of how do

21 you conduct these processes, and looking for

22 gaps, reviewing how they work.

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1 Earlier in the year, we conducted an

2 inter-agency staff level exercise on the parts of

3 Title II that would require inter-agency

4 interaction, so the key --

5 MR. REED: Does Treasury determine how

6 much liquidity you can get or do you determine

7 that?

8 MR. TETRICK: So there's two parts to

9 it. So we need to work with Treasury to

10 determine the amount of liquidity that's

11 available. There's statutory limits that are

12 set, so there's a maximum obligation limit that's

13 set in the statute. It's limited by the assets

14 of the firm. So that's straightforward,

15 relatively well defined. 

16 We've issued a joint rule with

17 Treasury on how we would come to that number in

18 terms of what the borrowing capacity, at least

19 the borrowing limit would be. But then the

20 access to the order of liquidation fund is really

21 governed by two documents that we need to agree

22 to with Treasury. So there's an order of

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1 liquidation plan and a mandatory repayment plan

2 and those, we'd work with Treasury to demonstrate

3 that how the borrowing would be repaid, broadly

4 over what time frame.

5 MR. REED: You'd do the work, but they

6 make the decision.

7 MR. TETRICK: We work together.

8 (Laughter.)

9 MR. REED: Over the weekend.

10 MR. HELD: We work with them now. As

11 Ryan pointed out, we do a number of exercises

12 with Treasury and other agencies in order to make

13 sure that people understand the process and the

14 protocols, but sure over the weekend --

15 MR. REED: When you'd have to decide

16 how much money you had.

17 MR. TETRICK: We all hope that the

18 need for OLF is not there and if it is, it's

19 limited and we want to find ways to --

20 MR. REED: There's got to be enough

21 convince the market that --

22 MR. TETRICK: Absolutely.

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1 MR. BODSON: Is there a draw-down

2 schedule? Can you draw it down 100 percent from

3 day one? I thought there was a step in which I

4 thought was contrary to fire sale concerns.

5 MR. HELD: The law says we can have

6 access to ten percent of the assets, consolidated

7 assets of the firm based on their financial

8 statements and then if you go above that, you

9 have to do a valuation and you get up to 90

10 percent of the value of the assets.

11 MR. BODSON: But can you get that 90

12 percent on day one I guess is my question?

13 MR. HELD: Well, you can get ten

14 percent on day one.

15 (Simultaneous speaking.)

16 MR. TETRICK: We can do the higher

17 valuation and the run up to resolution, be

18 prepared to access the higher amount day one. 

19 And in fact, just in terms of preparedness, more

20 to thinking about operational readiness, that's

21 what we expect to be ready to do, whether or not

22 we actually need that capacity. Hopefully, we

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1 don't need anything near it.

2 And we've talked with Treasury about

3 the scale of funding. They've seen where these

4 numbers might fall out, their ability to deliver

5 that if they needed to and we've worked through

6 the operational processes to actually deliver the

7 funds from Treasury through the Fed's wire system

8 to support a resolution if it were needed.

9 MS. BAIR: Refresh my memory, those

10 even guarantee debt too instead of --

11 MR. DELFIN: That's right.

12 MS. BAIR: Does the cap apply to the

13 amount you guaranteed, too, or is that -- it is. 

14 It's the same cap or not? No.

15 MR. DELFIN: In the Treasury report

16 they recommend the use of guarantees and --

17 MS. BAIR: I agree with that. I think

18 that's --

19 MR. DELFIN: And guarantees is sort of

20 a first option.

21 MS. BAIR: But I'm just saying is the

22 amount you can guarantee have the same cap as if

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1 you were borrowing directly? Consistent with the

2 90 percent.

3 MR. DELFIN: Right, so the key

4 question is whether it's at expected cost.

5 MS. BAIR: Right.

6 MR. DELFIN: Because it would -- then

7 it's -- you could lever it up. Or how you count

8 it, but guarantees are more complicated because

9 you could be guaranteeing a large amount of

10 money, but have very little potential costs. I

11 think that's one, right?

12 MS. BAIR: Right. Absolutely.

13 MR. DELFIN: So do you do it dollar

14 for dollar or do you expect the cost or do you do

15 some other approach?

16 MS. BAIR: Right.

17 MR. KOHN: So the Fed could fund the

18 bank provided it were well capitalized. So what

19 we're talking about is all the non-bank stuff and

20 the Fed's been constrained under 13.3 from

21 funding that.

22 MR. DELFIN: But one thing if I -- the

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1 chairman just gave a speech the other day. The

2 FDIC is kind of the gold standard when it comes

3 to bank failures, bank resolutions. But we've

4 built that up over decades of work. We learned

5 from each crisis, from each bank failure. We get

6 better and better and better.

7 We don't get that trial and error

8 here. So what we try to do is we do readiness

9 exercises so we can try to break our own system

10 and so we do quite a few of them. We do them

11 with our colleagues here in the U.S. We do them

12 internationally. We do them with our staff. We

13 do them sort of regular staff. We do them senior

14 staff. We do as many of these as we can because

15 we don't get the benefit of trial and error like

16 we do in others. And so this whole paradigm is

17 based on those sort of readiness exercises as a

18 means of preparation.

19 MR. REED: Is there room for any

20 stand-still agreement with the funders? You

21 know, during the Latin American debt crisis, and

22 you're only dealing with maybe 30 or 40 entities

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1 that were the big lenders, but when there was a

2 crisis and we needed time, we could get a

3 standstill where all of the people agreed they

4 would not withdraw any funding for a period of

5 time. You'd have a date certain and the lenders

6 agreed that they were going to maintain that

7 level of liquidity and particularly on a run in

8 Korea which was very much being managed by

9 Treasury. 

10 We got all the banks to have a

11 standstill that allowed the Koreans --

12 MR. DELFIN: And was there a temporary

13 guarantee tied to that?

14 MR. REED: It was just that the

15 government was involved. They trusted that they

16 weren't going to get caught out.

17 MR. DELFIN: An implicit guarantee.

18 MR. REED: Because one of the reasons

19 that people withdraw money is the danger that

20 somebody will and you didn't.

21 MS. BAIR: That's right.

22 MR. DELFIN: And if you could get the

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1 major funders because it's in their interest,

2 too.

3 MS. BAIR: Yes.

4 MR. DELFIN: To have a standstill. 

5 And we did use that on a couple of occasions

6 during the debt crisis and as I say, it was quite

7 different in the sense that you had 30 or 40

8 major lenders, but they were globally distributed

9 and -- but you did get an effective standstill

10 and runs would stop.

11 The U.S. Government tried to guarantee

12 in the case of Korea and it didn't work because

13 the Japanese banks kept taking the money out. 

14 They didn't believe, but we did get a standstill. 

15 I don't know if that's any place in your lexicon.

16 MR. HERRING: I think it would be very

17 difficult in this situation. It's sort of like

18 the bond markets where instead of having a small

19 group --

20 MR. REED: No, it's a large --

21 MR. HERRING: -- in which you have

22 influence, they're just huge numbers and your

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1 ability to influence them I think is very, very

2 difficult.

3 MR. REED: No, if it's widely

4 distributed across the market, but if, you know,

5 if there are 20 firms that constitute most of

6 your --

7 MR. HERRING: We should be able to

8 convince them it's in their own interest.

9 MS. BAIR: Yes, well, that might be

10 the positive of all this interconnectedness since

11 you have a smaller group of concentrated. And it

12 would be in their interest if they're --

13 MR. COHEN: They just have to believe

14 that it'll hold.

15 MS. BAIR: Right. Because if they

16 don't and if there's a run and it's at least five

17 minutes, they're going to be assessed for the

18 losses, right? So it would be --

19 MR. COHEN: That's with this bank. 

20 Don't forget, if you're a broker, the odds are

21 you're going to have institutional money on the

22 other side. It's not going to be your friendly

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1 banker down the street. They're not going to

2 have a choice.

3 MR. HERRING: It's very heterogeneous. 

4 I'm not sure how --

5 MR. BODSON: So it's very much

6 dependent on who it is. It could be if was banks

7 supporting it, sure, but if it's all

8 institutional money, they've got a fiduciary

9 responsibility. They're going to take their --

10 either sell the collateral, just take the money

11 back and run.

12 MR. COHEN: Whether it will work or

13 not, the one thing is for sure. If you start on

14 the Friday, it will not because we saw that on

15 AIG where there was the effort to get a number of

16 the derivative counter parties to hold, to stand

17 still and that lasted about five minutes.

18 (Laughter.)

19 But it can be done. It takes the

20 planning.

21 MR. TETRICK: Something we can look

22 into. You know, we also do these staff-level

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1 exercises. On a cross-border basis, I won't go

2 into too much detail, but we can go a little bit

3 more granular there than we go at principal level

4 and actually test the information sharing

5 protocols, and that's been particularly useful.

6 And then I just want to touch on the

7 bottom layer of our framework which is the

8 institution-specific planning that we do. So you

9 know, obviously, that starts with Title I

10 planning. We build off that to build out firm

11 specific Title II analysis. What are their

12 particular systemic risks that we're solving for

13 if we're put in a position that we need to use

14 Title II. 

15 One of the challenges for stabilizing

16 this particular institution, particular

17 operational challenges about how it operates or

18 what business lines it's in, and that gives us

19 information to plug into all the other parts of

20 the generic framework that's sort of pre-built

21 out. And it also gives us a basis on which to

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1 specific level. So we use that analysis to

2 support conversations, even crisis management

3 groups, and you know, we --

4 MR. DELFIN: And just for the group,

5 every year, we sit down with the host

6 jurisdictions of all the U.S. G-SIBs and we also

7 do it the other way to talk about the progress

8 we've made on resolution planning. And that's

9 the crisis management group.

10 MR. TETRICK: And those conversations

11 are increasingly we're talking about, the firms

12 participate. There's a regulators-only portion

13 of the day, but the firms participate. We're

14 talking about both bankruptcy planning, how they

15 would execute their bankruptcy strategy, what it

16 means for the host jurisdictions that are in the

17 room, and then how the back stop authority would

18 apply if it needed to.

19 And then just to pick up on a point

20 that Peter raised earlier about the importance of

21 the Treasury staff being involved, I think both -

22 - when we're engaging with the firms on Title I

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1 planning just vis-a-vis their plan submissions

2 and the CMGs, they're sending their resolution

3 planning staff. They're also sending their

4 treasurer and her or his staff to participate in

5 these conversations, particularly now that we're

6 talking more about the capital and liquidity

7 modeling that was previewed earlier. They're

8 talking about how those mechanisms would deliver

9 resources across the group in resolution. And

10 there's a pretty robust engagement with the

11 Treasury staff.

12 MR. FISHER: That's wonderful. My

13 question really went to John which is for Board

14 of Directors to get that, you can look at the --

15 the Board can look at a CEO and have some

16 confidence he knows what decisions he's got to

17 make. But for a Board to look down into the

18 bowels of the deputy treasurer is really hard.

19 MR. BODSON: If I can make one

20 comment, there's a philosopher, Mike Tyson,

21 remember him?

22 (Laughter.)

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1 Everybody's got a plan until you get

2 punched in the nose. 

3 I hope in your planning, you don't

4 plan it out well. Assume everything you think is

5 going to go right is going to go wrong and work

6 through all the alternatives because the dumbest

7 idea may the one that's going to get you through

8 the darkest part of the day.

9 MR. TETRICK: I think that's exactly

10 right, you know I started this with the framework

11 is intended to be flexible, not just for

12 different types of institutions, but different

13 scenarios. And it's also, I think, a good segue

14 to the next slide which is talking about how the

15 firm capabilities support our planning in Title

16 II. And the whole point of firm capabilities is

17 that the firm doesn't know what scenario it's

18 going to encounter and this allows them to adapt

19 different scenarios that they might be faced

20 with.

21 We expect to leverage these

22 capabilities under Title II and it also gives us

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1 that same sort of flexibility. So I'm going to

2 touch on some of the -- I think we've said

3 notionally how that Title I supports Title II. I

4 think this is one of the particular ways in which

5 it supports us. So the fact that they have

6 developed governments' mechanisms that map out

7 triggers and actions across the crisis continuum

8 gives us a better line of sight into how the firm

9 is proceeding through its recovery plan,

10 preparing for resolution. We can anticipate what

11 actions they might be taking. It gives us a

12 better basis to talk to host authorities about

13 where we are in that trajectory, so that's been

14 particularly useful for mapping out the

15 sequencing of actions with the firm and with host

16 authorities across that period into resolution. 

17 MR. HERRING: Ryan, may I ask a

18 question about the runway period?

19 MR. TETRICK: Yes.

20 MR. HERRING: I understand the concept

21 and I think it's essential, but presumably it's

22 not publicly announced, because if anybody knows

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1 you're going on the road, everything is going to

2 happen a whole lot faster when you --

3 MR. TETRICK: That's a great point. 

4 There's not a red light that goes on that says

5 you're in runway, everybody run away.

6 (Laughter.)

7 Unless the light is on in Rick's

8 office. But you could imagine there would be

9 reluctance to initiate their planning processes

10 because it would have a signaling effect.

11 MR. HERRING: I was thinking not that

12 you would have a press conference to announce it,

13 but it would be pretty easy to infer about what

14 you're doing.

15 MR. TETRICK: Sure. Sure. I think

16 one thing is they've built these processes into

17 their day-to-day operations so the staff who

18 would be involved, Treasury staff knows the

19 sensitivity about the planning process.

20 We've had our own conversation about

21 when do we start planning as they're concerned

22 about the sensitivity. I think our general

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1 predisposition is that we want to have a

2 relatively high tolerance for false positives. 

3 We're already thinking, coming in the office

4 every day, thinking about a crisis, so we start

5 planning at a relatively low threshold. We're

6 resolution planning all the time. We think

7 that's useful most of the time, hopefully, all of

8 the time. The result is going to be a recovery,

9 but it is a balance.

10 MR. HERRING: Part of business as

11 usual, but it's likely to be less --

12 MR. TETRICK: Right. I think that

13 there's in the cross-border space, too, there's

14 starting to be more of an acceptance that it's

15 not stress, then runway, then at some point down

16 the line we start talking about resolution. 

17 We're setting expectation, particularly through

18 the more focused cross border work, the TPLE

19 work, and related, I'm sorry, the principle level

20 exercise work, that we're going to engage early

21 on as a matter of course and we know that there's

22 going to be false positives along the way and we

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1 should get comfortable with that.

2 Moving on to the next couple of points

3 here so the capital and liquidity modeling

4 capabilities that the firms have built out, so

5 Mike Morgan went through earlier today, RCEN and

6 RCAP, RLEN and RLAP. These tools help us assess

7 -- first of all, they put resources in place in

8 advance of a resolution and then they help us

9 assess what those needs might be as you get into

10 resolution. 

11 I think the most critical thing to

12 point out about the innovation here is firms

13 already do a lot of stress testing, capital and

14 liquidity planning. What's unique is that these

15 are modeling capabilities that extend that, they

16 really build on the capabilities that they

17 already had for recovery of business as usual

18 purposes and extend that into resolution, what

19 are the assumptions that they make about what

20 happens in resolution. 

21 And we know if they say today the

22 number is 55, that's the one number it won't be,

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1 but it gives us a basis off of which to consider

2 you have behavioral assumptions about this group

3 of counter parties. Is that happening as we get

4 into the runway, do we expect that it will

5 happen? Did your assumptions about intra-group

6 frictions, were they -- they were conservative

7 for planning purposes, are those real when you

8 get into resolution?

9 MR. HERRING: How frequently will they

10 be required to recalibrate?

11 MR. TETRICK: So part of the

12 governance mechanism is to trigger the frequency

13 of calibration. A number of firms actually

14 already calibrate their metrics regularly on a

15 daily basis. But all of them have triggers as

16 they get closer to their runway that they are

17 calculating their liquidity and capital execution

18 needs daily as they get that.

19 MR. HERRING: Will that information be

20 shared with you?

21 MR. TETRICK: Yes.

22 MR. REED: This presumes that they

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1 know what their exposures are.

2 MR. TETRICK: I mean there's a

3 relationship with the reliability of these tools

4 and the supervisory work that goes on and the

5 reliability of their ordinary liquidity

6 monitoring tools. Your modeling can only be as

7 reliable as your existing capabilities are, so

8 that's something that we have supervisory

9 personnel and we work with the Federal Reserve

10 and other supervisors.

11 MR. REED: I gather you think it's

12 much changed from what it was.

13 MR. TETRICK: Yes. I didn't say --

14 you know the Title I playing process gives us a

15 lot of information. When we started doing this

16 process, it was eye opening how much firms could

17 not tell you about themselves, so we thought we

18 didn't have information. There were a lot of

19 things that if we asked we couldn't get an answer

20 or it took a month of working on spreadsheets. 

21 They're well beyond that now. I think -- I don't

22 want to overstate it. 

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1 MR. KOHN: Probably just a stress test

2 process, too.

3 MR. HELD: When we first started

4 planning on Title II, one of the biggest

5 obstacles was how do we get money into the firm

6 by Sunday night, get the yen to Tokyo and the

7 pounds to London and euros to Frankfurt? And it

8 was just assumed that like in the crisis in 2008,

9 it was going to be, oh, there isn't enough money

10 to open for business on Monday or actually Sunday

11 as things go these days.

12 And with these planning tools, it's

13 less likely that you're going to reach zero and

14 have to do the really heroic efforts to get money

15 where it's needed at the right time. 

16 Luckily, we start off with kind of the

17 worst case scenario and plan for that. Now it

18 appears that that's less likely. And I think the

19 tools really help us a lot. 

20 When we start off, when we ask the

21 questions, and we said, we sent out a lot of

22 questions to the firms and we said I don't know 

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1 is an acceptable answer at this point. This was

2 before the first plans came in. And there were a

3 lot of I don't knows that are now in the models

4 and answered and a lot of the I don't knows have

5 been eliminated.

6 MR. KOHN: So you have confidence that

7 they know.

8 MR. HELD: Well, there's a lot more

9 confidence than we had in 2011.

10 MR. TETRICK: There's much better

11 information at the acute phase of a crisis. One

12 of the challenges is there can be a lot of

13 demands on that Treasury desk, both from counter

14 parties, authorities around the world, and then

15 synthesizing that information to their existing

16 monitoring tools in modeling in terms of what's

17 happening in terms of counter parties' ruling,

18 different kinds of parties reducing exposure,

19 increased marginal requirements and working that

20 all into the existing modeling framework I think

21 is where the challenge will be. But their

22 current capabilities, I wouldn't want to

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1 overstate it, but they're much, much stronger

2 than they were.

3 MS. ADMATI: I have another question. 

4 I was worried about disruption in this industry

5 because the biggest banks are so strong that if

6 you have disruptions like, I don't know, peer-to7 peer, you know, they sort of swallow them or

8 fintech. So I'm less concerned about Uber type

9 of disruption, but I am concerned about cyber and

10 IT. Is that anywhere in your thinking?

11 MR. TETRICK: So --

12 CHAIRMAN McWILLIAMS: Don't worry,

13 Ryan, three chairmen are looking at you.

14 (Laughter.)

15 MR. TETRICK: I'll say that, you know,

16 there's still a lot of work to do on the easy

17 SIFI resolutions. The cyber SIFI resolution is

18 pretty extraordinary. I think we've started to

19 do some initial work on, you know, if there are

20 cyber scenarios or other operational scenarios,

21 how do our tools apply. It's the very early days

22 on that work.

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1 I think there's a lot of work across

2 the regulatory agencies on cyber. Most of that

3 is focused on resiliency, recovery. Resolution

4 is fairly remote, I think for a good reason. But

5 it's something that we know we need to look at.

6 I think it's also worth pointing out,

7 you know, not just for these institutions, for

8 other institutions and how do our authorities

9 apply to this model firm.

10 MS. ADMATI: But let's not go to

11 cyber. I'm talking simple IT because I actually

12 talked to some. A lot of these institutions have

13 had a lot of mergers along the way and I talked

14 to somebody who was actually monitoring one of

15 the settlements in one of the big banks who said

16 that IT is the biggest problem because they can't

17 find information. So this is sort of to your

18 planning issue like they didn't combine computer

19 systems. It was really in that simpler things

20 than big cyber.

21 MR. TETRICK: Capabilities in MIS are

22 essential. So MIS is one of the areas that the

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1 Federal Reserve with our participation is focused

2 on, making sure that this group of firms

3 significantly improve. So I think it was in our

4 guidance.

5 CHAIRMAN McWILLIAMS: And also I think

6 the supervisory that will be -- the idiosyncrasy

7 of getting a cyber-attack and being brought down

8 is a little bit different because we look at this

9 on the supervisory side. They get IT exams all

10 the time.

11 MR. BODSON: I've said this a few times

12 today. My first day as CEO was Knight Capital, my

13 first hour as CEO was Knight Capital, right, and

14 the thing that saved the industry from a massive

15 lawsuit that resulted in New York Stock Exchange,

16 New York spotted it, New York turned them off and

17 they capped it about $450 million. 

18 So the point I think you were making

19 before about the second tier firms and them having

20 a -- it doesn't have to be cyber. It can just be

21 a weird glitch, running up a very large tab is

22 something I think I'm more -- I think that's a

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1 bigger risk to the financial system than one of

2 the Big Eight collapsing. I just think that

3 that's an untapped area that we dodged a bullet on

4 but -- there's no kill switch for the markets,

5 etcetera, etcetera.

6 So I know it's not directly in your

7 purview, but you should be taking that in your --

8 because it can also just be a settlement system

9 that blows out a few billion dollars and by the

10 way, now how do you get these guys back up on

11 their feet when their settlement systems don't

12 want to work. So those operational technology

13 issues have to be on the agenda at some point.

14 MR. COHEN: Just back on cyber for one

15 moment. I realize or I understand there's a lot

16 of coordination among the bank regulatory

17 agencies. I'm far less confident that there's

18 that level of coordination with the other

19 governmental agencies which have both more

20 information and more knowledge with due respect

21 than you do, DHS, FBI, NSA. And because everybody

22 always talks about this as an existential threat,

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1 the more coordination you can have, particularly

2 for these eight.

3 MR. TETRICK: No, that's helpful. The

4 fact that it's a non-financial disruption, brings

5 other authorities into the picture.

6 MS. ADMATI: I think you're going far

7 with the same method. Last week, somebody was

8 like from emergency and she worked on, you know,

9 hurricane or these other types of emergencies and

10 it was bringing that finance kind of emergency

11 planning.

12 CHAIRMAN McWILLIAMS: Ryan, because we

13 are at a break time and since Raj just put the

14 burden on other entities and organizations and

15 agencies other than us, you can either conclude

16 here with this part of the presentation, finish

17 up, and then we'll move on to the break and move

18 on to the next panel.

19 MR. DELFIN: Can I just to wrap this

20 part up? Earlier, we talked about the evolution

21 on our Title I process, the way we started in our

22 silo, the Fed started in its silo and over time we

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1 reviewed plans together, we did training together. 

2 Our Title I, Title II process has similarly built

3 real synergies. 

4 We used to have sort of Title I staff

5 and Title II staff and what we really tried to do

6 in our organization is make sure that folks see

7 the way these work together and the way we can use

8 the capabilities, structural changes from one to

9 buttress our preparing for the other and so this

10 slide here on 7 really does a great job of that. 

11 So if that's helpful.

12 MR. TETRICK: Maybe just one more thing

13 on this segment which is that Herb started out, I

14 think we're interested in -- we've done a lot of

15 work in this space, hasn't necessitated as much

16 visibility as the Title I process has, but we're

17 interested in ways to make this work more visible

18 and what market participants and the public may

19 need to see about it.

20 CHAIRMAN McWILLIAMS: Thank you. We'll

21 take a little break. And see you in about 10 or

22 15 minutes. Thank you.

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1 (Whereupon, the above-entitled matter

2 went off the record at 2:33 p.m. and resumed at

3 2:50 p.m.)

4 MR. DELFIN: We are joined by today by

5 our third panel. We've got Susan Baker, the

6 Deputy Director; Joanne Fungaroli, Associate

7 Director; Ryan Tetrick, who you've just met; and

8 Bruce Hickey from our legal division. 

9 MS. BAKER: All right. Thank you. So

10 now I'm here to answer, help follow-up on all the

11 questions about how we build international

12 cooperation. Since I thought we'd be running out

13 of time by now, I put all the key messages up

14 front just in case we do run out of time. 

15 As you know, resolution planning in the

16 U.S. is inherently cross-border, both due to their

17 cross-border activities and all the extent of

18 their operations overseas. And so progress on our

19 work for resolution planning we have to discuss

20 are our work with our foreign authorities and how

21 we work with them. It's just unavoidable.

22 The FDIC has really been leaders, along

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1 with our other U.S. colleagues and others, in

2 promoting regular engagement for resolution

3 planning, both domestically, as Ryan explained

4 earlier, but also internationally. 

5 Now, our plan in cross-border

6 resolution involves investing the time before the

7 crisis, before the crisis hits so we're ready to

8 go when we need to. And that means our outreach

9 activities are very multifaceted. We have firm

10 level interactions, we have bilateral

11 interactions, and we have multi-lateral

12 engagement, as well. These are formal, informal,

13 regular, ad hoc, all different ways. It's a

14 complicated topic, so we try to get at it every

15 way we can.

16 The purpose here is really to increase

17 the transparency and the mutual understanding of

18 our foreign counterparts about our cross-border

19 resolution plans. In doing this, the idea is,

20 before the crisis comes, to establish

21 communication channels and ways to share

22 information that is safe and well understood, to

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1 understand each other's frameworks and standards

2 and the vocabulary, you know, what is MREL, what

3 is TLAC. It's all important to understand and

4 speak each other's languages. And, important, to

5 give the firms an opportunity to plan for the

6 cross-border elements of resolution and to explain

7 their plans to the foreign authorities. So this

8 type of transparency and advanced planning we

9 really do believe will serve as a stabilizing

10 force in times of stress. 

11 So what I have been asked to do is to

12 go through all the different ways that we do this,

13 and so let me start here describing these across

14 three general categories. So let's start out with

15 the institution-specific. Ryan touched on this a

16 little bit before. It's the Crisis Management

17 Groups is our primary vehicle for doing that. We

18 have established Crisis Management Groups, along

19 with the our co-chair, for all the U.S. G-SIBs. 

20 The foreign participants in these CMGs

21 are the ones that are supervising our

22 revolutionary authorities for the material

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1 entities that were material to the firm. I think

2 we're on our eighth round of CMG meetings, and,

3 so, as these have developed, you know, I wasn't

4 here for this but in the beginning there was a lot

5 about explaining our authority, what's Title I,

6 what's Title II. And now we have really moved a

7 lot to deeper subjects, and one of the subjects

8 that's been coming up a lot lately and has been a

9 key topic has been how the bankruptcy planning had

10 worked and familiarizing a lot of our foreign

11 counterparts with how that process would work, and

12 it also is a way to give the firm, as I mentioned,

13 a way to explain what they are doing that will be

14 key to a successful cross-border resolution.

15 MR. HERRING: Susan, I think the FSB,

16 possibly the Basel Committee, had an annual report

17 not too long ago looking at the Crisis Management

18 Groups and sort of trying to kind of, broad brush,

19 describe progress they made. I'd be surprised if

20 the number of Crisis Management Groups that had

21 not completed information sharing agreements, it

22 may happen informally, but the indication was

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1 that, even though these were all about sharing

2 information, some countries were reluctant on

3 obligations to share.

4 Has that been a real problem, or is

5 that just looking at some old data? 

6 MS. FUNGAROLI: So I think that the

7 primary agency, as a home authority, that would be

8 the one that's working towards completing those

9 arrangements would be the Single Resolution Board,

10 which is a relatively new agency that took its

11 authority in 2016, really got their CMGs up and

12 running in the last year to two years. So that,

13 largely, is the pocket that you noticed in that

14 seventh resolution --

15 MR. HERRING: Yes, they didn't identify

16 who, so that would be it. It's just they were so

17 slow to organize.

18 MS. FUNGAROLI: They're pursuing the

19 arraignments as rapidly and reasonably as possible

20 under the circumstances. So I think that the

21 United States, the U.K., and Switzerland and

22 Japan, who all completed our cooperation

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1 agreements largely around the same time in a

2 synchronized way. We had the benefit of early

3 organization of our framework and of our groups.

4 MS. ADMATI: I have a question. I was

5 trying to check quickly that my timing is right so

6 I don't confuse 2014 and '16 again, but there was

7 a document called "Key Attributes," you know, and

8 I remember reading that because just to kind of

9 make a case that, you know, by saying the

10 following, I put the document through a word

11 search for the word "should," meaning it's a wish

12 list of all these little things that have to

13 happen and all the different coordinations that

14 has to happen and I counted, like, hundreds and

15 hundreds. And then there was an annex with a

16 whole bunch of other kind of shoulds that were

17 just kind of in the list of things without the

18 word should.

19 So it was a huge wish list. I remember

20 Mark Carney was there, and I kind of confronted

21 him with that. And he said, "Well, it's Paul

22 Tucker's document." 

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1 In any case, I was wondering, my

2 question really is how many of these shoulds do we

3 have today? 

4 MS. BAKER: Well, all those shoulds are

5 still there. The international standards are not

6 self-executing. We all have to go around and do

7 them in our own natural jurisdictions and

8 according to our own procedures here, you know,

9 the Administrative Procedures Act, that takes

10 time.

11 And we do have robust mechanisms, which

12 I can talk about in a minute, for multilateral

13 review of how well people are doing that. And the

14 answer for the United States is pretty resounding

15 we're doing fine. We have all greens on our

16 traffic light approach.

17 But, yes, the key attributes are one of

18 the, basically it was built on what the FDIC had

19 been doing for years. When people looked around

20 the world and wanted to know who had been doing a

21 good job on resolution, they looked here. And it

22 was the work of our predecessors, and maybe you,

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1 Art, you were here working on it, Mike Krimminger,

2 Bill Murden, to help launch that process.

3 So running back to the CMGs just for a

4 minute, we do let the firms present in this topic,

5 so it gives them an opportunity to engage in an

6 efficient manner with all of their key supervisors

7 and resolution authorities. You know, they have

8 been spending a lot of time explaining their plans

9 that they've developed in Title I on pre10 positioning of capital and liquidity, explaining

11 their secured support arrangements, and all of

12 those things, wind down plans, communication

13 plans, all the things that they've developed in

14 Title I are of immense interest to the foreign

15 authorities and we do have a lot of time to talk

16 about that. We also have an authorities-only

17 section where we then, they can raise more

18 concerns and questions. 

19 We have also used the CMGs to review

20 our Title II planning and how that works together,

21 you know, how our bail-in mechanic would work, how

22 the bridge banks are established, etcetera,

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1 etcetera, with a big emphasis on, as Ryan said

2 earlier, the optionality idea. Like, we don't

3 know what the crisis is going to look like, but

4 here are the tools and the capabilities that we

5 have that we will use to make decisions.

6 Just as an aside, before I get off the

7 -- and that's the institution's strategic plans

8 that we talk about with them. Before we get off

9 the firm-specific topic, I'll just flag as an

10 aside that we also participate in the CMGs for a

11 number of foreign banking organizations that have

12 material operations in the United States, and

13 these are really helpful for planning resolution

14 as a host jurisdiction, and it's a complement to

15 what we do in the Title I process where we review

16 their plans in the United States for their IHCs

17 here, and this gives us a window in what their

18 home jurisdiction is thinking about, which is very

19 helpful. 

20 As briefly touched on earlier, I will

21 say an important foundation for the work in the

22 CMGs is to have the information sharing

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1 arrangements and cooperation agreements. These

2 are firm specific in this context, and so we have

3 those all in place thanks to the hard work of

4 Joanne here and her team. And this gives us pre5 established ways to share information that is

6 predictable and we know that it will be treated

7 confidentiality and that's all very important.

8 We also have, it's not up there, but we

9 do this, these are the formal institutions that we

10 have. We also have informal networking all the

11 time with our international counterparts about

12 various firm specific topics, about various firms. 

13 We have workshops, for example. Some recent ones

14 had been on international custody operations and

15 on internal TLAC, which I'm sure you guys will

16 want to hear about.

17 Moving on to the bilateral avenues for

18 engagement, we have for a number of years had FDIC

19 engagement at the staff level with the European

20 Commission. The European Commission is the part

21 of the European apparatus that would have to

22 propose new frameworks and propose new rules. 

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1 They're the ones that drafted the BRRD, which

2 stands for Bank Resolution Recovery Directive. 

3 So we talk with them on a regular

4 basis. It's really helpful for them to hear about

5 how we've structured our framework when they're

6 building one from scratch, as we mentioned

7 earlier. So that's been helpful. We also

8 participate in a number of interagency bilateral

9 dialogues that are led generally by Treasury with

10 all of the banking and market supervisors. The

11 longest-standing one is now called the Joint USEU

12 Regulatory Forum, that's with the European

13 Commission; the Single Supervisory Mechanism; and

14 the Single Resolution Board, our counterpart in

15 Europe. I think you guys all heard from Al

16 Kokonig in the last SRAC.

17 The newest addition to the bilateral menu is a

18 bilateral dialogue with the U.K., which started

19 last year and, as you can imagine, was dominated

20 by Brexit topics. 

21 So moving on to the multilateral

22 efforts that we talked briefly, Ryan talked a

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1 little bit about the trilateral principals-level

2 exercise, which has been a premier multilateral

3 effort that we've been doing with our U.K. and

4 banking union, i.e. Euro, area counterparts. This

5 includes the fiscal supervisory and resolution

6 authorities, so it's really pretty unique. They

7 have met as principals in October 2016 and in

8 April of 2018 and will continue to do so.

9 These exercises have really helped

10 familiarize the heads of agencies with each

11 other's processes for resolution and identifying

12 some key areas and getting buy-in for key areas

13 for cooperation and, importantly, launched a whole

14 lot of staff work for how to talk at a lot of

15 different levels. So we call it the principals16 level exercise, but there's a lot that goes on

17 that prepares for that amongst ourselves. And I

18 think that's been, you know, how will we

19 communicate, how will we cooperate, what will we

20 be able to say, and then start to plan actual

21 systems to make that happen. 

22 And it's been good that this trilateral

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1 has existed in its form. For a while, we had the

2 U.K. and EU were together, and now they're not,

3 but all three of these parties have strong roles

4 as hosts and home. So we have a real balanced

5 approach to solving problems where we have to

6 think about it from the other shoe, and I think

7 that helps us all cooperate quite well together. 

8 The other major multilateral venue for

9 cooperation is the Financial Stability Board's

10 resolution steering group. This is the

11 international standard-setting body for

12 resolution, and it's covered a lot of topics over

13 the years. Some recent topics that have come up:

14 funding in resolution, bail-in execution,

15 continuity of access to FMI, as well, in

16 resolution; solvent wind-down of derivatives book. 

17 And the FDIC has had leadership roles in a lot of

18 these. Ryan was the co-chair for the bail-in

19 execution group. Rick Delfin also leads a group

20 that covers CCP resolution. Actually, that's my

21 resolution but mainly so far focused on CCPs. 

22 And the FSB also undertakes a number of

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1 thematic peer reviews. One of them, there have

2 been two going on in the last year. One is on the

3 technical aspects of TLAC implementation, you

4 know, what are your terms looking like versus our

5 terms, who has really issued, where have they

6 issued, what does it look like, and the other one

7 has been on the resolution planning process

8 itself, which is one that Bruce has been on, as

9 well, and he can talk about more later.

10 You know, these have really served to

11 showcase the extensive progress that we've made

12 here and have helped give examples to other

13 jurisdictions about what they may want to adopt,

14 as well.

15 There are two things about the FSB work

16 that I want to flag that are a little new. Well,

17 not new, but rising in their importance. The

18 first is a renewed commitment to transparency and

19 stakeholder engagement. They now regularly

20 provide for public comment periods for documents

21 before they're finalized and do a lot of

22 stakeholder workshops, I think I've seen Rodgin at

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1 a number of them, to talk about what's happening

2 and to get feedback on the work. Some recent ones

3 there have been on solvent wind-down, disclosure

4 rules for TLAC instruments, you've had some on CCP

5 resolution issues. 

6 So it's a really important thing to

7 start getting more feedback. The FDIC even hosted

8 one of these last September on the margins of the

9 Res G meeting.

10 The other new thing, and this is

11 coming, that the FSB has been doing is focused a

12 lot more on the effects of reform. And I have a

13 whole process now to start thinking more robustly

14 about evaluating the effects of reform. A lot has

15 happened, for example, since the FSB issued its

16 framework for addressing "too big to fail" in

17 2010. So they have commissioned a study of the

18 effects of the reforms that jurisdictions have put

19 in place. It's going to be a review of academic

20 research and market data, as well, to try and

21 evaluate how far we have or haven't come in

22 meeting our objectives in the reforms. This work

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1 launches this year, but it won't be completed

2 probably until 2020. And they have built in some

3 opportunities for stakeholder engagement, so I

4 hope to see you all there.

5 And, finally, on the multilateral

6 front, there is the work by the IMF to do

7 evaluations of jurisdictions under what's called

8 the FSAP program, the Financial Sector Assessment

9 Program. Since 2017, all G20 jurisdictions have

10 committed to do a formal review of their

11 implementation of the key attributes with respect

12 to systemic bank resolution. And so this is

13 almost like our audit function. The IMF goes out

14 and looks at how they're doing, and then they do

15 it in an independent way and the results will be

16 published. So it's another way to make sure that

17 we're all holding each other accountable for all

18 of the shoulds out there in the standard. 

19 MS. ADMATI: It raised somehow, we had

20 discussed TLAC a lot, but sort of some of these

21 legal issues that often come up, you know, in any

22 kind of debt restructuring. Like, the TLAC, does

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1 it matter in which law it's actually issued? And

2 then, you know, you have the subsidiaries in

3 different places in the home and state. Does it

4 matter, you know, that they're always issued in

5 their home country or --

6 MS. BAKER: I don't think the TLAC term

7 sheet says anything prescriptive on the law, but

8 it has been a topic of discussion in the

9 stakeholder outreach, I think in particular

10 because this is the week that the Europeans have

11 finally agreed at a political level to what their

12 TLAC rules will look like. There was a lot of

13 feedback that was aimed at that. 

14 MR. TETRICK: In the U.S., our firms

15 issue TLAC in the U.S. and the U.S. law. We're

16 very lucky with a deep debt market and our firms

17 can be funded through the U.S. In other

18 jurisdictions, they will fund in the home

19 jurisdiction and in other host jurisdictions, like

20 the U.S. or where there are significant debt

21 markets where they can raise TLAC. It can make

22 bail-in execution marginally more complicated. 

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1 They need to solve for bailing in the instruments

2 that are issued under foreign law, but they are

3 working towards that in other jurisdictions.

4 MS. ADMATI: For example, Deutsche Bank

5 had a lot co-codes. I mean, I don't know if you

6 count or not, you know, these securities. Or in

7 Switzerland, they've always liked co-codes. And

8 so --

9 MR. TETRICK: Yes, so those are part of

10 their TLAC structure in most jurisdictions. 

11 MS. BAKER: So just to wrap up here,

12 one thing I want to emphasize about these avenues

13 for international engagement is that they are all

14 mutually reinforcing issues that are identified in

15 one group, say, like, in the institution-specific. 

16 We'll then take it up to a different level. Is

17 this a bilateral issue that we should talk about

18 with the U.K.? Is it bigger than that? Do we

19 need to talk about it at the multilateral level

20 and try and solve that problem? Some of the

21 problems have come to us or proposed solutions

22 have come up in some of the multilateral context,

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1 and we're like, well, why don't we talk about all

2 of those in the CMGs? So they're always mutually

3 reinforcing, and that, I think, is a helpful way

4 of looking at it. 

5 So with that litany of meetings and

6 avenues for engagement, I'd like to turn it over

7 to Joanne to focus on the ones that are really,

8 the issues that are really important.

9 MS. FUNGAROLI: Well, you think just

10 getting a group of people together to talk to each

11 other is easy, but actually it can be quite

12 challenging. So I would like to just say that

13 even forming Crisis Management Groups and the

14 other working groups that Susan described have

15 been extremely helpful in building the

16 relationships that we need to have the muscle

17 memory to know who to call and what's appropriate

18 to discuss with them or what needs to be escalated

19 to a more senior level for a consideration.

20 So with that framework, I wanted to

21 just look back at one of the remarks that Judge

22 Chapman made this morning because it summed up the

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1 work that we're doing internationally very well,

2 the question of why we have so many venues for our

3 cross-border work. And what she said was we work

4 together in a cooperative manner to define our

5 relationships working with key jurisdictions. You

6 highlighted in your remarks the U.S. and the U.K.,

7 which is the genesis of the U.S. G-SIB resolution

8 planning work in the United States. The U.S. and

9 the U.K. worked very, very closely together and

10 then build a framework from there. So there's a

11 consistency in the thought process that was

12 described earlier that carries through to the work

13 that we're doing in our international cooperation,

14 as well. So thank you for that. You stole our

15 thunder. 

16 So the work that we're engaged in is

17 really to try to increase the understanding that

18 foreign host authorities have in our home

19 resolution processes and strategies. Susan

20 identified and talked a little bit about the

21 Crisis Management Groups. The firms have a very

22 central role to play in bringing it all together

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1 with the full cohort of global authorities hearing

2 about the home strategy from the firm's

3 perspective. And we also then talk with our

4 foreign hosts regulator to regulator to try to

5 suss out their reflex mechanism, what are their

6 sensitivities, what are their concerns, what are

7 some reasonable ways that we can consider or

8 recommendation or escalate to others to address

9 those concerns? 

10 The transparency of resolution plans is

11 extremely helpful. The public sections of the

12 plans serve actually as a really useful tool. It's

13 like the abridged version of the Cliff Notes

14 version of a Title I resolution plan. We can use

15 that to talk to foreign authorities who don't

16 participate in a CMG to familiarize them with the

17 home resolution strategy overall. And then,

18 obviously, when we're working with CMG members, we

19 can go deeper and provide more information than we

20 would otherwise draw out of the Title I public

21 plan sections.

22 But I would just say that those are

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1 extremely useful even for CMG members to have as

2 a handy reference guide, for new members who are

3 coming in to get familiar, to just have a big4 picture concept of what the home strategy is that

5 the firm has articulated, and to start identifying

6 questions that they may have as a host

7 jurisdiction. 

8 Ultimately, our goal is the goal of

9 reducing the likelihood of ring-fencing and

10 pursuing avenues to achieve that through the

11 different venues that Susan described earlier.

12 Our Title I resolution planning process

13 with the firms has been extremely helpful to

14 advance our work. The U.S. emphasis on developing

15 firm capabilities in particular to support

16 resolution preparedness has been well received by

17 our foreign hosts. It gives us something

18 extremely tangible to talk about to use as a

19 reference point in these various discussions. 

20 Some of the capabilities that were

21 highlighted throughout the course of the day that

22 you heard about included mapping critical

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1 functions to material entities, estimating capital

2 and liquidity sources and uses in a more simple

3 language, and making arrangements for pre4 positioning to provide that capital and liquidity

5 to key foreign operations.

6 I think we're going to pause at that

7 last point and talk about that for a minute. Ryan

8 is going to try to tackle internal TLAC and

9 internal liquidity pre-positioning for cross10 border resolution for a couple of minutes. 

11 MR. TETRICK: Well, I won't solve it. 

12 I'll just recognize that the balance between

13 internal TLAC pre-positioning and flexibility, I

14 think it came up earlier in the day, is clearly an

15 area where there's a lot of focus right now and

16 how do you get that right, and it's something that

17 we're looking closely at.

18 The FSB internal TLAC guidelines lay

19 out a range of pre-positioning that should be

20 established material entities. You know, in the

21 U.S., the Federal Reserve has a rule that set that

22 requirement in the U.S. at the high end of the

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1 range. I know everybody is looking at whether or

2 not that balance is right here. And as other

3 jurisdictions are putting forward their

4 regulation, they're thinking about what the right

5 calibration is between this 75 and 90 percent that

6 you hear about. So it's 75 or 90 percent of what

7 an entity would need on a standalone basis for

8 external TLAC, they should have that much internal

9 TLAC if they're deemed to be material.

10 One of the things that -- 

11 MR. HERRING: Ryan, does the country

12 then have the right to up it if they start at 70

13 and say, oh, well, we're worried about this? 

14 MR. TETRICK: The company or the host

15 authority? So -- 

16 MR. HERRING: Host authority. 

17 MR. TETRICK: Host authority. So, yes,

18 but I guess the way that this is done is, you

19 know, we set out the requirements through

20 regulation, so the upping the regulatory

21 requirement, we'd have to go through whatever

22 regulatory process you need in that jurisdiction.

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1 MR. HERRING: What other countries

2 necessarily have to do that? 

3 MR. TETRICK: A host could always say

4 we're concerned about this subsidiary, we want to

5 hold more capital or liquidity if using their

6 ordinary supervisory tools. So there's the

7 prospect for that, I suppose. 

8 MS. FUNGAROLI: We'll just pause maybe

9 on one key foreign host of U.S. G-SIBs in response

10 to your question or to elaborate on the answer to

11 your question, which is the U.K. So the U.K., the

12 Bank of England in June of this year adopted a

13 policy statement on MREL, which is European speak

14 for we'll just call it TLAC. It's a simplifying

15 translation, if there's an easy way to translate

16 the terms. 

17 The Bank of England's policy covers

18 both its requirements as a home authority for its

19 firms and it actually said that for its firms, on

20 an outbound basis that are operating in

21 jurisdictions that don't have a rule, unlike the

22 United States, which does as a host, it will

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1 assess it and work with the firms to determine the

2 appropriate level. 

3 As a host jurisdiction, the U.K. also

4 addressed the pre-positioning requirement in its

5 policy. It set the range as 75 to 90 percent. It

6 gave itself the flexibility to make the

7 determination based on a couple of factors, but

8 two stood out to us for purposes of today's

9 discussion. One is the confidence that the Bank

10 of England has and the credibility of the group

11 resolution strategy overall, and the second is the

12 availability of the resources that are uncommitted

13 within the group that could be readily deployed to

14 support the subsidiary and its jurisdiction. 

15 MR. HERRING: I guess what concerns me

16 about that is, if it should change, then it's sort

17 of reflecting they have concerns about the

18 adequacy of resources or the availability. And

19 that's basically one of those signals you really

20 probably rather not have if you're getting into a

21 run-with period.

22 MR. FISHER: I want to ask an even

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1 harder question than Dick's and ask you to humor

2 me for a moment. I'm very worried that this is --

3 I understand why we want to pursue this, but I'm

4 afraid it doesn't get to a stable equilibrium as

5 the work you're doing in this area. 

6 Now, I understand cooperation is good

7 and we all should understand one another, but

8 humor me for a moment. Here in the United States,

9 bank resolution takes a weekend and ring-fencing

10 is a problem. Insurance resolution takes years

11 and years and ring-fencing is the answer. Very

12 different models. I understand how each of those

13 models are stable, but when you merge them a

14 little bit I don't think you have a stable

15 equilibrium in game theory terms. Now, that's

16 both an international problem in general but

17 particular given our, what I'll call the Title I -

18 Title II moment that we're going to be going

19 through. So, first, Title II is a hedge. Title

20 II is a hedge on whether we're in my bank world of

21 resolution takes a weekend and ring-fencing is a

22 problem or in the insurance world of resolution

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1 takes years and years and ring-fencing is the

2 answer. 

3 Now, a lot of the good work you all and

4 other countries are doing are going down the path

5 of making sure everyone is comfortable enough with

6 the subsidiaries that you think are not going to

7 rush and ring-fence. I don't think that's a

8 stable equilibrium, particularly in light of our

9 Title I - Title II moment. We're going to come to

10 a -- cooperation across borders is good. We

11 should all understand what each other is doing. 

12 I'm not saying that's bad. That's terrific. But

13 at that moment that we're having our Hamlet moment

14 or we're going down Title I - Title II, what's the

15 rest of the world doing? Well, the rest of the

16 world is, more or less, in an insurance world,

17 resolution takes years and years and ring-fencing

18 is the answer. That's just a mental bias they've

19 got, not just in the insurance world.

20 Now, there's some jurisdictions where

21 that's not the case, but I just think you've got

22 to think hard about whether, and you've got the

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1 nice long quote from Vice Chairman Quarles, who I

2 admire. But it's describing, the more work you do

3 to make people comfortable that the subs are well

4 set up, that also makes it more likely they want

5 to ring-fence. 

6 I know you're going to disagree, but

7 that's because you're coming from a world in which

8 resolution takes a weekend and ring-fencing is a

9 problem, and most of the world sees it the other

10 way. Now, you could disagree with me on that

11 actual observation about the rest of the world,

12 but I want you to think hard about whether it's

13 actually a stable place to be to be halfway

14 between these two models, and that's what Title II

15 is. 

16 MR. DELFIN: Maybe I'll take a quick

17 stab. But, you know, our goal is mitigation of

18 systemic risk, and so if we started our earlier

19 premise that systemic risk is housed in material

20 entity subsidiaries, then what we want to do is

21 make sure that they can continue operating and

22 providing the services that the market requires of

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1 them, and the type of ring-fencing can affect

2 whether they can achieve that goal.

3 So if each host jurisdiction has

4 sufficient resources and maybe soft ring-fences

5 that says, hey, I'm going to keep a little more

6 here, but services can continue to be provided,

7 the home jurisdiction and the other material

8 entities have sufficient resources to function,

9 although there's frictions, the friction of each

10 host being a little more protective than they

11 otherwise would have been, that need not destroy

12 the strategy. It's an unfortunate outcome, and

13 our Title I process is based on frictions

14 occurring. That is that jurisdictions are not

15 going to just allow the free flow of funds.

16 So we assume some degree of friction,

17 but there is a tipping point where if you have

18 hard ring-fencing, if resources are stuck in a

19 jurisdiction and it undermines the ability of the

20 other jurisdiction to function, you start having

21 real problems. That's what we're trying to avoid. 

22 So the small stuff within the band of

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1 everyone is having a little bit of self-interest

2 and protecting themselves. But the hard, sorry,

3 I'm protecting myself and shutting off the rest of

4 the world, that's a problem. 

5 MR. FISHER: The insurance world here

6 in the United States is premised on we'll let

7 things flow across but the regulatory will decide. 

8 Things will flow out of subsidiaries back and

9 forth to holding companies, but the regulatory

10 decides.

11 Your soft world is what are the

12 regulators deciding then, and I'm just suggesting

13 you may have made a distinction that I don't think

14 is a difference. That is, I'm calling that ring15 fencing. The regulator is deciding, and I just -- 

16 

17 MR. DELFIN: But if it doesn't

18 undermine the strategy, why is it -- so if the

19 regulator decides to let it go or decides to allow

20 the service to be provided and it doesn't undercut

21 the strategy -- 

22 MR. FISHER: Well, if I look at your

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1 slide up there, imagine instead of the arrow

2 saying reduced likelihood of ring-fencing we

3 insert learning how to live with ring-fencing. 

4 And I just think that's the world you're going to

5 be in, especially once you think hard about the

6 rest of the world is holding its breath while

7 we're making the Title I - Title II decision. And

8 they're not going to sit still there. 

9 MR. DELFIN: Yes. One thing we, and

10 I'm asking because of the parlance, when this

11 started there was ring-fencing, you know. It was

12 almost like a wall, a fortress. But pre13 positioning, some say, is a form of ex-ante ring14 fencing, but services can continue to be provided,

15 flows or funds continue to occur, but there's some

16 amount of money that's held in jurisdiction.

17 And so do you distinguish between the

18 idea of hard ring-fencing, fortress-like walls

19 versus soft ring-fencing that each jurisdiction is

20 going to have some self-interest to protect itself

21 but they're also not going to unnecessarily

22 complicate the resolution strategy? Because I

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1 think we're built on that second idea, that

2 everyone will have self-interest but they also

3 don't want to undermine the group. I don't know. 

4 MR. FISHER: When you describe that

5 second, you're describing from in the insurance

6 world the whole world over, not just the west. 

7 That is, things flow but regulators decide, and

8 there's a lot of inertia and timing is hard. When

9 you say hard ring-fencing, I think you're

10 expressing an American-centric view that ring11 fencing is bad and that we can see what happens

12 with extreme ring-fencing, extreme lack of

13 cooperation. And I'm suggesting think about a

14 world where everyone is holding their breath

15 waiting for the U.S. to decide Title I or Title II

16 and worrying which path we go down and what the

17 consequences are, and their tendency is going to

18 be to be a little more ring-fence-y at that

19 moment. 

20 MR. DELFIN: Agreed.

21 MR. FISHER: And I'm suggesting

22 learning to live with ring-fencing is a more

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1 profound ambition than trying to pretend it's not

2 going to happen. 

3 MR. DELFIN: So that's the last part

4 I'm just going to push back slightly on, which is

5 in our Title I process we distinctly assume that

6 there are frictions associated with the flow of

7 funds from material entity to material entity. So

8 we're not trying to be naive about ring-fencing

9 not occurring. It's just the degree of friction

10 that --

11 MS. BAIR: One thing that's new, and I

12 agree with you, but one thing that's new, at least

13 as we're talking about a Title II resolution, is

14 the ability of the FDIC to provide funding support

15 at that level and world commitments to the foreign

16 regulators to not cut their whatever operations

17 and keep liquidity, you know, the liquidity will

18 flow both ways, right?

19 So that's something new the FDIC has. 

20 That's a new conversation they can have with

21 foreign regulators that they didn't have before. 

22 Now, whether it works or not, I don't know. But

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1 I kind of think that we'll have soft, not hard,

2 ring-fencing, at least in a Title II. I think

3 it's harder on Title I. And, again, if you have

4 really strong backers in financing, maybe you

5 don't have a problem there, too. But with Title

6 II, at least, the FDIC can say that now and they

7 weren't able to before. 

8 MS. BAKER: And to the extent that this

9 is, as you mentioned earlier, kind of a classic

10 prisoner's dilemma, right? And everyone thinks if

11 I move first, I'll be better off. But when

12 everybody moves, everyone is worse off. 

13 You know, the classic solution to a

14 prisoner's dilemma is information and trust. And

15 so that is what we do in all this litany of

16 meetings is we try to build that information, we

17 try to build the muscle memory, what will we talk

18 about, commit to what we'll talk about, build the

19 systems to make that happen. 

20 MR. COHEN: Well, could I go just for

21 a moment? I would add a third, if I could, which

22 is capacity. And this is what I think is -- well,

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1 let me start with a premise, and we'll push this

2 a second time. If the U.S. is at 90 percent,

3 there is no chance the rest of the world won't go

4 to 90 percent. So it's really up to us. If we go

5 to 75, the rest of the world may or may not

6 follow. But if we're at 90, you can be sure

7 everybody will follow.

8 So I look at this and I worry that

9 we're looking at this through the wrong end of the

10 telescope, and the right end of the telescope is

11 the capacity of the parent to provide assistance

12 if there is a problem. If you've already used 90

13 percent, there is far less capacity to solve the

14 problem. You look at the individual subsidiary,

15 75 to 90 percent is of a fraction, whatever that

16 fraction may be of the whole. But when you're

17 looking at the totality and what is left, it's 75

18 to 90 percent of the entirety and it's a much

19 bigger number. And if you constrain the ability,

20 to me, flexibility should be the watch word, and

21 I can't imagine, frankly, a country saying, well,

22 at 75 percent I wouldn't ring-fence but at, 75

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1 percent I must and at 90 I won't, that's not going

2 to happen because the loss will be too big and

3 people will know there's no capacity to help out.

4 So I just couldn't argue more strongly

5 than I can now for really taking the leadership

6 role and going at 75. And I actually share

7 Peter's view inherently. I would go to 50 if I

8 thought that had the slightest chance. 

9 DIRECTOR GRUENBERG: I would say we

10 have not yet executed a resolution of the G-SIB. 

11 No country in the world has. And so we're all

12 talking hypothetical at this point, so you've got

13 to qualify it. And until we actually do it and

14 see what that experience is like and what actually

15 happens in the circumstance, you know, you can't

16 speak with confidence.

17 What I will say is that I do believe

18 the whole international arrangement here in regard

19 to these global financial terms has changed

20 significantly over the past ten years, that the

21 major jurisdictions that are the home and host of

22 these major firms have spent a lot of time over

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1 these last several years passing laws, developing

2 capabilities, and talking to each other about what

3 we would do together if one of these firms in

4 which we have mutual responsibilities gets in a

5 difficulty. 

6 And the whole premise of every

7 discussion, every collaborative effort is how do

8 we avoid closing borders and the disruption that

9 everyone understands that would cause the

10 financial system. And I can only tell you that

11 the premise of every conversation we've had, just

12 one little indication of it is, and Rodgin alluded

13 to this, if the home jurisdiction can demonstrate

14 the capability of meeting the obligations of the

15 firm domestically and internationally, it is not

16 in the interest of the host jurisdictions to screw

17 around with that. The optimal outcome for

18 everybody is to keep the institutions functioning

19 and the borders open, at least that is the premise

20 of all of the work and that is at least my

21 perception of where people's self-interest is.

22 Now, the second there is significant

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1 doubt in the foreign jurisdiction, including our

2 own, about the capability of the home jurisdiction

3 to meet the obligations, then you're dealing with

4 a different circumstance. And the whole premise

5 of our efforts, and it's fundamentally a handful

6 of jurisdictions that we're talking about in terms

7 of being home and host to these truly global firms

8 and for us it's fundamentally the U.K. and the

9 Europeans. In terms of U.S. operations, that's

10 really, you know, the ball game. And I think

11 there would be every effort, which is not to say

12 we haven't done it yet, and I understand the

13 skepticism and I think that's fair until we

14 actually do it. But I do think the operating

15 premise will be how do we make this process work

16 and how do we avoid ring-fencing is going to be

17 the threshold premise of the responsible

18 authorities and we'll see if we can actually

19 execute it. 

20 And I can tell you we had one

21 circumstances in which there was, without getting

22 specific, there was a potential enforcement action

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1 in the United States against a foreign firm that

2 had the potential of, it was uncertain what the

3 market reaction might be. And there was extensive

4 interactions leading up to that among the key

5 jurisdictions as to what we would do, and it was

6 quite clear that, as long as the home jurisdiction

7 of the firm was prepared to meet the obligations

8 of the firm in the foreign jurisdictions,

9 including our own, there was no interest. In

10 fact, the self-interest was to not intervene, and

11 we got those representations from the home

12 jurisdiction and that was our operating premise as

13 this thing -- at first, there was no market

14 reaction and never had to be tested. But do I

15 believe that the home jurisdiction would have met

16 the obligations if it had been tested? Let me

17 just say I would be surprised if they didn't, and

18 they certainly understood there would be

19 consequences if that didn't happen.

20 So, you know, that's the operating

21 premise. It's a set of relationships and

22 capabilities in each of these major jurisdictions

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1 that did not exist ten years ago. Ten years ago

2 there were no discussions around this subject. 

3 There were no authorities around this subject. 

4 There was no strategic thinking around this

5 subject and there was no planning around this

6 subject.

7 Now, I don't know if it will be

8 different if and when this occurs. I would not

9 operate off the premise that ring-fencing is going

10 to be inevitable. It may play out that way. 

11 We'll have to see it. It certainly has been the

12 object of all of our efforts to avoid that outcome

13 because, at the end of the day, if that is the

14 outcome, most people understand that's a lose-lose

15 situation for everybody involved. 

16 MR. KOHN: But, Peter, what part of

17 your point that I took it was deep skepticism that

18 Title I will work, especially -- so what you said,

19 Marty, is as long as they have confidence that the

20 home country can execute this, but if you have

21 these people sitting there debating should I do

22 bankruptcy, should I do Title II, and you don't

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1 think, you're the host country and you don't think

2 bankruptcy is going to work certainly before any

3 reform by Senator Toomey, and even then the

4 liquidity issue is still kind of up in the air. 

5 I don't think we've had a really good answer to

6 that here. Then you might be, then your point

7 would be you don't have confidence that the thing

8 is going to work, that the politics will push the

9 U.S. into Title I. We keep saying that's our

10 preference, but you have deep doubts it's going to

11 work and your obligation is to grab what you can

12 get. 

13 MR. FISHER: Yes. And that's

14 certainly, that's the fine point of what I call

15 the Title I - Title II moment we're proposing on

16 the rest of the world. And I'm happy to know

17 Marty's confidence in what's happened over the

18 last ten years, but I still, I hear you saying

19 you've developed the capacity to make de facto

20 ring-fencing work with other countries you trust. 

21 I don't hear you saying we're not going to be

22 carefully monitoring flows in and out of each of

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1 our jurisdictions at all. We're going to just let

2 laissez faire take hold here.

3 And so that is actually more like ring4 fencing in the insurance world. And I want you to

5 see linguistically you're using the term ring6 fencing bad, what we want to do good, and I think

7 you're also describing a world you've invented

8 through ten years of discussions that's much more

9 subtle and complicated. And in the game theory

10 moment, the Title I - Title II moment is going to

11 lay on top of that. 

12 MR. COHEN: Okay. So just to pick up

13 very quickly on that, I think you make a critical

14 point here with your Hamlet reference. It didn't

15 work out so well for him, so, you know, it's

16 really critical here that that decision be made

17 immediately. 

18 DIRECTOR GRUENBERG: Let me just say

19 again it's contrary to all of my experience. I

20 don't see us having a Hamlet moment here, to be

21 candid about it. Given we don't know what the

22 circumstances -- 

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1 MR. FISHER: Our present company not

2 included. We're referring to people outside this

3 room. 

4 DIRECTOR GRUENBERG: You know, we're

5 dealing with one of these global firms. We're

6 going to assess the risks and make a judgment, and

7 I don't see us going back and forth for weeks and

8 trying to, agonizing over that call. You don't

9 know how sudden it's going to move. But assuming

10 there's some planning opportunity, some line of

11 sight into the problems as they're developing, I

12 think it's going to become pretty apparent to the

13 responsible authorities of our government what

14 we're going to have to do one way or the other,

15 what the nature of the firm is, and I think we're

16 going to be communicating that to our counterparts

17 and we're going to be working very hard to get on

18 the same page if, indeed, that's where we're

19 heading on this thing to bring this together and

20 that everybody knows what we're going to do, when

21 we're going to do it, and execute it. And then

22 the question is, you know, can we execute it

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1 successfully because even if you do all of that,

2 the operational changes here, even if everything

3 is good, you know, particularly until we do it the

4 first time, the risks are significant.

5 But I don't see, I see a different set

6 of, I don't see a Hamlet issue and I don't

7 necessarily see the other foreign authorities

8 going back on all of the work we've done over

9 these last several years. What I do see is, boy,

10 this is a big challenge to carry out, and the

11 ability of our authorities and the foreign

12 authorities to work together and execute this in

13 a way so that it happens in an orderly matter

14 without undue disruption, that is the thing that

15 I would worry the most about from where at least

16 I've sat. You know, you may be right, but I

17 worry, for what it's worth, less about that than

18 I do as can we pull this off from an operational

19 standpoint. 

20 MS. ADMATI: So when you're referring

21 to ten years ago, I mean, I think the benchmark

22 there is that there was tier 2 capital. I mean,

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1 the words keep changing, so it was called tier 2

2 capital or trust preferred or something else that

3 was counted as losses and it wasn't. And there

4 were, I understand, some memorandum of

5 understanding about things, so I'm sure it was

6 different because, in the end, nobody observed

7 losses. In other words, the creditors were paid

8 in full, even in institutions that were bailed

9 out.

10 So that's the starting point of now

11 it's going to be different. But my worries that

12 you've been working with all these other

13 regulators and it's really about the legal

14 authority and about the political people that will

15 have a tendency to ring-fence because of their

16 constituents. So when there are all these

17 understandings and these relationships, we work

18 out for all of us and exactly how. So worrying is

19 good, right? 

20 MR. TETRICK: I think, going back to

21 where this conversation started on internal TLAC,

22 part of the goal there is to give hosts confidence

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1 so that they don't need to do further undue ring2 fencing. 

3 And picking up on Rodgin's point about

4 the importance of flexibility, you know, we can't

5 answer the question in this forum what's the right

6 level, but, you know, from a home authority

7 perspective, you can understand why having some

8 flexible tool to meet needs where they might

9 arise. We don't know where it's going to be most

10 acute. It's helpful to have some degree of

11 flexibility.

12 I think one thing just to acknowledge

13 that's a factor in that conversation is if you

14 have lower pre-positioning in a bigger pool of

15 contributable resources, part of that discussion

16 that's been around is how do we know that pool is

17 going to be there, is it visible to host

18 authorities, and what are the controls around it? 

19 And I'll just say that the work that we've done on

20 the capital positioning framework in Title I is

21 pretty helpful in that regard in that it defines

22 what that pool of resources is. I don't think

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1 anybody else has that. And it gives hosts some

2 understanding of how it might be used over the

3 course of the runway. 

4 MR. COHEN: This is why the point,

5 Susan's earlier point, you need the confidence and

6 the cooperation or else it doesn't make a lot of

7 difference. So I think all three have to work

8 together. 

9 MS. BAKER: And the fact also that our

10 firms have already done this pre-positioning, even

11 in countries where there hasn't been a rule

12 requiring them to, is doing a lot of work for us,

13 as well, in terms of building trust. And the fact

14 in the CMGs they talk about that, how they

15 calculated what they're doing, what are the

16 numbers in the various material legal entities,

17 and what would be the plan if they did go into

18 bankruptcy to make sure that that is distributed

19 out.

20 So, I mean, I think that the foreign

21 authorities would know, at least for those

22 material entities, what they would be getting. 

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1 MS. CHAPMAN: Can I just chime in? 

2 Because this is a point that's come up when we've

3 had engagement with foreign regulators in the U.K.

4 and in various international conferences. And

5 when they hear what status would be afforded to

6 the regulators in a U.S. Chapter 11/Chapter 14 of

7 U.S. G-SIB, first they're surprised, then they're

8 relieved, then they're happy because, once they

9 hear that the regulators would be parties in

10 interest, that their views would actually form

11 part of the evidentiary record, that just because

12 now this bankruptcy judge that they've never heard

13 of before is going to very much involve the

14 regulators, it raises their comfort level and it

15 makes them much more enthusiastic and willing to

16 engage and less afraid of the process. 

17 And I think the point that Ryan made

18 about flexibility around pre-positioning, which

19 picks up something that Rick started the day with,

20 is also very critical. 

21 The other thing that happened when

22 Lehman filed that that is absolutely avoided is

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1 there's a filing and you can't operate your

2 trading system because the intellectual property

3 is in Hong Kong and you don't have a way of

4 getting at it. 

5 So just operationally and structurally,

6 there's been a huge, huge step forward and maybe

7 a Pollyanna view of the world I could see a

8 situation in which in a regular Chapter 11 in the

9 United States we will have non-debtor foreign

10 entities and there will be funding that's

11 provided. And, you know, we always are nervous

12 about money leaving the debtor group, but you can

13 track it, you can make mechanisms, you know, for

14 bringing it back and forth and trying to maintain

15 business as usual. Whether that would be possible

16 in the world of a G-SIB filing, you know, no one

17 knows, but, at least theoretically, it is possible

18 if things work remotely the way they're supposed

19 to work. 

20 MR. HERRING: I'll circle back to an

21 issue that came up this morning. Is the

22 intermediate holding company, if it has proper

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1 governance around it, a partial solution to this? 

2 The question is, you know, if a country can be

3 satisfied that means are available and will be

4 used when necessary and don't have to be right

5 here in the bank that I control, then it seems to

6 me that you do get a lot more flexibility. 

7 Is it possible to have a transparent

8 governance mechanism so they realize it's going to

9 be automatic or at least very, very reliable that

10 whatever they have locally can be augmented, if

11 necessary, from the intermediate holding company? 

12 MR. DELFIN: It can be. I think

13 there's tradeoffs. We started this process from

14 a Title I legal impediments perspective, so, you

15 know, we were thinking if a firm was doing this

16 and the assumption was they were downstream, let's

17 say at the last minute, and there were clearly

18 legal challenges associated with that, and so if

19 you look at our guidance this falls in our legal

20 obstacles bucket because that's the way we first

21 came to the thought. And it was only considered

22 the following mitigants to that legal obstacle. 

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1 You could have an IHC, you could have pre2 positioning, you could consider binding mechanisms

3 or support agreements. That's the way we came to

4 it.

5 Over time, you can see how an IHC could

6 provide some degree of flexibility because it

7 could be a pool that could move in to whichever

8 material entity might need it. 

9 MR. HERRING: Yes, I was thinking about

10 that. 

11 MR. DELFIN: So there is some

12 flexibility in there. It's more flexible than if

13 you pre-positioned with each of them. 

14 MR. HERRING: But on the other hand,

15 the host countries would have to be satisfied that

16 not only is it there but it will be used.

17 MR. DELFIN: Exactly. 

18 MR. COHEN: And it goes back to the

19 independent directors at the IHC. So it actually

20 has a really, you know, I agree, that's exactly

21 the origin of the IHC, but I think it has the

22 benefits that it's referring to. 

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1 MS. BAKER: Everybody is thinking about

2 flexibility versus certainty, including our

3 colleagues at the Fed. Just to wrap up quickly on

4 things because everyone needs to end up with a

5 next steps slide, it goes without saying that we

6 will continue to be having our firm-specific

7 meetings and our bilateral dialogues. And I

8 didn't put them up there. I thought I'd focus on

9 a few things you might not be as aware of. The

10 multilateral efforts continue. The FSB just put

11 out its seventh annual report of the G20 on

12 progress towards resolution and adhering to the

13 key attributes we're all bringing, but it is a way

14 to continue to keep the pressure up. 

15 As I mentioned earlier, the FSB is also

16 launching this multi-year effort to evaluate the

17 effects of reform and looking at their framework

18 for adjusting "too big to fail." We also will be,

19 we've been undertaking reviews of the technical

20 implementation of the TLAC standard. That is

21 coming out, and the resolution planning process

22 itself, Bruce has been on that. And maybe you

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1 could talk just very briefly about that and how we

2 are using that as sort of a vehicle for

3 transparency. 

4 MR. HICKEY: Sure. You know, the FSB

5 members have been undertaking this peer review. 

6 They do peer reviews periodically. They've done

7 there. This is a third one on resolution issues. 

8 The first one was chaired by former Chairman

9 Gruenberg. This one is on resolution planning. 

10 They basically want to get a sense across the 25

11 FSB jurisdictions where are they in terms of

12 actually having frameworks for resolution

13 planning.

14 And we wanted to highlight this as a

15 good example because it shows a lot of what our

16 priorities are in undertaking this kind of

17 multilateral engagement. I mean, the gist of it

18 is they just want to issue a report, having done

19 extensive survey through questions and bilateral

20 conversations with all 25 jurisdictions as to what

21 are you actually doing about resolution planning. 

22 No surprise, you know, I don't want to

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1 preview too much what's going on, but, you know,

2 certain jurisdictions that are home to the large

3 institutions are doing very well. There's still

4 a lot of work to do on other jurisdictions. 

5 But the thing we wanted to highlight

6 what's so impressive, we think, about this type of

7 work and the opportunities that it affords us it

8 the fact that, principally, what this does is

9 produce a report and it's a factual report. It's

10 not about listing a bunch of prescriptive guidance

11 but sort of saying to the world, here, transparent

12 fashion, here is what all the FSB jurisdictions

13 are doing.

14 The review is undertaken by -- it's a

15 peer review. It's undertaken by representatives

16 from agencies that are represented in the FSB. 

17 And what you have is instead of you should do this

18 and not be doing this, we're just saying here's

19 the continuum of options that you have as

20 policymakers in thinking about resolution

21 planning. 

22 Secondly, what I'll say is that we've

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1 built into the process, as is true throughout many

2 FSB efforts, engagement with the industry. Just

3 last month, we had a workshop with banks, with law

4 firms, and with consultants, in which we asked

5 them to take a look at some of the issues that we

6 were trying to cover and to get their perspective. 

7 Certainly, from a U.S. perspective given that the

8 firms are the subject of all this resolution

9 planning work, it was important to hear from them. 

10 And I think this accomplishes two things: one is

11 it results in work that is far more well developed

12 in terms of its overall perspective and then,

13 finally, getting back to the transparency issue,

14 it is a way of communicating tangibly to firms and

15 to the public sector, to the public, the fact that

16 regulators are, in fact, working together on some

17 hard issues. I mean, I'm sympathetic to the idea

18 that we've heard this in various other settings

19 that they kind of have to take it on faith that

20 there's a lot of work being done cooperatively

21 amongst regulators and that we are making

22 progress. But as Susan mentioned earlier, in

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1 context like the CMGs where we bring the firms in

2 and they see all of us sitting around the table

3 and we barrage them with questions for half a day

4 and in things like workshops that are associated

5 with various FSB work, firms get to see that, in

6 fact, regulators are working together and trying

7 to advance the ball. 

8 MS. BAKER: And just to wrap up, I'll

9 quote my chairman who said on the topic of

10 international cooperation there is no magic

11 bullet, we have to just keep talking. So with

12 that, I took your talking point. 

13 CHAIRMAN MCWILLIAMS: Thank you. Well,

14 that brings us to the conclusion of the

15 Committee's meeting today and, first and foremost,

16 thank you to the staff who have not only worked

17 hard to prepare for this Committee meeting, and

18 I'll quote Ric Delfin who said, "I just need to

19 survive Thursday." To everybody else on staff at

20 the FDIC who not only sat bravely here briefing

21 the three chairmen, current and former, and a

22 former vice chairman of the Federal Reserve and

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1 the Lehman judge --

2 (Laughter.)

3 CHAIRMAN MCWILLIAMS: -- but was taking

4 questions and being barraged by some of the

5 smartest people in the world on these topics. So

6 thank you all. I know how much work went into

7 this and you did an excellent job.

8 I have a couple of minutes for my

9 closing remarks, but, truly, I am the beneficiary

10 of the hard work done with the FDIC, and under the

11 19th chairman, Sheila Bair, and under the 20th

12 chairman, Marty Gruenberg, so I think it's only

13 appropriate that the 21st chairman yield some time

14 to the 19th and the 20th and allow you to do some

15 closing remarks for today. And thank you again to

16 the staff. 

17 MS. BAIR: Do it in numerical order? 

18 (Laughter.)

19 MS. BAIR: Thank you, Madam Chairman. 

20 And I appreciate the opportunity to be on this

21 advisory committee. I appreciate your invitation. 

22 I've been a little rusty on this, so, hopefully,

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1 my questions and comments have been helpful. And

2 you've been tolerant to have two former chairs and

3 a lot of other smart people pontificate, but

4 you're going to be the decision-maker and you

5 wisely held your cards close because, right, there

6 are no answers to these questions and you can't be

7 too definitive about it because if you are then

8 you're going to end up having probably to do

9 something else. 

10 So I think it's amazingly helpful. I

11 served on this committee, actually. I had one

12 meeting before I stepped down as chair, but I'm

13 glad Marty continued it, I'm glad you're

14 continuing it. And I will turn my phone off. So

15 it's been helpful, and I look forward to future

16 meetings. Thank you. 

17 DIRECTOR GRUENBERG: I should say, for

18 me, the underlying theme here is continuity, and

19 Sheila did establish this committee, I continued

20 it, and I think we're both very grateful that the

21 new chairman is continuing this committee and the

22 commitment of this agency to this important work. 

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1 And it's been over two years since this committee

2 met, so I hope the presentation today, if nothing

3 else, persuades you that we just haven't been

4 sitting around. 

5 (Laughter.)

6 DIRECTOR GRUENBERG: We have been doing

7 a little bit of work here and paying some

8 attention to this issue. I think the staff who's

9 briefed you here today really demonstrate an

10 extraordinary level of engagement and expertise. 

11 There's, at least in my experience, no group

12 anywhere else at any other institution more deeply

13 engaged or more expert in this challenging,

14 really, new area of financial regulation, and

15 we're fortunate to have them.

16 And I would close on the point of

17 continuity that it did strike me that most of you,

18 frankly, have been members of this advisory

19 committee from its inception. And given the

20 nature of this, which is really, I think it's one

21 of the reasons we've been able to attract such an

22 exceptionally distinguished group is this is sort

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1 of interesting stuff and it's important, so it

2 continues to engage our attention and yours, and

3 we've been the great beneficiary of your

4 participation. You give us a hard time, but

5 that's why we have you. 

6 (Laughter.) 

7 DIRECTOR GRUENBERG: I can go around

8 the table. So thank you, thank you all. 

9 CHAIRMAN MCWILLIAMS: This Committee

10 meeting is adjourned. Thank you, everybody. 

11 (Whereupon, the above-entitled matter

12 went off the record at 3:55 p.m.)

13

14

15

16

17

18

19

20

21

22

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A

a.m 1:15 5:2 91:10,11

139:14

ability 55:12 68:21

78:18 97:22 146:18

174:6 226:4 231:1

280:19 284:14 286:19

295:11

able 63:17 70:9 78:10

87:19 98:4 102:16

103:6 107:8 111:16

111:20 130:15 132:3

148:6 153:10 157:5

159:12 177:8 231:7

262:20 285:7 310:21

above-entitled 91:9

188:15 251:1 311:11

abridged 271:13

abroad 219:20

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109:17 130:20 159:5

224:22 227:12 299:22

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167:22

absorbing 26:4 42:17

54:2 163:19 165:16

166:18

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absorption 184:15

academic 147:8 265:19

academics 147:5

acceleration 168:6

acceptable 244:1

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239:14

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99:2 104:6,14,16

123:5 151:12 157:5

158:1 162:7 196:3

222:4 223:20 225:6

225:18 263:15

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171:17

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67:11 272:10 280:2

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93:8 104:3 209:4

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77:1 155:17 170:4

289:22

actionability 125:6

actions 43:20 48:5 51:9

67:21 98:12 237:7,11

237:15

active 5:14 147:7

186:14

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252:9

activity 186:19

actors 66:19

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129:14 262:20 279:11

actuality 53:13

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144:7 197:6 285:21

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adding 221:2

addition 12:4 130:21

132:9 133:3 136:21

143:10,22 148:12

166:1 219:21 261:17

additional 103:20

106:19 107:6,12

109:5 114:17 176:17

address 4:11 13:22

28:17 35:18 40:3

49:22 52:5,18 63:7

71:1 77:1 78:16,18

83:6 115:16 135:15

146:22 172:19 173:20

174:1 175:21 187:9

187:13 194:15 205:17

271:8

addressed 20:11 76:5

157:9 217:18 276:4

addresses 40:13

addressing 19:19 33:21

62:11 76:8 78:1

131:18 265:16

adequacy 94:16,19

103:14 185:11 276:18

adequate 187:12

adequately 87:14

adhere 175:2,14

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adhering 303:12

Adjourn 4:20

adjourned 311:10

adjust 179:18

adjusted 108:12

adjusting 303:18

ADMATI 2:2 15:17 17:7

19:2 32:1 33:6 34:22

35:7,13 36:15 38:11

52:20 63:20 75:7

88:21 89:22 90:9

104:13 105:4,14

111:11 113:10 151:15

151:17 153:14 154:6

183:22 196:1 212:10

245:3 246:10 249:6

256:4 266:19 268:4

295:20

administration 142:10

142:19 206:5 222:19

Administrative 257:9

administratively 163:3

Administrator 144:1

admire 279:2

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ado 189:5

adopt 127:16 264:13

adopted 101:22 275:12

advance 14:8 31:4

240:8 272:14 307:7

advanced 253:8

advances 190:17

215:18

advantage 142:14

advantages 45:8

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advertisement 182:7

advice 87:16 141:20

Advisor 3:11

advisory 1:3,15 5:10

192:14 308:21 310:18

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affectionately 70:17

affiliate 174:16

affiliates 62:1,1 95:12

139:16,22 174:4

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299:16

afternoon 6:10 184:1

agencies 11:13,15,20

12:2,7 13:4,17,21

19:6 21:5,7 22:2,2,7

23:14 25:8 32:21

35:17 41:5 75:17

108:11 120:11 135:17

159:12 161:10 163:2

202:19 203:6 220:5

222:4 224:12 246:2

248:17,19 249:15

262:10 305:16

agencies' 6:11

agency 7:16 141:20

148:8 149:4 220:2

255:7,10 309:22

agency's 35:22 41:3

163:14

agenda 212:22 248:13

aggregate 140:11

144:18 170:21

aggressive 186:20

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181:11 193:13 254:17

291:1,1 295:21

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204:22 205:22 223:21

226:17 284:12 302:20

agreed 36:12 37:20

229:3,6 267:11

283:20

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agreements 77:5

123:11 124:2 254:21

256:1 260:1 302:3

ahead 36:18

aid 110:2

AIG 89:5 159:1 232:15

aimed 267:13

air 292:4

akin 214:16

Al 261:15

Alex 8:15 17:6 21:11

22:22 41:9 81:3,14

106:6 117:17 122:1

135:22 149:20

Alexandra 3:3 12:13

aligned 49:13

alive 72:20

alliance 133:11

allocation 50:13

allow 203:3 209:7,9

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280:15 281:19 308:14

allowed 31:10 65:4

152:6 229:11

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236:18

alluded 41:9 81:3 165:5

288:12

alternatives 236:6

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Ambac 137:5,6

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American-centric

283:10

amount 86:10 102:4

156:11 159:6 165:2

167:6,11 170:21

172:7 197:3 200:21

205:15 223:10 225:18

226:13,22 227:9

282:16

amounts 145:15 151:12

156:10 167:7,13

analysis 115:22 125:13

125:17 134:16 233:11

234:1

Anat 2:2 98:16,16

Anat's 186:6

and/or 195:21

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answer 11:4 20:1 71:7

87:15 149:10 204:10

208:21,21 211:11

242:19 244:1 251:10

257:14 275:10 277:11

278:2,18 292:5 297:5

answered 244:4

answering 81:14

answers 309:6

anticipate 188:22

237:10

anybody 204:13 237:22

298:1

anybody's 204:9

anymore 186:16 215:15

anyway 184:14

apologize 136:9

apparatus 260:21

apparent 294:12

apparently 53:17

114:19

appear 81:10 193:11

appears 176:6 243:18

applaud 109:8

applications 123:12

applied 89:20

applies 89:18 163:20

180:7,7

apply 179:6 180:6

205:11 218:14 219:3

226:12 234:18 245:21

246:9

applying 180:22 181:3

appreciate 308:20,21

approach 72:17 92:16

134:20,21 201:22

227:15 257:16 263:5

appropriate 269:17

276:2 308:13

appropriately 69:17

188:20

approval 38:17

approvals 85:14,14

approve 38:18 85:12

approved 139:6

approximately 144:16

April 10:7,12 13:5,7

14:20 19:6,16 20:9,9

21:4,5,21 40:1 107:11

120:4 132:13 262:8

Apropos 142:21

Arabia 82:12

area 114:13 164:4

186:14 215:15,17

248:3 262:4 273:15

277:5 310:14

areas 22:8,10 87:5

120:20 121:12,17,21

122:2,14 148:9

164:19 176:18 222:12

246:22 262:12,12

argue 56:19 112:10

201:11 287:4

argument 209:21 210:7

210:14

arguments 102:16

arising 174:16

arose 143:9

arraignments 255:19

arrange 210:17

arrangement 287:18

arrangements 27:19

165:10 172:3 255:9

258:11 260:1 273:3

arrow 282:1

Art 8:13 11:3 177:21

193:12 258:1

ARTHUR 3:11

articulate 59:8 135:2

articulated 272:5

aside 208:5 259:6,10

asked 17:4 19:18 28:15

45:2 49:22 52:4 61:16

75:12 98:16,16

120:13 184:12 197:13

242:19 253:11 306:4

asking 63:20 69:9,12

96:3 97:9 152:1

184:11 282:10

aspect 165:4

aspects 127:11 138:6

146:4 264:3

assert 144:3

asserted 143:9,12

145:16

asserting 112:10

140:11

assess 240:6,9 276:1

294:6

assessed 231:17

assessing 196:18

assessment 21:8 24:13

118:19 266:8

asset 102:7 126:17

138:15 158:21 178:2

191:17

assets 35:3 42:11 48:20

102:1 125:22 139:18

144:3 157:21 166:5

191:3 223:13 225:6,7

225:10

assigned 87:13

assist 8:21 175:14

assistance 286:11

assistant 3:12,15 88:17

Associate 3:3,7,14

251:6

associated 5:13 8:22

9:19,22 18:12 23:12

28:17 29:17,22 30:16

31:12 60:14 67:2

125:1 145:4 180:3

284:6 301:18 307:4

associates 29:2

Association 173:16

assume 15:22 16:2,3

37:7 44:17 55:7 95:13

98:17 129:7 182:20

202:17 236:4 280:16

284:5

assumed 7:18 104:6

136:18 159:3 243:8

assumes 154:20

assuming 54:15 57:6

105:16 294:9

assumption 46:8 48:7

98:22 104:12,14,14

127:10,16 132:17

155:12 160:21 301:16

assumptions 15:20

17:3 54:19,21 55:5

63:12 95:11 101:16

101:18 102:5,7 166:5

202:6 240:19 241:2,5

assure 17:16 32:18

56:14

attempt 79:18

attempted 57:12

attention 86:16 112:3

310:8 311:2

attest 181:7

attics 72:3

attract 310:21

attributes 256:7 257:17

266:11 303:13

audit 86:19 266:13

augmented 301:10

auspices 147:11

148:13

authorities 7:3 9:4 79:7

83:3 206:14 219:20

220:11,13,14,22

221:17 233:22 237:12

237:16 244:14 246:8

249:5 251:20 253:7

253:22 258:7,15

262:6 270:18 271:1

271:15 289:18 291:3

294:13 295:7,11,12

297:18 298:21

authorities-only 258:16

authority 6:12,20,21

9:11 10:17 37:12,12

37:16 118:10 161:20

189:8,14 190:21

218:8,12 219:2,4

221:18 234:17 254:5

255:7,11 274:15,16

274:17 275:18 296:14

297:6

automatic 50:6 301:9

availability 61:3 196:19

196:20 276:12,18

available 43:7 67:21

68:10 84:12 95:21

102:21 103:1 106:12

120:6 131:6 156:10

197:10 210:8 214:14

216:6 223:11 301:3

avenues 260:17 268:12

269:6 272:10

aversion 205:4 209:3

avoid 11:18 37:14 68:2

71:15 130:16 135:8

UNOFFICIAL/UNREVIEWED
(202) 234-4433 Washington DC www.nealrgross.com

Neal R. Gross and Co., Inc.

314

145:1 150:13 156:19

164:11 280:21 288:8

289:16 291:12

avoidance 68:17 77:1

avoided 74:4 299:22

avoiding 36:4

aware 84:4 122:20

163:18 169:7 303:9

awful 32:17

awkwardness 207:19

B

back 13:5 16:13 20:4

29:6 38:22 57:3 59:3

65:15 75:4 90:20

99:11 100:17 101:3

105:6 114:4,12

124:12 130:5 135:6

141:14 151:19 160:3

160:5 170:18 183:4

183:11,12,16 184:6

187:11 189:8 190:22

191:22 200:21 201:2

201:8,9 202:5 207:4

209:9 214:13 215:6

217:22 222:18 232:11

234:17 248:10,14

258:3 269:21 281:8

284:4 294:7 295:8

296:20 300:14,20

302:18 306:13

backed 143:12 179:19

179:20

backers 285:4

background 21:19 53:9

136:5

backstop 9:11 83:8

210:13

backup 181:2

bad 18:1 34:14 99:11

131:15 183:3 206:12

207:14 278:12 283:11

293:6

bail 185:21

bail-in 34:9,14,16

258:21 263:14,18

267:22

bailed 45:7 296:8

bailing 268:1

bailout 34:14 207:4,10

bailouts 6:3 152:8

Bair 2:4 7:15 27:18 28:1

28:4 31:20 32:2,13

33:4,11 61:12 62:16

62:21 63:9,15 64:4,10

65:2,7 66:9,12,16,22

67:9,18 68:1,20 69:1

73:8,12 83:20 103:7

104:2 105:11 129:19

130:11,19 131:1,3,7

131:11,14 135:12

181:6 182:12 186:10

186:16,21 187:10

188:1,6 198:2,10,14

198:18,21 199:4,10

199:14 200:4,6,11,14

200:19 201:4 210:16

211:1 212:3 226:9,12

226:17,21 227:5,12

227:16 229:21 230:3

231:9,15 284:11

308:11,17,19

Baker 3:2 251:5,9 257:4

267:6 268:11 285:8

298:9 303:1 307:8

balance 28:8 112:12

119:6 125:22 239:9

273:12 274:2

balanced 263:4

balkanization 146:10

157:15

ball 289:10 307:7

band 280:22

bank 2:18 7:3 9:6 14:12

15:21 61:17 64:2,8,18

79:6 89:18 90:6 110:4

111:14 112:20 139:13

145:7,17 164:6 165:8

165:21 166:9 168:9

168:22 169:14 170:2

170:11 183:8 191:18

193:6 196:3 199:19

212:21 227:18 228:3

228:3,5 231:19

248:16 261:2 266:12

268:4 275:12,17

276:9 277:9,20 301:5

banker 232:1

banking 35:22 38:13

90:9 93:4 111:12

112:1 134:12 163:14

164:6 172:19 173:22

187:4 221:1 259:11

261:10 262:4

banks 12:21 61:14

111:13,14,20 113:18

114:1 117:10 131:19

177:10 178:1 181:19

182:15 183:16 229:10

230:13 232:6 245:5

246:15 258:22 306:3

bar 140:8 193:15

Barclay's 71:16

Barclays 138:21 156:20

barrage 3:3 8:15 12:12

12:13 14:4 15:6 19:4

25:1 30:11 34:8,20

35:10,14 39:13 49:20

52:4 65:1 74:13,17

75:4,9 78:21 79:3

85:8,20 86:1,6 90:21

105:18 114:8 115:16

116:7,13,20 117:6

122:3,18 123:1 129:8

131:16 134:8 135:4

136:10 162:11 176:9

307:3

barraged 308:4

base 66:3 127:4

based 46:7 50:9,12

52:17,17 66:19 78:18

101:17 115:19 150:5

166:4 179:2 186:17

203:12 225:7 228:17

276:7 280:13

Basel 254:16

basic 70:8 165:20

basically 13:1 27:5

102:11 123:16 157:20

164:8 170:1 217:13

257:18 276:19 304:10

basis 97:20 113:11

118:3 190:4 199:8

214:15 233:1,21

237:12 241:1,15

261:4 274:7 275:20

BAU 122:7

bear 53:11 102:3

142:22 214:20

bearing 33:20

beggars 130:2,7

beginning 24:6 111:12

111:19 113:2 143:3

254:4

behavioral 241:2

believe 93:1 101:6

134:13 138:4 146:20

148:3 149:7 150:1

152:10,15 202:20

205:20 230:14 231:13

253:9 287:17 290:15

believes 45:6,11

belt 32:14 55:20

belts 123:21

benchmark 295:21

beneficiaries 114:9

beneficiary 308:9 311:3

benefit 26:9 29:4,11,16

228:15 256:2

benefits 302:22

bespoke 19:13 168:15

best 58:4 141:13 192:8

Betsy 190:14

better 16:21 34:18 45:2

61:11 81:14,16 83:6

136:13 138:2 153:5

154:12 208:19 228:6

228:6,6 237:8,12

244:10 285:11

beyond 56:5 195:13

242:21

BHC 169:3

bias 278:18

biased 141:12

big 7:19 21:4 40:2

65:10,11 66:7,10 67:3

69:2,15 114:1 117:3

119:6 145:7 173:21

174:1 184:3,21

202:19 211:21 212:21

229:1 246:15,20

248:2 259:1 265:16

287:2 295:10 303:18

big- 272:3

bigger 66:15 152:9

248:1 268:18 286:19

297:14

biggest 76:13 137:11

145:8 160:20 190:16

243:4 245:5 246:16

bilateral 252:10 260:17

261:8,17,18 268:17

303:7 304:19

bilaterally 190:3

bill 212:12,16,16 213:2

258:2

bill's 212:17

billion 144:5 145:15

182:16 195:16 248:9

billions 139:17 143:11

144:8

binary 50:14

binding 28:21 30:5

32:19 47:9,12,21 77:4

107:21 123:11 302:2

bit 8:19 11:9 14:5 20:22

21:22 27:5 40:10,12

57:5,19 75:6,20 98:14

120:1,19 131:18

156:7 162:15 165:17

181:11 182:2 189:15

217:1,21 218:4,6

220:19 233:2 247:8

253:16 262:1 270:20

277:14 281:1 310:7

biting 160:11

black 23:10 51:4 59:11

113:15

blame 206:6

blown 193:6

blows 248:9

board 1:17 2:10,12,19

UNOFFICIAL/UNREVIEWED
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Neal R. Gross and Co., Inc.

315

7:4 43:18 48:10,20

49:14 52:1,1,5 53:10

68:10 84:1 85:12 86:1

86:21,22 87:12,19

129:14 163:18 185:20

192:7,18 193:21

219:13 235:13,15,17

255:9 261:14

Board's 263:9

boards 20:5 48:17

49:18,21 51:22 77:22

78:2 98:7,10

BODSON 2:4 51:2,21

72:14 73:20 74:2,7,10

104:5,21 127:22

128:3 225:1,11 232:5

235:19 247:11

body 263:11

bolts 222:20

bond 102:6 230:18

Bonds 105:4

book 44:14 110:7,8

149:16,18 150:20

160:3 263:16

booking 72:5,6

books 123:4 125:6

146:17 149:22 153:2

border 142:17 157:10

174:13 203:18 220:10

239:18 273:10

borders 202:9 278:10

288:8,19

borne 214:9,18

borrowing 223:18,19

224:3 227:1

bottom 26:2 204:4

218:15 233:7

bowels 235:18

BOWSHER 2:5 86:18

box 23:10 26:7 59:11

boxed 204:19

boxes 113:15

boy 295:9

Bradfield 92:19

Bradfield's 93:9

brain 32:17

branch 133:5

branches 133:4,10

bravely 307:20

Brazil 129:10

breach 64:14

break 90:17 91:3,3

191:18 228:9 249:13

249:17 250:21

breakfast 111:21

breath 282:6 283:14

Brexit 261:20

bridge 37:13 155:11

191:3,14,16 192:3

193:4,5 222:6,19

258:22

brief 162:22

briefed 310:9

briefing 307:20

briefly 21:2 94:13

165:14 259:20 261:22

304:1

bring 12:17 75:9 176:10

183:12 207:3 209:2

294:19 307:1

bringing 88:22 249:10

270:22 300:14 303:13

brings 151:18 249:4

307:14

brink 205:7

broad 115:6 221:20

254:18

broadly 224:3

broker 65:6 191:16

231:20

broker/dealer 138:21

Brookings 2:14

Brothers 130:5 138:12

brought 207:7 247:7

BRRD 261:1

Bruce 3:9 251:8 264:8

303:22

brush 254:18

bucket 301:20

budget 216:13

budgetary 86:17

buffer 98:11 159:21

buffers 166:1

build 7:1 50:15,21,22

51:9 55:3 201:1 202:6

233:10,10 240:16

251:11 270:10 285:16

285:17,18

building 4:15 6:17

147:20 261:6 269:15

298:13

builds 193:2

built 35:15 50:20 77:6

81:17 85:17 97:7

107:19 202:11 218:18

228:4 238:16 240:4

250:2 257:18 266:2

283:1 306:1

built-in 56:13

bullet 248:3 307:11

bumping 162:21

bunch 85:2 256:16

305:10

burden 249:14

business 2:3,9,9 18:7,8

26:15 69:2 115:20

122:8 138:21 178:7

233:18 239:10 240:17

243:10 300:15

buttress 250:9

buy 174:22 175:21

176:1

buy-in 262:12

buyer 125:13,17 127:4

127:17,20

buyers 69:20,22 71:8

buying 71:14

C

C 2:4,6

C-O-N-T-E-N-T-S 4:1

calculate 97:20,22 98:4

calculated 298:15

calculating 241:17

calculation 74:22

calculations 74:19

107:21 166:3

calibrate 241:14

calibration 241:13

274:5

call 8:3 12:5 26:4 37:5

67:20 75:12 81:6

123:15 168:3 202:19

203:3 206:16 213:1

222:17 262:15 269:17

275:14 277:17 292:14

294:8

called 11:16 20:16 33:1

34:6 82:6 94:15 110:6

137:10 145:7 190:20

212:16 256:7 261:11

266:7 296:1

calling 116:15 281:14

calls 197:21

calm 141:21

CAMELS 87:8

candid 293:21

cap 226:12,14,22

capabilities 18:8 43:6

55:3 60:15 62:13

63:11 97:4,13 123:3

179:5 236:15,16,22

240:4,15,16 242:7

244:22 246:21 250:8

259:4 272:15,20

288:2 290:22

capability 288:14 289:2

capacity 22:9 26:4

42:17 163:20 164:9

164:21 165:16 166:19

166:21 223:18 225:22

285:22 286:11,13

287:3 292:19

capital 11:22 18:9 22:8

27:1 28:11 38:6 41:22

42:16,21 47:17 66:2

93:19 94:6,10,18,19

96:18,18 98:14 99:15

123:3 129:3 154:7

159:19 164:22 166:20

167:5 182:16 183:11

183:16 184:18,18

196:19,20 199:6

200:10 201:5 202:22

213:5 235:6 240:3,13

241:17 247:12,13

258:10 273:1,4 275:5

295:22 296:2 297:20

capitalize 65:14

capitalized 99:4 157:1

227:18

capped 247:17

capsule 75:5

caption 77:18

car 104:9

cards 309:5

care 51:17 57:13 88:20

careful 57:6 128:13

carefully 14:10 292:22

Carney 256:20

carried 22:12

carries 270:12

carry 163:21 295:10

carrying 146:16 219:18

cart 74:11

case 56:22 76:6 79:22

79:22 80:1,1,10 135:9

136:19 137:6 141:3,4

141:9 142:5 145:20

156:15 158:10 165:12

167:12 173:9 174:8

230:12 243:17 251:14

256:9 257:1 278:21

cases 26:14 57:8 75:15

80:2 82:19 136:22

137:7 140:7 141:1,12

142:10 143:2 144:10

150:17 152:19

cash 7:10 97:10 129:20

215:21

catch 171:12

categories 115:6

253:14

category 168:20

caught 229:16

cause 179:2,6 215:13

288:9

caused 193:18

causes 146:3

caveat 130:13

CBM 29:19 30:3 48:1

49:3,4

UNOFFICIAL/UNREVIEWED
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316

CBMs 29:22

CCP 263:20 265:4

CCPs 263:21

ceased 138:15

cells 32:17

Center 2:8,11 147:12

148:14 149:1

central 9:4 15:21 91:22

188:8 270:22

centrally 61:16

centric 86:14

cents 144:16 152:17

CEO 2:4,14,17 88:19

235:15 247:12,13

CEOs 84:14

certain 29:4 36:14 75:2

138:5 150:15 156:9

164:17 165:2,2,9,10

166:1,15 167:17

173:4 174:4,6,11,17

175:16 229:5 305:2

certainly 18:4 19:1

46:14 65:17 71:7,13

109:7 140:15 186:19

204:22 208:10 209:22

290:18 291:11 292:2

292:14 306:7

certainty 39:2 303:2

cetera 36:18 79:7 89:5

CFI 87:17

CFO 88:8

chair 53:18 184:20

309:12

chaired 304:8

chairman 1:18 2:2,4,7

2:12,14,15,18 3:11

5:3 7:15 8:14 69:7

86:20,20 87:7 90:16

90:19 91:1,5,12 92:21

93:8,10 104:7 135:12

136:2 137:17 149:11

154:9 177:16 182:9

188:12,18 192:22

194:1 202:12 207:5

213:8 214:5 216:18

228:1 245:12 247:5

249:12 250:20 279:1

304:8 307:9,13,22

308:3,11,12,13,19

309:21 311:9

chairmanship 7:19

chairmen 245:13

307:21

chairs 309:2

challenge 37:17 42:13

42:22 43:2 44:12 45:4

45:5 49:16 55:15

145:8 160:20 161:7

185:4 244:21 295:10

challenges 4:11 5:13

8:22 9:17,18,22 16:22

25:7 28:16,18 83:5

160:18 218:3 233:15

233:17 244:12 301:18

challenging 137:12

269:12 310:13

championing 212:12

chance 73:10,12 286:3

287:8

change 90:5 182:17

215:16 276:16

changed 10:2 90:5

215:4,5 242:12

287:19

changes 178:15 250:8

295:2

changing 296:1

channels 252:21

chaos 208:17

Chapman 2:6 7:21,22

33:7,13 34:15 36:6

70:11 73:10 79:13

80:4 81:21 135:10,14

135:21,22 136:12,18

137:19,21 149:14,17

150:12 151:16 152:13

153:16 154:8,10,15

154:18,22 155:2,6,10

155:15 156:17 157:2

157:4,14,19 158:2,5,8

158:12 185:5,10

209:18 214:4 216:10

269:22 299:1

Chapter 34:4 80:10

136:22 137:7 140:7

140:10 141:8,13

142:3,7 145:21 299:6

300:8

characterize 149:15,18

charge 80:16

CHARLES 2:5

chart 154:13,14

Chase 152:10

check 165:18 256:5

checked 141:2

Chief 3:13 137:22

chime 33:13 299:1

China 82:13

choice 129:18 197:19

207:15 208:4,15

232:2

choices 31:10,11 50:12

51:18 68:10,18

129:16 197:5,5

198:20

choose 51:9 129:15,18

192:7 198:12

choosers 130:3,8

choosing 207:17

chuckling 33:6

circle 300:20

circumstance 287:15

289:4

circumstances 7:11

9:12 18:22 36:14 51:7

84:19 204:15 209:10

255:20 289:21 293:22

Citigroup 2:15

City 145:17

claim 31:8

claims 74:17,18 140:10

143:6,9,12,14,16

144:3,18 145:2,7,10

145:16 153:19 191:5

211:11 215:9 222:19

clarified 79:21

clarify 20:1

clarity 114:17 116:10

classic 285:9,13

clawed 214:13

clean 33:1 41:19 44:9

156:8 165:5 169:19

172:10

cleaning 72:9

clear 19:14,14 36:6

41:2 83:3 91:18 92:2

162:5 183:20 214:7

290:6

clearing 2:5 123:5

clearly 40:5,6 134:11

208:8 273:14 301:17

clever 59:5

Cliff 271:13

close 93:13 95:20 174:7

177:2 203:3 309:5

310:16

closely 46:15 270:9

273:17

closer 241:16

closet 46:20

closets 72:3

closing 4:18 36:16

288:8 308:9,15

CMG 254:2 271:16,18

272:1

CMGs 235:2 253:20

255:11 258:3,19

259:10,22 269:2

298:14 307:1

co-chair 253:19 263:18

co-codes 268:5,7

Co-Director 2:10

Code 9:9 37:11,17

78:10 142:15 147:18

173:4 174:19

COHEN 2:7 32:16 33:9

38:20,22 55:16 69:11

70:8 112:13 162:5

204:8 205:22 206:18

231:13,19 232:12

248:14 285:20 293:12

298:4 302:18

cohort 271:1

collaboration 202:18

collaborative 288:7

collapse 73:3 79:12

138:4,12

collapsing 207:21

248:2

collateral 44:1 168:1

173:12 232:10

colleague 27:4 106:4

172:13

colleagues 8:13 179:12

228:11 252:1 303:3

collectively 134:2

207:10

combination 126:3

combine 246:18

combined 87:10 216:17

come 20:18 23:9 34:3

68:14 75:22 78:5

87:14 89:9 90:20

101:2 108:16 110:2,3

113:5 124:12 134:21

144:6 150:7 160:3

171:8 177:5 182:5

192:10 217:22 223:17

263:13 265:21 266:21

268:21,22 278:9

299:2

comes 18:20 33:19

58:7 63:13 70:18

170:2 178:13,17

197:17 211:8 228:2

252:20

comfort 68:21,22 80:19

160:22 210:13 299:14

comfortable 59:3 80:13

80:14 115:12 240:1

278:5 279:3

comforted 201:17

coming 128:5 181:15

239:3 254:8 265:11

272:3 279:7 303:21

comment 84:8 97:17

176:18,19 182:13

183:1,5 184:1,2,6

186:6 235:20 264:20

comments 177:4 215:6

309:1

commercial 215:12

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Commission 260:20,20

261:13

commissioned 265:17

commit 211:16 285:18

commitment 32:19

264:18 309:22

commitments 183:15

284:15

committed 86:9 266:10

committee 1:3,15 5:10

86:19 87:13 91:17

92:2,9,12,14 93:5

106:15 136:6 141:20

142:11 151:19 163:8

177:20 189:12 191:1

191:9,12 192:14

254:16 307:17 308:21

309:11,19,21 310:1

310:19 311:9

Committee's 307:15

communicate 262:19

communicating 294:16

306:14

communication 80:12

82:20 252:21 258:12

communications

222:10

community 6:19 39:9

134:12 135:16

companies 9:6 25:21

26:2 72:20 79:1,2

89:19 90:7,10 108:13

108:16 117:11 163:22

164:10 165:8,19,21

169:1,15 170:3,11

171:19 196:3 281:9

companies' 164:6

company 16:8 25:19,21

26:7,10 27:3,7,10,16

28:20 29:15,18 30:22

32:6,22 33:1 36:5

39:16 41:18,19 48:10

52:13 56:10 57:7 58:5

59:6 63:22 65:14

69:18 76:10 78:12

88:6 89:11 90:10

96:10 108:19 117:3

132:8 155:11,19

156:1,8 162:16 164:2

165:6 166:9 168:10

169:19 171:14 172:10

178:13 193:5 199:6

213:12 222:6 274:14

294:1 300:22 301:11

compared 80:9

comparison 141:7

comparisons 109:14

compensation 49:18

153:19 214:13

competence 86:19

competent 87:12

competing 76:2,9

139:17

competition 182:10

competitive 181:13

competitor 181:17

complement 259:14

Complementary 4:8

complete 20:5 135:6

162:17 171:15 222:3

completed 254:21

255:22 266:1

completely 103:17

completing 177:11

255:8

complex 3:2,3,4,5,7,8,8

3:13,14 5:14 8:12

65:11 137:11 143:16

150:16

complexity 59:9 142:6

compliance 169:11

175:14,17 176:1

complicate 282:22

complicated 88:9 139:6

166:4 227:8 252:14

267:22 293:9

complied 36:2

comply 167:16 174:20

175:6

component 25:4 45:14

149:7

components 119:8

composition 52:17

comprised 140:17

Comptroller 2:5

computer 246:18

conceivable 60:22

conceive 56:7

concentrated 231:11

concept 23:1 95:5

96:17,19 123:13

151:2 237:20 272:4

concepts 93:21 94:1,12

94:20 97:18

concern 35:10 36:15

39:15 55:17 148:10

150:19 166:19

concerned 15:5 37:4

238:21 245:8,9 275:4

concerns 96:21 175:21

225:4 258:18 271:6,9

276:15,17

conclude 74:20 249:15

conclusion 204:17

307:14

conclusory 17:3

concomitant 145:3

conduct 221:9 222:21

conducted 120:18

223:1

conference 83:10

209:21 210:15 238:12

conferences 299:4

confidence 7:10 34:2

58:8 162:4 203:4,7

207:16 209:7 212:1

235:16 244:6,9 276:9

287:16 291:19 292:7

292:17 296:22 298:5

confident 61:21 117:9

185:13 187:17 248:17

confidential 112:21

confidentiality 260:7

confined 100:6

confines 33:8

confirmed 144:13

conflict 51:22 52:3,10

53:5

conflicts 48:16

confronted 256:20

confuse 256:6

confusion 24:2

Congress 216:7

conjunction 155:15

conjure 71:11

connect 202:4

connectivity 133:9

consensus 142:2

consequences 84:12

169:2,8 189:11

207:14 283:17 290:19

conservative 102:22

241:6

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203:4 241:1 271:7

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considerably 167:22

consideration 74:21

128:10 203:17 269:19

considerations 193:17

considered 139:8 177:3

220:12 301:21

considering 215:6

consistency 270:11

Consistent 227:1

consisting 99:7

consists 27:6 167:10

consolidated 225:6

constituents 296:16

constitute 231:5

constrain 286:19

constrained 227:20

constraints 95:11

constructed 88:2

constructive 106:16

consultants 85:3 86:4

306:4

consultation 175:11

consultations 203:8

consulted 173:17

consulting 173:17

contagion 112:15,16

158:15 170:7 180:3,8

contain 106:21 174:11

contained 106:8

contemplate 16:9

context 25:16 119:9

136:6 163:6 260:2

268:22 307:1

Continental 53:16,18

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contingencies 44:19

contingency 124:17

contingent 57:17

continuation 133:1

continue 7:1 19:8 28:11

81:7 91:2 93:11

108:20 109:5 121:18

123:18,19 138:7

159:8 181:22 221:7

262:8 279:21 280:6

282:14,15 303:6,10

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continues 311:2

continuing 39:14

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continuity 49:8 119:12

119:16 123:5 263:15

309:18 310:17

continuum 237:7

305:19

contract 31:4,6 47:10

47:12 123:17

contracts 36:5 56:4

59:13 78:7,11 123:15

140:18 152:11 153:12

154:21 155:16 157:7

172:21 173:5 174:7

contractual 56:3

contractually 28:21

30:4 47:8 77:4 107:20

123:11

contrary 225:4 293:19

contributable 297:15

contribute 149:5

contributed 26:19 92:5

contributions 93:9

135:19

control 301:5

controls 72:6 297:18

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conundrum 205:14

convened 1:15

conversant 86:2

conversation 10:5 59:2

81:12 82:15 88:18

130:4 189:1 202:5

209:3 238:20 284:20

288:11 296:21 297:13

conversational 10:22

conversations 234:2

234:10 235:5 304:20

conversion 28:9 31:13

50:8 213:5

convert 65:13 184:10

convertible 168:10

conveyance 31:1,7

33:18

convince 224:21 231:8

convinced 85:6 216:10

cooperate 262:19 263:7

cooperation 4:15 7:2

39:6 80:5 83:4 142:10

157:12 190:1 251:12

255:22 260:1 262:13

263:9 270:13 277:6

278:10 283:13 298:6

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coordinate 222:9

coordination 6:18 10:1

10:20 79:16 220:20

222:3 248:16,18

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coordinations 256:13

core 42:2,13 46:22 83:1

83:4 115:19 217:2

218:2,19 219:2

corporate 3:10 182:4

corporate's 103:11

corporation 1:1,16 2:5

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corporations 113:12

correct 27:22

corrective 53:19

correctly 104:15

cost 29:12 34:17 67:2,3

86:14 145:11 174:15

179:18,19 180:4

214:18,20 227:4,14

costs 29:16 67:4 144:8

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Council 2:19 182:7

counsel 3:9,12,15

92:20,22

count 176:5 227:7

268:6

counted 168:19 256:14

296:3

counter 70:17 232:16

241:3 244:13,17

counter-parties 140:6

143:8 173:3 174:7,21

counter-party 123:17

counterpart 261:14

counterparties 17:9

18:13 36:11 37:6 78:9

counterparties' 18:14

counterparts 203:9

252:18 254:11 260:11

262:4 294:16

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counting 167:10

countries 255:2 275:1

278:4 292:20 298:11

302:15

country 111:13 133:18

193:19 267:5 274:11

286:21 287:11 291:20

292:1 301:2

country-specific 56:20

counts 85:6 167:5

couple 28:18 33:15

66:6 78:6 93:16,18

114:6 121:17 163:7

182:8 185:15,17

230:5 240:2 273:10

276:7 308:8

courage 207:6

course 22:11,16 38:11

46:2 49:2 64:9 73:1

76:11 84:2,21 92:19

120:6 132:17 133:13

200:8 239:21 272:21

298:3

court 73:9,18 74:5 82:9

138:18 142:9 201:9

cousin 39:3

cover 45:16 120:1

122:1 306:6

covered 21:15 164:10

164:18 165:20 169:3

170:10 263:12

covering 164:18

covers 263:20 275:17

Crapo 90:5 134:14

crash 179:9

Crawley 3:4 172:13,15

cream 168:5

create 149:1 170:6,8

created 110:18

creates 53:4 207:2

creating 29:17 170:12

credibility 92:1 199:11

276:10

credible 11:14 13:10

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credit 138:14 160:4

168:9 170:14 185:15

creditor 144:12,15

145:22 156:7,13

creditor's 142:11

creditors 26:9 32:5

66:13 67:13 70:15

139:7 144:6 156:2,12

171:7 214:10 296:7

crisis 7:17 29:10 61:13

62:5 138:13 141:15

146:8 185:12,19

187:12 188:8 215:14

228:5,21 229:2 230:6

234:2,9 237:7 239:4

243:8 244:11 252:7,7

252:20 253:16,18

254:17,20 259:3

269:13 270:21

criteria 167:17 204:18

204:20

critical 19:9 42:10

113:8 115:20 149:7

159:5 240:11 272:22

293:13,16 299:20

criticism 16:11

criticisms 65:8

cross 142:17 173:10

174:12 220:10 239:18

cross- 35:14 37:2 157:9

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cross-border 4:15 6:18

9:22 83:4 220:2 233:1

239:13 251:16,17

252:5,18 253:6

254:14 270:3

cross-defaulted 36:8

cross-defaults 36:4

78:8

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crux 65:1

Culpable 214:12

cure 184:5

curious 14:6 126:6

148:5

current 106:17 147:18

169:15 244:22 307:21

custody 260:14

customers 143:19

cut 284:16

cyber 245:9,17,20

246:2,11,20 247:20

248:14

cyber-attack 247:7

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D.C 1:18

daily 36:21 60:21,22

241:15,18

damage 144:3

damages 56:2,4

danger 229:19

darkest 236:8

darn 212:7

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data 68:5 115:13

118:22 119:1,18

124:8 126:16 182:4

255:5 265:20

date 63:13 140:8 144:4

229:5

daunting 151:5

David 3:15 8:16 27:4

35:19 156:6 162:19

171:6 172:15

day 6:16 10:6 18:2 31:3

58:7 63:19 77:12 81:2

81:3,4,6 89:7 91:16

92:10 100:16 101:3

110:3 139:10,14

147:21 156:20 159:21

160:2 219:12 225:3

225:12,14,18 228:1

234:13 236:8 239:4

247:12 272:21 273:14

291:13 299:19 307:3

day-to-day 238:17

days 30:13 71:17 96:12

98:22,22 100:3,4,7

130:5 145:18 152:3

157:21 209:14 243:11

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deadline 162:21

deal 30:22 51:21 76:1,2

78:3 101:9 168:1

186:13 187:6 192:21

194:8 202:11,16

211:6

dealer 65:6 191:17

dealing 42:21 55:3

103:8 154:17 197:14

206:9 228:22 289:3

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debate 39:4 70:2

147:14 168:12

debating 291:21

debt 26:6 27:6,7,9,10

54:3 101:5 156:10

157:2 158:7 164:22

165:3,17 166:1,11,15

166:17,21 167:6,10

167:11 168:6,7 169:2

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170:12 171:2,4 172:2

172:3 185:1,1 210:18

213:5 215:10 226:10

228:21 230:6 266:22

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debtor 39:16 81:5

151:13 300:12

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decades 228:4

December 1:11 20:4

69:5 121:7,8 122:4

163:18

decide 105:5 117:11

224:15 281:7 283:7

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decides 281:10,19,19

deciding 281:12,15

decision 10:9 70:10

129:15 135:1 150:5

151:4 187:22 210:19

210:22 220:5 224:6

282:7 293:16

decision-maker 309:4

decisions 22:1 51:5

61:6 108:1 156:3

221:10 235:16 259:5

dedicated 141:18 147:3

deemed 118:15 274:9

deep 93:22 117:7 189:1

267:16 291:17 292:10

deeper 120:20 254:7

271:19

deeply 310:12

deer 150:9,13

default 35:15 37:3

66:20 173:10

defaults 174:16

deferred 153:19

deficiencies 11:17,20

13:9,19,22 19:5,18,19

20:7,9,10 22:16 40:19

40:20 108:4 121:15

122:6 153:14

deficiency 12:2,7 46:9

define 5:16 93:17

127:17 270:4

defined 134:20 223:15

defines 297:21

definitely 33:22 39:8

70:4 77:5 84:16 154:6

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definition 57:16,19

115:17 130:8

definitional 116:10

definitive 309:7

degradation 70:20

145:3 152:20

degree 34:2 37:2 39:10

46:13 79:4 160:21

163:12 203:4,7

280:16 284:9 297:10

302:6

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deliver 222:9 226:4,6

235:8

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demands 244:13

demise 138:6

demonstrate 224:2

288:13 310:9

Department 206:4

depend 71:8 156:4

199:10

dependencies 119:3

dependent 232:6

depending 51:6

depends 55:19 57:7

depletion 166:22

deployed 276:13

deposit 1:1,16 64:2

111:17

depositors 7:9

Depository 2:4

deposits 61:17 62:5

depression 158:21

depth 218:6

deputy 3:2,6,8 8:14

88:20 235:18 251:6

derivative 44:20 59:13

145:16 157:6 232:16

derivatives 35:3 44:13

44:14 140:17 143:7

143:10 145:2,7

152:12,19,22 173:16

263:16

describe 13:18 107:15

107:18 108:3 125:6

133:5 254:19 283:4

described 40:21 65:5

107:20 137:8 207:15

269:14 270:12 272:11

describes 117:19

describing 45:3 58:6

77:11 208:6 253:13

279:2 283:5 293:7

description 169:1

descriptive 77:18

design 211:14

designate 115:18

designated 9:6 89:4,19

95:8 187:2

designation 90:11

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designations 90:12

designed 25:18 26:22

27:14 35:17 81:6 95:7

167:17 170:1 174:6

210:21 218:18

desire 210:9

desk 244:13

destabilize 170:7

destabilizing 173:8

destroy 28:13 49:12

70:5 199:21 200:3

280:11

destruction 74:4 127:3

detail 17:5 21:22 76:20

147:16 192:1 193:1

233:2

detailed 109:11 191:21

details 93:22 98:15

determination 21:9,11

70:21 276:7

determinations 118:21

determine 223:5,6,10

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determined 13:8 20:5

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determining 100:3

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developed 52:6 97:12

110:12 123:4 142:9

175:3 191:20 195:10

218:12 237:6 254:3

258:9,13 292:19

306:11

developing 272:14

288:1 294:11

development 13:3

39:18 77:3,20 162:12

162:14 163:10

developments 4:9 8:2

13:2 82:1 114:13

122:11 163:6 217:17

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devolved 139:16

DHCs 164:18

DHS 248:21

diagram 26:1

dialogue 261:18

dialogues 261:9 303:7

Dick 91:20 92:4 112:18

113:2

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dictated 192:5

differed 23:22

difference 108:21

281:14 298:7

different 24:1 29:7 31:9

46:5 50:12 58:1 72:16

83:14 87:16 90:14

108:22 110:11 119:8

150:18 181:17 182:2

188:11 191:13 197:19

199:5,14 208:11

210:1 217:12 221:21

222:11,15 230:7

236:12,12,19 244:18

247:8 252:13 253:12

256:13 262:15 267:3

268:16 272:11 277:12

289:4 291:8 295:5

296:6,11

difficult 130:12 211:22

230:17 231:2

difficulty 288:5

digging 120:19

dilemma 285:10,14

diligence 124:7

dimensions 79:1

DIP 205:15 214:16

dire 159:11

direct 5:15 112:5

140:12 212:18

directed 75:18

Directive 261:2

directly 78:15 86:3 92:2

116:1 227:1 248:6

director 3:2,3,5,6,7,8

3:14 8:11,14 52:5

82:22 84:8,16,21

87:17 91:15 92:8

105:18 106:13 161:8

161:14 162:3 202:14

206:9,19 251:6,7

287:9 293:18 294:4

309:17 310:6 311:7

directors 2:10,19 49:21

52:8,13 78:3 85:12

219:13 235:14 302:19

disagree 279:6,10

disagreement 117:13

disappears 178:22

discipline 6:1 7:8

disclose 169:1

disclosed 27:12

disclosure 113:6,19

265:3

disclosures 112:5

113:10,20 114:3

169:6

discount 102:18

discouragement

152:15

discrete 126:9

discuss 7:5 88:22

147:14 172:17 251:19

269:18

discussed 120:10

142:17 146:7 163:12

266:20

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discusses 76:19

discussing 173:2

discussion 5:11 15:3

20:19 25:17 53:3

93:14,20 135:5

162:18 267:8 276:9

288:7 297:15

discussions 80:20,21

272:19 291:2 293:8

disjointed 23:15

disorderly 172:20

180:9

Disparate 215:8

disrupt 74:8

disrupted 73:2

disruption 65:18 72:18

73:16,17 129:21

130:16 245:4,9 249:4

288:8 295:14

disruptions 245:6

disruptive 5:20

disrupts 178:7

distinction 281:13

distinctions 132:17

distinctly 284:5

distinguish 282:17

distinguished 310:22

distracting 60:4

distress 164:14 165:12

183:13 185:16

distressed 64:17 211:6

distributed 144:5 230:8

231:4 298:18

distributions 144:6

District 2:7 7:22 82:9

82:19 148:1,2

divestiture 12:3 19:10

division 3:9,10,12,16

8:17 83:2 219:13

251:8

docket 136:22 140:21

141:3,4

dockets 141:1

document 14:21 21:3,7

21:14,15 22:21 23:3,5

24:4,7,16,21 39:22

40:11,21 41:1 176:13

256:7,10,22

documents 77:17

109:20 192:17 222:1

222:12 223:21 264:20

Dodd-Frank 8:20 9:3

189:9

dodged 248:3

doing 14:9 58:12 64:19

85:1 86:22 87:6 89:8

89:14 92:1 97:7

111:10 201:13 202:1

207:14 213:6 221:3

238:14 242:15 252:19

253:17 254:13 257:13

257:15,19,20 262:3

265:11 266:14 270:1

270:13 277:5 278:4

278:11,15 298:12,15

301:15 304:21 305:3

305:13,18 310:6

dollar 80:10 141:8

144:17 227:13,14

dollars 139:18,20

140:12 143:11 144:5

144:8 145:15 216:14

248:9

domestic 4:6 132:15

domestically 219:20

220:3 252:3 288:15

domestics 41:16

133:21

dominated 261:19

Don's 52:21

DONALD 2:12

double 160:9

doubly 212:4

doubt 37:5 91:20

163:17 289:1

doubts 161:22 292:10

downgraded 103:12

159:1

downstream 28:22

29:20 30:15 41:22

47:9 56:8 143:14

301:16

downstreaming 43:19

47:1 48:17

dozens 146:10

draconian 55:8,9

105:13

draft 77:12,16

drafted 261:1

drafting 122:4 150:2

dragged 58:18

drain 158:10

drama 138:19

dramatic 12:2

dramatically 49:7 61:18

61:19 194:17

draw 159:1 225:2

271:20

draw-down 225:1

driven 40:2

drivers 151:6

drop 141:14

dropped 186:21 187:2

dropping 186:22

dubious 102:5

due 73:1 124:7 139:7

167:8,13 172:21

248:20 251:16

duke 23:19

dumbest 236:6

dump 42:11

duties 52:12

dying 189:4

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earlier 21:4,17 22:19,22

36:18 39:1 94:5 96:22

97:18 98:9,17 105:19

115:17 123:10 124:11

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165:5 176:10 183:5

185:6 223:1 234:20

235:7 240:5 249:20

252:4 259:2,20 261:7

270:12 272:11 273:14

279:18 285:9 298:5

303:15 306:22

early 23:8 24:19 30:7

30:13 35:12 36:4,12

78:6 96:12 158:7

172:21 190:22 239:20

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244:5

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268:12

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289:22

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239:20 258:5 299:16

311:2

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148:5 270:16 310:13

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219:11,12,22 222:17

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260:18 263:17 265:7

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90:21 93:22 97:14

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goal 5:17 8:18 19:1

42:2 44:9 68:3 73:19

117:13 118:6,6

219:15 272:8,8

279:17 280:2 296:22

goals 5:16 21:15

gold 102:14 228:2

gold-plated 184:15

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gotten 16:19,21 44:9

114:10

governance 22:8 43:11

83:19,22 84:1 85:16

86:11 98:8 125:1

196:14,21 210:20

241:12 301:1,8

governed 167:19

223:21

government 2:9 229:15

230:11 294:13

government's 118:6

governmental 248:19

governments' 237:6

Governors 2:13 163:18

GovMec 43:21

grab 292:11

Graduate 2:3

grain 35:1

granular 233:3

graphic 218:10

grapple 25:8

grappling 39:20 76:14

grateful 135:18 309:20

greater 91:22

greatest 148:19

green 26:7

greens 257:15

grim 89:16

ground 156:5

group 9:16 11:6 13:5

20:22 133:12,14,14

176:10 230:19 231:11

234:4,9 235:9 241:2

247:2 263:10,19,19

268:15 269:10 276:10

276:13 283:3 300:12

310:11,22

groups 234:3 253:17,18

254:18,20 256:3

269:13,14 270:21

Gruenberg 2:10 82:22

84:8,16,21 91:15 92:8

106:13 161:8,14

162:3 202:14 206:9

206:19 287:9 293:18

294:4 304:9 308:12

309:17 310:6 311:7

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guarantee 123:12

155:13 201:21 216:1

226:10,22 229:13,17

230:11

guaranteed 77:7

140:12 226:13

guaranteeing 227:9

guarantees 35:2 144:19

155:1 170:19 215:20

226:16,19 227:8

guarantor 36:8

guards 91:6

guess 64:18 71:20 78:6

79:9 154:11 157:7

167:3 195:19 225:12

274:18 276:15

guidance 14:22 18:18

22:12 28:15 39:22

40:12 41:13 49:20

75:10,18,21 76:2,18

78:15 93:14 94:2

105:21 106:1,20

107:10,10,12 108:5

119:20 120:3,6,9

121:14 122:7 124:13

124:19 132:10,14,15

133:3 162:12 176:13

176:17,22 177:1,3,9

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halfway 279:13

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293:20 295:6

hand 12:10 141:21

217:14 302:14

handed 194:7

handful 289:5

handle 161:16 199:18

202:20

handling 136:21

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128:12 156:21 168:9

182:21 186:4 192:4

198:20 202:2 203:16

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262:21 284:2 285:19

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79:14 80:12 104:8

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191:14 206:12 240:20

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292:16 299:8

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88:3,10,13 168:16

200:17 205:19 206:8

235:18 260:3 278:22

279:12 280:18 281:2

282:5,18 283:8,9

285:1 294:17 306:17

307:17 308:10 311:4

harder 45:8 100:19

116:21 117:9 277:1

285:3

hardwired 104:1

hark 190:22

hate 113:18

hats 63:21

hazard 5:22

head 64:3

heading 294:19

headlight 150:10,13

headquarter 138:20

headquarters 138:20

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heads 87:12 262:10

health 56:21 142:5

hear 189:4,18 260:16

261:4 274:6 292:18

292:21 299:5,9 306:9

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84:15,17 113:13

136:4 137:5 190:8

261:15 272:22 299:12

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heavy 16:10

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heightened 11:21

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190:13,16 194:4

195:7,10 207:2

209:15 214:2,7

219:22 220:2,9

224:10 225:5,13

243:3 244:8 282:16

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102:11 115:11 142:8

145:1 149:5 150:20

180:3 240:6,8 243:19

251:10 258:2 287:3

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264:12

helpful 9:16 32:21 60:4

60:5 177:2 249:3

250:11 259:13,19

261:4,7 269:3,15

271:11 272:13 297:10

297:21 309:1,10,15

helping 6:6 111:7

helps 31:11 45:12 49:3

49:4,5 59:8 68:20

71:4 166:18 190:16

263:7

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HERBERT 3:8

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15:16 56:16 57:15

90:13 91:20 98:21

101:20 102:19 103:4

105:3,6 106:15 109:7

110:14 111:3,22

114:16 116:3,8

118:14 125:20 126:6

126:13 134:6 147:13

149:14 150:9 171:6

171:16,21 186:5,12

186:17 187:1,20

188:2 204:22 206:20

211:8,20 230:16,21

231:7 232:3 237:17

237:20 238:11 239:10

241:9,19 254:15

255:15 274:11,16

275:1 276:15 300:20

302:9,14

Herring's 142:12

hesitant 92:6

heterogeneous 232:3

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hide 206:11

high 25:16 34:2 102:1

108:1 157:21 159:2

162:4 193:15 203:1,4

212:7 239:2 273:22

higher 141:16 203:22

225:16,18

highest 141:12

highlight 6:6,17 105:20

304:14 305:5

highlighted 216:6

270:6 272:21

highlighting 122:10

highly 193:21

hired 85:2

historic 138:19

Historically 173:2

history 21:18 137:16

hit 106:3

hits 252:7

hoc 252:13

hold 65:14 71:18 87:19

88:15 90:9 144:19

154:20 231:14 232:16

275:5 293:2

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50:6 58:9 64:15

154:16,20 156:22

162:6

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169:2

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27:3,7,9,16 28:20

29:14,17 30:22 32:5

32:22 33:1 39:16

41:18,19 48:10 52:13

56:10 57:7 58:5 59:6

63:22 76:10 78:12

88:5 89:19 90:7

108:13,15,19 117:3

117:11 132:8 155:19

155:22 156:8 162:16

163:21 164:2,6 165:6

165:8,18,21 166:9

168:9,22 169:14,19

170:3,11 171:14

172:10 196:3 266:17

281:9 282:6 283:14

300:22 301:11

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hole 196:10

home 6:20 133:18

200:7 201:6 220:17

221:17 255:7 259:18

263:4 267:3,5,18

270:18 271:2,17

272:4 275:18 280:7

287:21 288:13 289:2

289:7 290:6,11,15

291:20 297:6 305:2

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hope 10:21 34:7 57:15

81:13 148:16 150:12

150:13 153:4 157:14

182:21 183:6 188:4

224:17 236:3 266:4

310:2

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191:6 202:10 221:2

225:22 239:7 308:22

hopes 110:3

hoping 180:6

horizontal 58:13,21

59:10 71:2 116:15

horizontally 60:3

horrible 139:2 214:3

horribly 194:6

horse 74:11

host 6:21 80:1 220:17

221:17 234:5,16

237:12,15 259:14

267:19 270:18 272:6

274:14,16,17 275:3,9

275:22 276:3 280:3

280:10 287:21 288:16

289:7 292:1 297:17

302:15

hosted 82:11,11 265:7

hosts 263:4 271:4

272:17 296:22 298:1

hot 39:8

hour 247:13

hours 33:15

house 68:6

housed 279:19

HQLA 100:11,15

huge 14:8 77:20 115:1

158:10 230:22 256:19

300:6,6

huh 84:15

HULAs 103:10

human 145:11

humor 277:1,8

hundred 139:21

hundreds 139:17 141:9

141:17 144:1 256:14

256:15

hurdle 81:19

hurdles 147:16

hurricane 249:9

hypothetical 151:20

287:12

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idea 39:13 80:14 108:17

153:8 155:20 168:14

183:3 204:20 236:7

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ideally 57:16

identification 124:20

127:12 143:14

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124:5 125:8,11

218:19 268:14 270:20

identify 11:16 18:8,11

18:13 43:7 45:11

121:17 124:14 255:15

identifying 262:11

272:5

idiosyncrasy 247:6

IHC 26:14 133:2,7,10

302:1,5,19,21

IHCs 135:2 259:16

IHD 47:13

II 4:13 65:9 68:11,14

79:5 83:6,8,11,13

161:19 174:14 184:2

186:4 188:21 189:3

189:18 190:6,11,17

190:21 192:10 193:16

193:22 194:4,13,19

194:22 195:5 197:6

198:9 199:17 201:16

204:17 205:2,13,19

206:13 208:3,18

209:4,6 211:5,6,15

213:15,19 217:10

220:6 222:18 223:3

233:11,14 236:16,22

237:3 243:4 250:2,5

254:6 258:20 277:18

277:19,20 278:9,14

279:14 282:7 283:15

284:13 285:2,6

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291:22 292:15 293:10

Illinois 53:17,19 54:1

illiquid 54:13

imaginable 143:17

imagine 17:20 39:17

48:4 126:10 143:18

196:15 238:8 261:19

282:1 286:21

imagining 25:22 59:21

IMF 266:6,13

immaterial 117:14

immediately 293:17

immemorial 76:5

immense 258:14

immunized 158:17

impact 91:18 92:15

173:8 198:19 202:2

impacted 158:21

impede 170:5

impediments 125:8,9

301:14

imperative 156:19

imperfect 59:20 60:6

implement 6:7 113:4

192:10,13 193:8

implementation 4:16

216:15 264:3 266:11

303:20

implemented 82:18

implementing 193:16

implicit 229:17

implicitly 127:9

importance 99:18

156:18 234:20 264:17

297:4

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22:5 25:3,16 40:10

69:12 76:16 92:3,17

98:1 113:3 114:11

117:15 119:7 132:16

138:5,10 142:22

150:8 153:18 162:13

163:5 166:6 175:19

176:3 183:10,19

187:3 253:3,4 259:21

260:7 265:6 269:8

306:9 309:22 311:1

importantly 72:2 80:11

136:5 146:2 221:16

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impose 11:21

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impossible 56:7

impossibly 137:12

impressive 305:6

improve 9:20 68:17

109:5 110:9 164:9,14

216:4,7 247:3

improved 45:1 49:7

87:3 108:9 109:3

improvements 6:8

incentive 38:12 66:14

200:2 201:7 202:1

incentives 48:22 49:5

incentivize 176:1

inception 310:19

include 106:10 123:15

129:12 174:5 220:22

included 133:3 272:22

294:2

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including 7:3 10:17

12:3 40:11 107:2

132:7 140:15 141:19

153:19 173:21 174:22

176:7 217:22 221:8

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incorporate 107:22

incorporated 122:7

124:1

incorporating 77:11

increase 6:13 170:5

179:22 183:7 208:9

252:16 270:17

increased 244:19

increasing 61:17,18

62:6

increasingly 234:11

incredibly 137:11 148:5

incurred 144:9

incurring 165:8

independent 22:1 52:7

99:19 266:15 302:19

indicates 34:5 115:14

indicating 152:16

indication 195:14

254:22 288:12

indicator 88:19

indicators 195:3

individual 65:22 108:5

286:14

individually 13:22

individuals 55:19

industry 76:7 173:15

176:20 214:19,20

245:4 247:14 306:2

inefficient 65:11

inertia 283:8

inevitable 186:2 291:10

infer 238:13

infinitely 135:18

influence 230:22 231:1

influential 93:4

informal 252:12 260:10

informally 254:22

information 50:2 60:21

61:5,6,10 68:6 107:2

107:5,6,14 112:17

115:10 118:3 120:21

120:21 124:12 221:15

233:4,19 241:19

242:15,18 244:11,15

246:17 248:20 252:22

254:21 255:2 259:22

260:5 271:19 285:14

285:16

informative 109:9

informed 138:6 146:4

inherent 83:12

inherently 251:16 287:7

initial 105:7 245:19

initiate 144:1 238:9

initiative 173:15

innovation 240:12

innovations 38:15

input 6:14 10:3

inquire 187:21

insert 282:3

inside 114:1 116:16,18

insightful 177:21

insights 148:9

insist 127:4

Insisting 127:2

insolvencies 76:3,9

insolvency 42:21 82:1

82:7,15 140:1 164:12

164:13 173:5 174:17

196:9

insolvent 196:9

instance 222:4

instances 56:18

instituted 191:12

institution 2:14,16

37:14 38:3 54:14

69:15 76:16 147:12

157:22 178:6 191:3

192:3 206:10 211:13

218:14,21 233:16

310:12

institution's 259:7

institution-specific

233:8 253:15 268:15

institutional 231:21

232:8

institutions 2:11 3:2,3

3:5,6,7,8,9,13,14 5:14

5:18 6:1,21 8:12 9:2

92:17 146:16 170:9

178:2,10 179:9 211:6

236:12 246:7,8,12

260:9 288:18 296:8

305:3

instruction 181:14

instruments 27:13

164:22 166:9 167:9

169:9 265:4 268:1

insurance 1:1,16 57:1

64:2 90:10 111:17

277:10,22 278:16,19

281:5 283:5 293:4

insured 7:9 61:16 62:4

64:1,17 182:15 183:8

183:16

integrated 121:2 134:3

139:11

intellectual 72:7 300:2

intended 236:11

inter- 220:1

inter-affiliate 202:8

inter-agency 192:18

223:2,3

inter-day 96:8

inter-group 202:8

interacted 84:6 133:7

interaction 120:10

219:19 220:8 223:4

interactions 252:10,11

290:4

interagency 261:8

interconnectedness

112:16 231:10

interconnections 170:9

interest 18:14 48:16

67:14 141:13 142:13

204:9 215:22 230:1

231:8,12 258:14

288:16 290:9 299:10

interested 54:4 109:4

147:4 250:14,17

interesting 114:18

168:4 311:1

interests 49:13

interim 120:8

interlocking 49:21 52:5

52:9 78:2

intermediate 28:20

29:14,17 48:9 52:1

132:8 163:21 300:22

301:11

internal 26:13,14,19,20

27:18,21 31:13,19

39:3 48:13 95:5,9

99:10 146:13 183:5

219:11,21 222:16

260:15 273:8,9,13,18

274:8 296:21

internally 15:2 51:7

163:3 222:3

international 6:19

10:19 39:6,9 78:22

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164:4 173:16 189:22

190:6 217:20 251:11

257:5 260:11,14

263:11 268:13 270:13

277:16 287:18 299:4

307:10

internationally 201:14

228:12 252:4 270:1

288:15

interrogate 88:2

interval 98:7

intervene 195:21

290:10

intimately 135:14

intra-group 241:5

introduce 93:15 135:13

190:12

Introductions 4:3

invaluable 141:19

invented 293:7

investing 252:6

investment 139:13

investors 17:11 113:13

113:15,19

invitation 308:21

involve 299:13

involved 14:14 80:19

80:21 171:7 181:12

192:16 229:15 234:21

238:18 291:15

involves 252:6

ironic 211:5

irrelevant 115:6

ISDA 38:1 145:1 155:16

162:17 170:16 172:14

172:17 173:17 175:10

ISDA's 176:5

issuance 164:21

issue 7:17 33:16,21

37:9 47:15 52:9 53:3

58:3,22 71:3 73:5

78:2,5 87:18 101:20

112:14 134:9 144:20

157:18 166:10 169:14

184:14 246:18 267:15

268:17 292:4 295:6

300:21 304:18 306:13

310:8

issued 27:9 39:22

106:7 107:11 120:3

120:13 174:3 176:14

176:15,16 189:13

215:3,9,12 223:16

264:5,6 265:15 267:1

267:4 268:2

issues 11:16 12:5,6

13:19 15:14 19:7,10

19:14 20:1 32:7 37:3

44:8 52:6,18 53:14

54:4 58:1,6,14 59:4

59:11 63:7 78:4,8

83:1 113:1 135:15

147:1 156:7 157:10

173:21 183:20 217:8

248:13 265:5 266:21

268:14 269:8 304:7

306:5,17

issuing 170:12

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J

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January 136:20 169:12

169:13 175:17

Japan 255:22

Japanese 230:13

jargon 15:9

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269:7

job 45:2 69:8 81:14

110:5 185:18 208:19

250:10 257:21 308:7

jobs 138:15

John 2:14 212:3 235:13

John's 87:15 88:12

186:6

join 156:7

joined 7:20 8:13 190:13

251:4

joint 19:18 24:6,11,12

24:14,17 120:18

131:20 223:16 261:11

jointly 11:13 13:8 21:6

24:9 84:10 132:10

JP 152:10

judge 2:7 7:21,22 8:1,4

32:2 33:5 79:9 80:15

135:10,13,16,21

136:19 137:6,9,10

138:22 141:22 145:9

148:18 149:14 150:4

154:10 269:21 299:12

308:1

judged 189:10

judgement 161:9,16

judges 79:11 80:5

82:12 147:22 148:5

148:10,15 149:16,16

149:19 150:14,15

judgment 161:11

202:19 206:16 294:6

judicial 82:7 147:10

148:3,13 149:1,2

judiciary 147:8 149:6

July 40:18 41:3 120:5

121:7,8 132:3 133:20

134:1 175:8 176:16

177:7

jump 10:22

June 275:12

junk 102:6 103:12

jurisdiction 29:9 32:3,4

199:1 200:9 201:6

221:3 259:14,18

267:19 272:7 274:22

276:3,14 280:3,7,19

280:20 282:16,19

288:13 289:1,2 290:6

290:12,15

jurisdictions 42:19

110:16,20 140:2

150:16 190:4 201:15

201:18 202:18 203:13

204:6 220:17 234:6

234:16 257:7 264:13

265:18 266:7,9

267:18,19 268:3,10

270:5 274:3 275:21

278:20 280:14 287:21

288:16 289:6 290:5,8

290:22 293:1 304:11

304:20 305:2,4,12

Justice 138:1

justifying 185:4

K

keep 72:19 128:4

165:17 181:19 186:22

280:5 284:17 288:18

292:9 296:1 303:14

307:11

keeping 14:12 39:14

66:2

kept 230:13

Kevin 113:14

key 13:2 28:16 29:2

39:17,20 40:11 43:19

45:14 47:7 48:5 68:6

86:22 96:22 97:13

155:3 159:14 176:18

190:1,3 193:17 195:8

198:12,13 202:18

212:2 220:4 223:4

227:3 251:13 254:9

254:14 256:7 257:17

258:6 262:12,12

266:11 270:5 273:5

275:9 290:4 303:13

keys 198:12,21

kill 248:4

kinds 14:7 111:20

158:16 171:9 197:12

244:18

Kingdom 220:11

knew 92:19

Knight 247:12,13

knock 62:19 156:15

158:15

knowing 15:7 209:8

knowledge 58:15 59:15

59:22 248:20

known 50:16 70:17

173:17

knows 128:15 182:4

220:18 235:16 237:22

238:18 244:3,4

294:20 300:17

KOHN 2:12 30:3,6,8

45:15,21 46:3,11,17

47:3,6,16,20 78:20,22

79:4 80:3 81:19 98:16

99:20 100:1,6,18

101:7 117:10 118:1,5

118:9,12 154:11,16

154:19 155:1,4,9,14

156:22 157:3,5,17,20

158:3,22 159:16

160:1 195:3,9,19

227:17 243:1 244:6

291:16

Kokonig 261:16

Kong 300:3

Korea 82:10,13 229:8

230:12

Koreans 229:11

Krimminger 258:1

L

lack 112:17 158:11

283:12

lacking 146:14

laissez 293:2

lamentable 109:15

land 89:18 213:15

language 57:22 123:16

273:3

languages 253:4

large 4:7 5:19 9:6 37:19

65:21 113:12 132:1

132:11 136:22 146:16

151:10 168:20 183:8

210:5 227:9 230:20

247:21 305:2

largely 24:19 123:22

255:13 256:1

larger 107:4 112:1

133:13,17 137:4

largest 12:20 90:3,3

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131:19 139:12 150:19

182:15 193:7

lasted 145:18 232:17

late 106:14

lately 254:8

lateral 175:6

Latin 228:21

latzy 70:18

Laughter 92:7 114:7

122:17,22 136:17

137:20 149:13 160:10

160:19 180:16,20

182:11 188:14 194:3

198:1 204:11 209:1

209:19 212:5 213:14

216:20 221:5 224:8

232:18 235:22 238:6

245:14 308:2,18

310:5 311:6

launch 258:2

launched 262:13

launches 266:1

launching 303:16

Laura 137:22

law 56:17 89:21 140:14

167:20 169:11 209:15

213:15,22 214:2

222:2 225:5 267:1,7

267:15 268:2 306:3

laws 32:11 288:1

lawsuit 247:15

lawsuits 144:2

lawyer 20:21

lawyers 85:2 88:2 93:4

lay 273:18 293:11

layer 221:19 222:14

233:7

layers 218:13,15

laying 88:4

layman's 21:17

LBHI 141:3 144:19

LBI 141:4

LCR 18:2

lead 79:22 109:17

131:22 158:9 164:12

204:16

leader 7:17 8:2

leaders 251:22

leadership 263:17

287:5

leading 19:20 174:15

290:4

leads 185:10 263:19

learned 18:3 228:4

learning 282:3 283:22

lease 134:7

leasing 115:7

leave 101:5

leaving 300:12

led 7:15 109:21 151:19

173:15 221:6 261:9

left 56:9 191:4 286:17

legal 3:9,12,15 8:17

22:17 29:21 30:1

76:19 85:11,19 88:9

125:9 126:1 133:8

192:17 222:1 251:8

266:21 296:13 298:16

301:14,18,19,22

legally 28:4 32:19 49:5

183:15

legislating 58:4 59:4

legislation 34:4 90:5

147:19 215:2

Lehman 8:1,4 17:13

36:10 65:18 70:13

73:2 76:5 78:9,13

79:14 81:16 89:4

130:5 135:9 136:7,14

136:21 137:10 138:4

138:6,12 139:11,21

140:3,6,10,21 141:12

142:2 143:5,6,7,20,22

144:2 145:5,8,16,17

145:20 146:3,7,10,12

146:15 148:19 151:18

151:22 152:2,4,10,21

153:10,16 158:19

173:9,11 180:2

207:12 208:11,16

210:2 299:22 308:1

Lehman's 137:7 138:19

140:16

lend 66:14,19

lenders 229:1,5 230:8

lending 58:10

lengthy 145:14

lent 141:19

let's 23:15 46:22 47:4

62:18 91:3,5 213:16

246:10 253:14 301:16

letter 13:15,16 25:3

183:1,17

letters 13:3,4,13 14:7

14:14,18,20 15:8

19:13 20:2 21:11

22:15 24:8 83:10 87:2

121:11,16 122:5,5,10

122:16,16,19 177:13

letting 29:10

level 12:7 25:16 26:13

27:3,7,10 34:4 36:5

52:13,14 64:15,16

68:21,22 75:13 80:19

95:1,3,7 97:10,14

108:2 125:2 144:11

150:1 156:1 162:4

168:10 186:19 203:1

203:22 218:17 219:8

219:9 220:1,8,10,22

221:8,21 222:7,17

223:2 229:7 233:3

234:1 239:19 248:18

252:10 260:19 262:16

267:11 268:16,19

269:19 276:2 284:15

297:6 299:14 310:10

levels 78:1 125:2

262:15

lever 227:7

leverage 166:5 182:18

236:21

lexicon 230:15

liabilities 139:19

155:13 165:9 170:21

207:13

liability 140:13 164:17

169:15 191:4

life 57:6

light 238:4,7 257:16

278:8

liked 268:7

likelihood 29:9 201:20

210:4 272:9 282:2

limit 165:7 174:6

215:21 223:12,19

limitations 55:12 83:12

limited 140:16 168:6

213:3 214:14 223:13

224:19

limits 223:11

line 88:8 115:20 196:11

204:4 237:8 239:16

294:10

lines 44:9 82:20 116:10

233:18

lingo 12:4

linguistically 293:5

liquid 54:12 102:1

126:18 157:21

liquidated 56:2

liquidation 4:13 6:12

9:11 10:16,18 37:12

136:14 161:20 173:12

189:7,14 191:11

211:15 212:18,19

222:5 223:20 224:1

list 58:20 62:22 63:3

184:21 256:12,17,19

listed 154:7

listing 305:10

lists 59:12

litany 269:5 285:15

litigation 33:3

little 8:19 11:9 20:22

21:22 27:5 40:9,12

57:5,18 75:20 78:20

98:14 107:12 109:12

109:13 115:12 116:10

120:1,19 124:12

131:18 154:12 162:15

165:17 166:3 181:4

181:11 182:2,6

189:15 217:1,21

218:4,6 220:19

227:10 233:2 247:8

250:21 253:16 256:12

262:1 264:16 270:20

277:14 280:5,10

281:1 283:18 288:12

308:22 310:7

live 56:2 282:3 283:22

Lives 138:16

living 9:7,21 10:10

16:14,15 28:2,7 58:11

59:7,19 60:2 61:21

62:7 67:5 76:6 89:20

89:22 106:7 112:2

LLP 2:8

loan 104:9 112:4

locally 301:10

locked 32:10

lodged 143:18

log 169:6

logically 43:14

London 243:7

long 23:20 36:13 58:10

72:20 92:20 101:5

123:18 142:4 146:22

147:21 156:10 164:22

165:3,16 166:1,11,15

166:17 167:10 171:4

188:21 254:17 279:1

290:6 291:19

long- 193:2

longer 109:11 119:13

126:22 142:6

longest 145:17

longest-standing

261:11

look 5:10 6:14 8:5 10:4

16:15 23:11 49:17

51:3,4 72:15 81:10

96:4,5 110:8 118:14

133:10 150:2 194:13

232:21 235:14,15,17

246:5 247:8 259:3

264:6 267:12 269:21

281:22 286:8,14

301:19 306:5 309:15

looked 15:18 118:22

119:18 136:15 153:3

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178:5 209:6 216:3

257:19,21

looking 15:18 16:20

22:7 24:3 31:18 32:1

41:8 43:15 46:15 79:9

110:21 128:20 154:13

176:5 195:4 212:15

222:21 245:13 254:17

255:5 264:4 269:4

273:17 274:1 286:9

286:17 303:17

looks 17:20 88:13

266:14

lose 30:20 178:11

lose-lose 291:14

loss 26:3 29:7 42:17

163:19 164:21 165:16

166:18 167:22 184:15

287:2

losses 26:21 27:15 53:5

53:7 66:21 67:13

173:13 214:8 231:18

296:3,7

lots 127:13 215:4,5

love 137:9

low 186:19 239:5

lower 297:14

luckily 33:4 48:6 243:16

lucky 267:16

lunch 10:14 162:21

188:12 207:8

M

M 87:8

Mac 143:13

machine 202:11

macro 212:14

Madam 308:19

Mae 143:13

magic 307:10

magically 101:18

magnitude 109:9

206:10

main 141:3

maintain 119:11 164:20

165:2,21 166:10

229:6 300:14

major 69:2 131:16

215:14 230:1,8 263:8

287:21,22 290:22

majority 37:22

maker 197:16

makers 197:4 205:5

making 4:5 15:8 18:19

19:8 31:17 42:13

48:15 49:6 88:7 92:2

104:17 118:3 129:14

130:3 179:17 180:11

184:4 187:21 197:20

247:2,18 273:3 278:5

282:7 306:21

manage 185:17

managed 154:2 229:8

management 3:10 8:16

83:16 84:20 86:15,20

87:9 89:8 97:19 98:5

98:7,10 107:16 149:2

214:12 234:2,9

253:16,18 254:17,20

269:13 270:21

manager 191:18

managing 107:17

mandate 73:9

mandatory 224:1

mankind 50:16

manner 5:20 258:6

270:4

map 237:6

mapping 19:9 237:14

272:22

March 40:20

margin 169:18

marginal 244:19

marginally 267:22

margins 265:8

mark 119:6 138:3

256:20

markers 106:2

market 5:22 7:8 34:16

37:22 45:5,6,9,10,11

54:9 58:19 66:18,19

67:1 74:4 101:2 109:4

111:8 157:6 159:22

160:5 162:7,9 169:7

174:22 175:14 176:6

178:13 208:2 211:1,2

224:21 231:4 250:18

261:10 265:20 267:16

279:22 290:3,13

marketable 167:18

markets 42:10,11 54:11

71:10 74:8 99:3 102:7

138:14 158:3 160:16

230:18 248:4 267:21

MARTIN 2:10

Marty 91:13 93:10

202:12 291:19 308:12

309:13

Marty's 157:8 292:17

Massachusetts 2:16

massive 41:20 139:5

145:2 247:14

match 115:12 153:3

matching 178:21

material 18:10 25:20

26:5,17 27:2 28:10

29:8 31:16 42:1,8,14

42:17 43:7 47:10,11

49:8,12 50:7 57:7,16

57:17,20 60:13,17

61:4 62:10,14 64:14

64:15 77:7,14,22 95:1

95:2,7,14,16,19,20

96:4,5,14 97:10,14

100:16,16 101:4

107:3 115:18 116:5

117:11,18,20 118:11

118:15 123:9 132:20

156:4 159:8 164:13

200:9 210:5 253:22

254:1 259:12 273:1

273:20 274:9 279:19

280:7 284:7,7 298:16

298:22 302:8

matter 85:11 91:9 115:5

121:19 153:13 167:1

173:11 188:15 239:21

251:1 267:1,4 295:13

311:11

mature 195:1

maturity 58:9,16 59:16

116:17 207:21

maximization 71:5

72:16 73:4,18

maximizing 65:20

maximum 61:9 197:19

223:12

McWilliams 1:18 2:2

5:3 69:7 87:7 90:16

90:19 91:1,5,12 93:10

104:7 136:2 137:17

149:11 154:9 182:9

188:12,18 194:1

202:12 207:5 213:8

214:5 216:18 245:12

247:5 249:12 250:20

307:13 308:3 311:9

mean 16:2,10 23:11

32:17 34:22 35:4

38:11 46:19 59:12

60:20 64:12 72:19

77:17,18 81:15

103:12,16 104:8

105:9 113:13 126:15

134:18 153:11 157:14

160:14 171:12 187:8

198:5 199:19 200:17

205:6 208:2 242:2

268:5 295:21,22

298:20 304:17 306:17

meaning 206:11 256:11

means 34:16 150:14

194:5 199:3 228:18

234:16 252:8 301:3

meant 172:19 187:13

measure 101:21 102:2

measured 95:2

measures 15:13 65:5

195:11,16

measuring 95:10

mechanic 258:21

mechanics 77:8

mechanism 30:5 47:9

55:18 187:21 196:14

212:19,20 241:12

261:13 271:5 301:8

mechanisms 22:9

28:22 43:11 55:22

56:14 77:4 98:8

107:18,21 123:11

210:3,21 235:8 237:6

257:11 300:13 302:2

meet 85:8,20 86:2,3

101:16 102:11 112:7

165:1 169:16 202:22

289:3 290:7 297:8

meeting 1:6 5:9 8:9

12:16 24:8 106:18

119:13 151:20 191:11

265:9,22 288:14

307:15,17 309:12

311:10

meetings 82:2 120:12

254:2 269:5 285:16

303:7 309:16

meets 100:22

mega 141:8

mega-multibillion

80:10

meltdown 182:3

member 92:14

members 7:14 92:11

135:11 147:8 182:8

191:9 193:21 271:18

272:1,2 304:5 310:18

memorandum 82:7

296:4

memory 226:9 269:17

285:17

memos 24:13

mental 278:18

mention 175:16

mentioned 21:3 22:22

56:2 91:20 106:13

143:4 168:21 177:11

189:8,22 193:13

214:22 254:12 261:6

285:9 303:15 306:22

mentioning 21:12

184:16

menu 261:17

merge 277:13

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mergers 246:13

messages 251:13

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93:5 120:14 163:8

189:12 251:7 262:7

290:15 310:2

meter 194:14,16

method 192:7 249:7

methodologies 108:12

196:13

methodology 118:20

119:17

metrics 241:14

MICHAEL 2:4 3:10

Mike 8:15 20:20 92:18

93:5,8 122:3 124:3,8

131:21 177:10 235:20

240:5 258:1

Mike's 130:17

million 140:18 143:10

152:11,11 247:17

mind 13:17 15:7 33:19

33:20 70:18 102:3

142:22 157:8

mine 110:3

minimal 160:14

minimize 5:22 72:17

156:11

minimum 96:5 156:10

165:21,22

Minneapolis 2:18

minute 33:17 193:13

257:12 258:4 273:7

301:17

minutes 91:3 172:16,16

231:17 232:17 250:22

273:10 308:8

MIS 246:21,22

misleading 212:18

mismanaged 130:9

mismatch 58:16 59:16

59:16,17 116:18

mission 148:17

mitigants 301:22

mitigate 31:12 51:16

63:3 180:3 201:20

mitigated 37:19 125:11

mitigation 279:17

mix 166:15

model 76:10 160:22

246:9

modeling 129:3 202:7

235:7 240:3,15 242:6

244:16,20

models 63:11,12,18

96:15 97:5,11 178:20

179:1 196:13,17

197:9 244:3 277:12

277:13 279:14

modified 123:14 127:9

moment 7:13 22:13

77:14 93:7 178:6

208:5 248:15 277:2,8

277:18 278:9,13,13

283:19 285:21 292:15

293:10,10,20

moments 93:19 126:19

Monday 74:3 151:4

243:10

money 29:20 30:22

66:14 126:21 128:16

216:17 224:16 227:10

229:19 230:13 231:21

232:8,10 243:5,9,14

282:16 300:12

monitoring 89:12 242:6

244:16 246:14 292:22

month 21:4 222:16

242:20 306:3

months 36:3 175:9

191:7

moral 5:22

Morgan 3:10 8:16 20:20

20:21 93:12 98:20

119:19 122:15,20

124:3,10 126:2,8

128:18 129:11 130:10

132:1 152:10 161:12

162:2 177:10 180:19

240:5

morning 5:3,8 6:5 8:10

20:20 136:1 173:2

202:5 269:22 300:21

mortgage 179:19,20

mortgaged 143:11

motions 77:12 81:3,5,6

move 22:21 29:10,15

67:13 99:11 100:17

121:22 249:17,17

285:11 294:9 302:7

moved 191:19 194:17

254:6

moves 285:12

moving 36:17 60:14

61:16 62:3 97:21

105:20 119:20 218:21

221:19 240:2 260:17

261:21

MPOE 9:20

MREL 253:2 275:13

multi-lateral 252:11

multi-year 303:16

multibillion 141:8

multifaceted 252:9

multilateral 190:4

257:12 261:21 262:2

263:8 266:5 268:19

268:22 303:10 304:17

multiple 25:11 55:3

76:2,8

Murden 258:2

Murton 3:11 8:13 14:16

15:2 64:21 65:4 189:6

muscle 269:16 285:17

mutual 113:18 252:17

288:4

mutually 268:14 269:2

myriad 146:3

N

naive 284:8

name 12:13

Nancy 61:16

narrow 145:22 213:2

Nathan 3:13 8:17 106:4

120:17

National 2:19 83:9

209:21

nations 82:12

nationwide 148:15

natural 257:7

nature 178:21 294:15

310:20

navigating 5:12

near 226:1

neat 117:4

necessarily 126:1

275:2 295:7

necessary 29:20 83:13

130:16 192:12 194:13

194:19 197:3 210:10

301:4,11

necessitated 250:15

need 11:17 12:8 28:9

28:11 38:7,16 39:7

42:20,20 51:13 60:16

61:2 62:11,11 63:10

63:17 64:7 68:19 75:1

83:8 91:6 94:5,6,7,9

94:11 95:1,18 96:1,10

96:13,19 97:6 98:2,12

99:16,17,21,22 100:4

100:6,21,22 101:2,11

101:15 113:4 119:11

121:17 129:19 151:10

160:15 171:13 181:20

194:21 195:11,12,16

205:17 217:8,9 218:8

220:19 221:11,22

222:2 223:9,21

224:18 225:22 226:1

233:13 246:5 250:19

252:8 268:1,19

269:16 274:7,22

280:11 297:1 298:5

302:8 307:18

needed 29:16,21 72:11

96:6 121:20 144:2

159:6 181:21 226:5,8

229:2 234:18 243:15

needling 98:15

needs 27:1 43:3,8 45:9

45:10 47:1 50:2 61:3

62:15 69:21 99:15,15

159:19,19 196:18,20

203:1 215:21 222:8

240:9 241:18 269:18

297:8 303:4

negotiated 102:4

142:18

Neither 54:11

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net 144:7

network 82:7 133:5

networking 260:10

neutral 216:13

never 5:6 11:5 70:1

154:4 194:20 205:6

207:10,11,11 290:14

299:12

new 2:7 7:14,22 9:4

20:22 26:6 37:13 38:3

38:6 66:2 82:9,20

148:1 149:15 154:16

154:20 156:14,22

157:6,22 159:2,4

162:6 178:17 181:14

211:13 247:15,16,16

255:10 260:22,22

264:16,17 265:10

272:2 284:11,12,19

284:20 309:21 310:14

NewCo 26:8,8

newest 135:11 261:17

NewHoldCo 26:8

newly 155:18 175:3

nice 20:21 62:4 63:7

110:8 115:5 116:9

279:1

night 176:5 243:6

nine 191:6

non- 65:11

non-bank 87:17,18

227:19

non-banks 9:7 89:19

non-contingent 170:21

non-debtor 300:9

non-financial 178:6

249:4

non-making 62:1

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nonfinancial 115:1

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nonmaterial 114:19,21

normally 30:20

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176:3

noted 41:5 69:5 121:11

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notice 139:7 215:3

noticed 255:13

notionally 237:3

notwithstanding 78:11

153:22

novating 38:17

novation 38:18

novel 140:14

NSA 248:21

nub 88:11

number 19:11 20:18

56:14 90:4,8 98:1,4

100:20 115:1 122:13

123:8 140:22 141:3,4

144:4,7 161:1 187:2

188:7 193:6 195:13

205:3 220:1 222:1,15

223:17 224:11 232:15

240:22,22 241:13

254:20 259:11 260:18

261:8 263:22 265:1

286:19

numbers 96:16 140:4,4

140:20,22 152:13

153:17 161:3,6 212:2

226:4 230:22 298:16

numerical 308:17

nuts 222:20

nutshell 34:9 94:4

NW 1:17

O

object 68:4 125:10

291:12

objective 164:7 181:18

objectives 21:16

265:22

objects 67:20 68:12

69:4 124:5,14 125:3

obligation 32:5 56:3

223:12 292:11

obligations 77:7 119:2

119:14 255:3 288:14

289:3 290:7,16

observation 279:11

observed 296:6

obstacle 37:18 51:11

51:12,14 52:15 76:4

301:22

obstacles 16:22 25:9

29:2,21 30:1,16 31:18

40:4 45:11 51:16

76:19 78:16 217:2,6

217:19 243:5 301:20

obvious 127:20,22

obviously 51:17 52:2

53:11 167:20 184:8

196:16 198:9 201:3

233:9 271:18

OCC 173:18 174:3

175:12 182:14 183:6

occasions 230:5

occur 97:3 150:22

157:15 178:16 282:15

occurred 70:20 145:5

152:20 153:5

occurring 280:14 284:9

occurs 29:7 36:13 55:9

291:8

OCFI 8:14,15 87:16

October 19:17,20,21

20:3 40:20 262:7

odds 231:20

offered 175:20

offering 42:9 178:17

office 3:2,3,4,5,6,7,8,13

3:14 8:11 222:18

238:8 239:3

official 122:19

officially 207:9

officials 84:3

offset 168:1

OLA 193:2 207:3 210:7

214:7 216:4

old 26:10 193:5 255:5

OLF 215:18,19 216:11

216:17 224:18

OLF's 215:21

on-going 202:17 204:3

221:6

once 29:6 87:18 112:10

124:22 125:5 155:2,4

211:16 282:5 299:8

ones 11:5,7 42:9,11

48:5 60:1 113:12

118:14 137:4 164:1

253:21 260:13 261:1

265:2 269:7

ongoing 97:20 124:20

177:17

op 129:21

OpCos 26:5

open 10:21 91:13

152:12 153:9 159:9

243:10 288:19

opening 5:4 22:19

242:16

operate 81:8 219:15

291:9 300:1

operates 233:17

operating 6:22 25:20

26:2,12,20,21 27:1

39:14 50:1 52:14

58:22 59:18 72:4,20

74:2 76:11 88:10 96:5

96:9 107:3 108:20

159:9 162:10 191:15

199:6 275:20 279:21

289:14 290:12,20

operation 88:8 115:20

129:12

operational 6:8,13 19:7

22:9 43:22 119:1

125:8 146:13 218:7

219:11,16 221:22

225:20 226:6 233:17

245:20 248:12 295:2

295:18

operationally 300:5

operations 19:9 75:3

78:18 112:2 119:7

132:20 133:1 199:20

204:5 214:8 238:17

251:18 259:12 260:14

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recover 144:3

recoveries 70:13,14,18

144:12,16 152:17

recovering 56:11

recovery 68:8 97:22

237:9 239:8 240:17

246:3 261:2

red 238:4

redacted 14:17

reduce 167:21 168:8

182:19 198:16 200:20

210:4

reduced 282:2

reduces 29:5 210:9

reducing 201:22 202:1

244:18 272:9

reductions 182:15

REED 2:14 48:1,9,12,19

49:2,17 57:11 83:14

84:6,15,18,22 85:5,13

86:5 128:13 129:7,9

134:9 160:8,11 161:4

177:22 179:8,15

180:13 223:5 224:5,9

224:15,20 228:19

229:14,18 230:20

231:3 241:22 242:11

refer 182:22

reference 120:7 272:2

272:19 293:14

referred 134:14

referring 212:12 294:2

295:20 302:22

reflect 138:5 141:12

reflecting 276:17

reflex 271:5

reflexively 203:15,21

reform 187:12 265:12

265:14 292:3 303:17

reforms 185:12,19

265:18,22

refresh 124:21 226:9

reg 132:6 164:2 215:16

regain 99:2

regard 64:12 72:10 92:5

101:21 165:15 203:22

287:18 297:21

regarded 169:13

regarding 110:18 134:7

regardless 18:15

regime 9:12 200:13,21

201:1

regimes 174:14 217:11

regular 113:11 171:10

228:13 252:2,13

261:3 300:8

regularly 241:14 264:19

regulation 196:2,8

274:4,20 310:14

regulations 172:19

179:7 215:5

regulator 200:3 271:4,4

281:15,19

regulators 24:3 80:13

80:14 81:1,11 89:14

111:8 112:4 147:7

173:19,22 192:20,21

198:3,3 281:12 283:7

284:16,21 296:13

299:3,6,9,14 306:16

306:21 307:6

regulators-only 234:12

regulatory 4:8 23:20

67:4 131:8 162:14

163:6 184:17 217:17

246:2 248:16 261:12

274:20,22 281:7,9

reinforcing 268:14

269:3

reins 136:18

reissued 176:17 177:8

reissuing 177:3

reiterate 129:13 193:13

related 35:11 140:16

145:2 166:12 183:21

239:19

relates 182:17

relating 6:11 83:2

relationship 117:2

143:20 242:3

relationships 269:16

270:5 290:21 296:17

relatively 80:8 155:21

223:15 239:2,5

255:10

relay 160:21

release 183:11

released 21:7 121:9

132:10,13

releases 134:7

relevance 144:20

relevant 204:21 207:8

reliability 98:5 242:3,5

reliable 242:7 301:9

reliance 129:2

reliant 200:22

relied 17:2

relies 48:2 128:21

relieved 299:8

reluctance 238:9

reluctant 92:6 255:2

rely 15:10 39:10 62:3

63:14 65:4 102:16

105:1,8 130:18 173:3

201:1

relying 47:8 64:17

104:16 128:13 169:6

remain 96:21

remaining 25:17

remains 7:6 148:17

remarkable 142:1

remarks 4:18 22:19

70:12 136:7 269:21

270:6 308:9,15

remediate 11:17

remediated 20:6,8

remediation 13:20

15:15 19:15

remedied 12:1

remedy 11:19 12:8

40:19

remember 8:20 15:18

15:19,20 16:6 23:8

53:16 54:3 56:22

75:17 120:3 152:1

153:18 159:7,17

176:13 235:21 256:8

256:19

remote 246:4

remotely 146:19 300:18

remove 127:14 206:21

207:3

removed 108:14 214:13

removing 127:2

renewed 264:18

RENs 99:14 100:20

159:18

reorganization 137:2

repaid 224:3

repayable 216:12

repayment 224:1

repeat 61:20 138:10

repo 36:17,21,22

report 10:18 152:16

189:13 193:12 209:5

214:21 216:3 226:15

UNOFFICIAL/UNREVIEWED
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254:16 303:11 304:18

305:9,9

reporters 34:14

reporting 186:18

reports 97:19 109:13

repos 35:3

representations 290:11

representatives 142:11

305:15

represented 26:7

305:16

represents 218:11

Republic 82:13

require 28:7 68:5 85:11

124:13 174:10 214:11

215:1 223:3

required 11:16 43:10

151:12 164:1 169:12

175:1,15 241:10

requirement 9:5 132:7

164:20 165:1,20

166:12,17 171:2

273:22 274:21 276:4

requirements 50:9

85:17 117:18 132:6

164:7,17 165:6,18

167:15 169:18,20

172:4,10 214:11

244:19 274:19 275:18

requires 7:12 88:7

156:9 168:22 279:22

requiring 106:8 112:1

127:7 174:3,12

298:12

Res 265:9

research 265:20

Reserve 2:13,18 10:8

11:11 13:7 14:18 17:2

19:21 21:6 98:18

106:19 120:19 121:3

132:9 134:4 165:11

173:18 174:3 175:11

179:12 242:9 247:1

273:21 307:22

Reserve's 132:6

resident 124:4

resilience 68:17

resiliency 164:9 185:3

246:3

resilient 44:10 185:14

resolutions 228:3

245:17

resolvability 6:9 144:21

164:14

resolvable 122:12

resolve 76:15 152:2

resolved 145:11

resolving 5:13 63:22

145:6 194:16

resort 193:14

resounding 257:14

resources 25:19 26:16

34:11 38:7 47:2,13

50:13 51:12 54:10,16

60:17 61:4 86:10

103:1 235:9 240:7

276:12,18 280:4,8,18

297:15,22

respect 10:9 248:20

266:11

respected 139:9

respects 45:4 55:13

responded 75:17 108:3

responding 218:20

221:12

response 172:11,18

175:9 275:9

responsibilities 288:4

responsibility 232:9

responsible 206:13

219:18 289:17 294:13

responsive 71:22 81:13

rest 17:9 53:6 109:16

152:6 180:2 208:2

278:15,15 279:11

281:3 282:6 286:3,5

292:16

restricted 168:17

restrictions 214:8

restructuring 111:5

266:22

restructurings 82:5

resubmit 19:18

result 76:17 84:12

121:10 143:6 152:21

153:4 168:8 239:8

resulted 92:2 146:9

173:11 247:15

results 181:2 266:15

306:11

resume 91:13

resumed 91:10 188:16

251:2

retired 136:19

retirements 153:20

return 101:13,14

revealed 146:12,15

revenue 178:11,22

review 11:11 20:5 21:22

22:3 23:7,16,17 24:10

24:11,17 40:17 51:15

52:19 85:12 119:22

120:2 121:5 131:20

134:5 257:13 258:19

259:15 265:19 266:10

304:5 305:14,15

reviewed 250:1

reviewing 16:16 176:21

222:22

reviews 85:13,14

177:11 264:1 303:19

304:6

revolutionary 253:22

Ric 12:13 21:3,16 22:18

33:21 38:20 40:9 56:6

81:13 104:5 149:20

162:5 177:21 307:18

Ricardo 3:5 8:11

RICHARD 2:10

Rick 94:4,17 96:22

181:6 190:13 263:19

299:19

Rick's 238:7

Rico 137:15

ridiculous 58:8

riding 151:4

rights 36:13 37:11

139:7 168:6 170:12

173:7,10

rigor 64:13

ring 28:12 44:4 198:4

198:22 199:2,19,20

200:16,17,18,18

201:7 202:1,10

203:15

ring- 281:14 282:13

283:10 293:3,5 297:1

ring-fence 278:7 279:5

286:22 296:15

ring-fence-y 283:18

ring-fences 280:4

ring-fencing 272:9

277:9,11,21 278:1,17

279:8 280:1,18 282:2

282:3,11,18,19 283:9

283:12,22 284:8

285:2 289:16 291:9

292:20

rise 12:6

rising 264:17

risk 3:10 8:16 35:11

42:4,6,7,12,12 53:3,4

53:12 55:1 63:4 67:10

72:5,6 76:2,6,22 77:1

78:19 86:20 112:13

113:22 115:9 119:12

119:16 129:21 153:8

165:12 166:4,22

170:6 178:5,15,19

180:1,6 182:7 183:8

193:19 201:3 202:3

205:4 209:3 216:14

248:1 279:18,19

risking 208:16

risks 31:12 146:17

153:3 179:12 187:6

233:12 294:6 295:4

RLAP 94:15 95:17 99:6

240:6

RLEN 95:22 97:5,18

98:1 240:6

road 149:22 238:1

robust 195:1 212:20,21

216:14 235:10 257:11

robustly 265:13

rock 183:14

Rodgin 2:7 41:18 56:17

264:22 288:12

Rodgin's 297:3

role 9:5 80:22 81:12

270:22 287:6

roles 263:3,17

Ron 172:13 176:9

184:12

RONALD 3:4

room 1:17,17 33:14

228:19 234:17 294:3

rooms 68:5 124:8

126:16

roughly 12:15

round 109:9 115:11

254:2

ruined 138:16

rule 31:19 34:6 39:19

39:19 85:11 106:7

153:21 156:9 163:11

163:19,20 164:7,8,16

164:16 168:21 169:12

170:2,16 171:2 172:9

175:6,18 177:15

181:2 215:9 223:16

273:21 275:21 298:11

rulemaking 27:20 32:15

rules 31:21 35:17,22

142:16 163:15,16

172:14 174:3,10,21

175:9,15 176:2

260:22 265:4 267:12

ruling 244:17

run 9:12 42:12 188:19

207:12 210:9 225:17

229:7 231:16 232:11

238:5 251:14

run-with 276:21

running 37:6 54:8 58:8

247:21 251:12 255:12

258:3

runs 36:17,18 41:21

210:5 230:10

runway 37:5 46:15

107:17 209:22 210:1

210:2 237:18 238:5

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239:15 241:4,16

298:3

runways 18:1

rush 278:7

Russia 82:12

rusty 308:22

Ryan 3:14 190:13

224:11 237:17 245:13

249:12 251:7 252:3

253:15 259:1 261:22

263:18 273:7 274:11

299:17

S

S 2:14

S.1841 212:16

sadly 93:5

safe 62:4 78:9 173:3

198:8 216:17 252:22

sale 67:20 68:4 69:4

71:16 72:13 124:5,14

125:3,10,21 126:9

127:7,19 128:21

129:2,14,18 138:19

139:1 156:19,20

225:4

sales 131:9 158:16

salient 146:6

sanctions 11:18,21

12:1

sat 295:16 307:20

satisfied 301:3 302:15

satisfies 26:22

satisfy 26:22

Saudi 82:12

save 73:6,7 77:7

saved 247:14

saw 7:18 61:13 77:3

107:5,6 232:14

saying 6:2 16:7 53:22

54:11,19 64:13 69:22

104:8,18,22 115:13

184:21 199:15 226:21

256:9 278:12 282:2

286:21 292:9,18,21

303:5 305:11,18

says 26:8 31:15 48:21

54:15 70:5 113:14

123:16 196:1 212:14

212:16,19 213:22

225:5 238:4 267:7

280:5

scalable 126:11

scale 59:16 150:18

210:5 226:3

scenario 17:21 18:4,6

18:16,20 25:22 26:18

50:16 54:22 56:7 64:5

95:9 97:1,2 132:19

182:1 196:4 203:19

236:17 243:17

scenarios 17:20 55:4,4

63:17 193:10 194:11

194:18 196:22 208:9

216:5 219:5 236:13

236:19 245:20,20

schedule 225:2

schematic 25:13

191:13

school 2:3,9,11 70:4,6

scratch 261:6

screen 25:12

screw 288:16

search 256:11

Sears 151:11

seatbelts 10:12

SEC 114:6

second 7:20 9:10 45:21

69:14 71:20 146:9

165:4 210:7 247:19

276:11 283:1,5 286:2

288:22

secondary 73:5

Secondly 305:22

secret 14:13 122:16

section 3:13 9:5 43:5

44:20 112:3 133:4,12

258:17

sections 9:21 45:1

106:3,9,12,17,20

108:8 109:1 271:11

271:21

sector 115:1 266:8

306:15

secure 204:18 214:15

secured 77:4 123:10

215:19 258:11

securities 61:22 143:12

167:7,12,16 168:2

169:6 179:19,21

268:6

security 91:6

seed 20:18

seeking 71:15

seen 138:16 152:18

194:9 226:3 264:22

sees 279:9

segment 189:22 250:13

segue 119:20 236:13

seizure 173:11

select 125:7

selected 125:4,5

137:22

self 118:4

self-executing 257:6

self-fund 55:14

self-interest 281:1

282:20 283:2 288:21

290:10

sell 68:12 72:22,22

128:16 129:10,17,17

156:4,19 174:22

191:17 232:10

selling 102:6

seminal 43:2 44:12

Senator 206:2 212:11

292:3

send 46:19

sending 235:2,3

senior 2:7,8,13 3:4,11

85:18 228:13 269:19

senior-most 84:3

sense 12:18 13:13 53:7

100:5 111:8 116:9

139:1 147:21 168:11

210:17 212:9 230:7

304:10

sensitivities 271:6

sensitivity 238:19,22

sent 24:7 183:18

243:21

separability 64:11

65:19 66:4 67:17,21

68:16 69:5,16 124:3,4

125:19

separable 68:16

separate 47:13 68:7

69:18 72:12 96:15,16

166:12,17

separating 70:5,6

September 120:14

139:11 143:1,20

176:20 265:8

sequencing 237:15

series 51:5 220:1

serious 14:9

seriously 203:14

serve 253:9 271:12

served 67:14 92:22

264:10 309:11

service 119:3,5 181:15

281:20

services 42:10 44:4

119:14 123:6,14,20

133:9 171:13 181:21

279:22 280:6 282:14

session 91:14 148:3

189:21

sessions 147:22

set 11:2 24:21 52:7 58:6

102:10 124:7 126:16

154:16 169:16 170:12

186:13 207:12 217:12

222:12 223:12,13

273:21 274:19 276:5

279:4 290:21 295:5

sets 46:6 58:1

setting 24:16 40:6

221:13 239:17

settings 306:18

settle 155:20

settled 145:19

settlement 123:6 248:8

248:11

settlements 246:15

seventh 82:9 255:14

303:11

severe 56:4 104:12

178:19

severely 146:14 158:20

severing 127:13

shape 57:4

share 252:21 255:3

260:5 287:6

shared 241:20

shareholder 73:7

shareholders 214:9

shares 170:18

sharing 233:4 254:21

255:1 259:22

sheet 119:6 125:22

267:7

Sheila 2:4 7:15,18

63:20 69:8,11 135:12

151:19 184:15 308:11

309:19

Sheila's 184:6

Shelley 2:6 7:21

shift 195:4

shoe 263:6

shoes 7:19

short 34:3 58:10 80:8

97:10 139:6 151:14

156:11 170:12 172:1

172:3,6 177:13

215:19

short- 215:9

shortcomings 12:5,6

13:19 22:18 108:4

121:16

shortfall 197:2

shorthand 81:4

shortly 28:15

shot 162:1,2 203:5

shoulds 256:16 257:2,4

266:18

showcase 264:11

showed 14:8 191:12

shows 304:15

shut 42:20

shutting 281:3

SIBs 5:12 176:4

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side 33:11 35:1 87:8

111:1 174:22,22

175:21 176:1 193:20

206:2 217:14 219:6

231:22 247:9

sideways 210:8

SIFI 191:2 245:17,17

sight 237:8 294:11

sign 31:4

signaling 121:13

238:10

signals 276:19

signed 37:20 38:13

82:8 155:3,4

significant 6:7 17:4

55:11 86:14 121:11

122:11 147:9 161:22

173:14 182:14 267:20

288:22 295:4

significantly 60:8 247:3

287:20

silent 216:19

silo 249:22,22

similar 94:19 131:20

132:14 221:1

similarly 167:9 250:2

simple 211:7 246:11

273:2

simpler 156:16 246:19

simplified 25:13 156:8

156:13

simplifying 275:14

simply 170:15 202:14

205:13,20

simultaneous 15:1 34:1

38:10 51:1 65:3 69:10

81:18 85:15,22

105:17 185:9 214:1

225:15

Singapore 82:3,10

Singer 113:14

single 7:4 20:16 22:22

30:13 41:10,11

108:17 119:10 181:4

201:15 255:9 261:13

261:14

singled 215:9

SIPA 141:4

sit 150:15 204:14 234:5

282:8

sitting 291:21 307:2

310:4

situation 44:15 52:2

64:17 69:13 89:16

96:7 128:4 130:12

135:8 150:10,14

166:13 183:13 186:1

194:8 195:20 230:17

291:15 300:8

six 20:15 25:5 41:9

82:12 145:14 191:6

size 193:7

skepticism 203:22

289:13 291:17

slide 25:12 39:21 58:20

119:21 216:22 217:22

218:5 236:14 250:10

282:1 303:5

slidometer 194:10

slightest 287:8

slightly 217:12 284:4

slow 128:1 255:17

small 5:19 111:20

127:18 137:1 170:20

230:18 280:22

smaller 12:5 90:6 127:3

127:4 174:22 231:11

smart 147:4 309:3

smartest 308:5

smashed 58:9

smile 149:12

smiling 149:5

smooth 151:21

snapshot 152:12

so- 32:22 145:6

society 53:7

soft 200:18 202:10

280:4 281:11 282:19

285:1

software 72:6

solely 169:6

solid 183:14

solution 128:7,14 185:2

214:3 285:13 301:1

solutions 128:1 268:21

solve 28:9 33:16 36:3

43:4 65:6 184:22

205:14 217:9,10,13

268:1,20 273:11

286:13

solved 157:11

solvency 196:6

solvent 31:5 263:16

265:3

solving 33:22 34:10

233:12 263:5

somebody 38:12 51:14

53:11 116:4 128:15

184:19 229:20 246:14

249:7

someplace 27:19

somewhat 21:17

soon 135:2

sophisticated 147:3

sorry 30:4,10 38:20

85:9 100:8 101:6

161:11 175:8 182:12

239:19 281:2

sort 8:18 10:12 17:14

17:15 40:10,16 41:1

53:2,14 54:9 55:20

57:9,14 58:4 92:9

107:7 113:17 117:1,4

143:17 149:16 163:2

170:22 171:1,8 184:5

186:12 196:16 202:10

216:8 217:2 218:2

219:7 221:1,21 222:7

226:19 228:13,17

230:17 233:20 237:1

245:7 246:17 250:4

254:18 266:20 276:16

304:2 305:11 310:22

sorts 171:19

sounds 160:15

source 31:21 58:5 59:6

59:7 77:5 123:12

sources 101:13,15

102:17 105:2 273:2

South 82:10,13

Southern 2:7 7:22

82:19 148:1

space 190:11 192:20

239:13 250:15

speak 15:12 22:13 35:8

94:12 136:3 253:4

275:13 287:16

speaking 15:1 38:10

51:1 65:3 69:10 81:18

85:15,22 105:17

144:15 151:18 155:21

185:9 214:1 225:15

special 174:13 213:3

Specialist 3:4

specific 5:16 11:16

16:20 25:9 40:13 41:7

62:13 75:16 78:16

106:2 120:20 233:11

234:1 260:2,12

289:22

specifically 13:18

35:17 37:9 52:12

63:21 94:21 142:8

170:10 174:2

specificity 22:6

specified 222:2

specify 126:3

speech 228:1

speeches 192:22

speed 12:17 24:17

126:20 127:2,10,16

spend 93:18 131:18

162:15 216:22 217:21

218:4

spending 258:8

spent 32:18 33:15,19

188:21 219:12 287:22

spike 200:15

SPLE 144:22

SPO 148:7,16

SPOE 7:6 9:19 23:2

25:6,10,13,18 26:10

27:12 34:8,21 41:14

44:17 67:17 68:9 76:7

147:16 148:14 170:4

191:2,20 210:13

215:3 216:15

SPOEs 65:9

spoke 94:4 98:9 124:10

spotted 247:16

spreading 53:7

spreadsheets 242:20

SRAC 8:19 12:16 89:12

114:10 135:11 219:10

261:16

SRC 183:1,17

stab 279:17

stability 9:14 74:14

80:7 117:14 118:7

185:3 203:11 263:9

stabilization 74:21

96:14 101:1,8,10,12

159:15 160:6

stabilize 75:3 154:3

160:4

stabilized 99:4 153:11

stabilizing 233:15

253:9

stable 61:14 69:1 74:3

74:6 277:4,13,14

278:8 279:13

stack 156:13

staff 24:12 87:17 90:20

147:3 221:21 222:7

222:17 223:2 228:12

228:13,14 234:21

235:3,4,11 238:17,18

250:4,5 260:19

262:14 307:16,19

308:16 310:8

staff-level 232:22

staffs 19:21 86:7

176:20 177:11

stage 24:16,22 152:15

203:15

stakeholder 264:19,22

266:3 267:9

stakeholders 139:8

stakes 141:15

stand 232:16

stand-still 228:20

standalone 274:7

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standard 31:15 102:12

102:14 131:21 228:2

266:18 303:20

standard-setting

263:11

standardization 109:12

standards 112:7 253:1

257:5

standing 193:3 222:12

standpoint 65:20

295:19

stands 261:2

standstill 155:7 229:3

229:11 230:4,9,14

Stanford 2:3 184:21

Starke 3:12 190:14

213:18

start 10:7,14 11:8 49:11

98:12 190:15 204:18

209:13 232:13 238:21

239:4,16 243:16,20

253:13,14 262:20

265:7,13 272:5

274:12 280:20 286:1

started 5:5 17:19 18:6

24:5,8,10,11,12,15,16

58:13 59:10 69:8

90:22 121:3 136:16

236:10 242:15 243:3

245:18 249:21,22

250:13 261:18 279:18

282:11 296:21 299:19

301:13

starting 220:9 239:14

296:10

starts 233:9

state 55:7,8,9 59:21

106:17 196:16 267:3

statement 5:4 275:13

statements 225:8

states 2:6,6 6:21,22

7:21 80:16 82:16

127:22 133:6,8

139:13 140:8 175:15

175:17 255:21 257:14

259:12,16 270:8

275:22 277:8 281:6

290:1 300:9

status 104:15 155:8

299:5

statute 11:10 161:15

193:12 208:8 223:13

statutory 22:17 84:11

131:21 223:11

stay 33:7 35:7,16 36:19

37:12,15,21 38:1

163:15 172:14,17

174:10,15,21 175:15

176:2 178:22 216:16

stays 142:7 184:21

steady 141:21

steer 159:13

steering 263:10

Steinwald 3:13 8:17

74:19 106:4,6 118:17

step 42:16 67:12,15

73:20,21,22 130:16

131:8 174:1 205:8

210:6 225:3 300:6

stepped 309:12

steps 4:11 10:17 18:13

22:5 43:13,15 51:16

162:18 181:1 192:12

192:15 201:17 218:19

219:2,14,17 303:5

STERN 2:17 50:1,14,20

212:6

stick 46:20

sticky 168:7

Stock 247:15

stole 270:14

stood 276:8

stop 172:5 184:3 189:9

209:9 230:10 234:17

stopped 158:18

stopping 51:15 121:21

story 53:16 54:4

straightaway 11:8

straightforward 223:14

strategic 92:15 259:7

291:4

strategies 9:19 10:3

20:17 45:10 84:5

107:6 110:10 192:2

270:19

strategy 18:15,21 25:8

39:12 41:12,15 44:6

49:14 60:18 61:7

73:14,14,16 100:21

107:9 108:18 110:6

119:11,15 124:15,16

130:14,18 131:6

133:17 147:16 191:2

192:11,13 234:15

271:2,17 272:4

276:11 280:12 281:18

281:21 282:22

street 1:17 232:1

strength 31:21 58:5

59:7 77:6 123:13

strengthened 45:1

stress 25:22 60:9,13

71:9,13 77:8,15 95:6

95:8 96:6 97:12,22

99:8,10,10,17 100:14

100:16 107:17 132:20

164:11 196:16 218:20

239:15 240:13 243:1

253:10

stressed 145:21

strike 310:17

strikes 59:20 205:18

strong 7:1 79:17 105:3

245:5 263:3 285:4

stronger 190:19 245:1

strongest 83:10

strongly 104:1 287:4

structural 6:7 44:7

250:8

structurally 300:5

structure 11:9 62:18

63:8 81:17 144:22

166:8 169:10 216:15

268:10

structured 44:8 168:13

168:15 216:11 261:5

structures 16:10

146:13 164:18 169:16

structuring 10:6

struggling 60:3 112:8

stuck 211:4,17,18

280:18

Studies 2:13

study 265:17

stuff 35:4 62:4 75:6

184:10 189:2,3

227:19 280:22 311:1

sub 47:11 129:21 156:4

subject 39:7 139:22

167:12 170:3 291:2,3

291:5,6 306:8

subjects 125:20 136:8

254:7,7

submission 85:3

submissions 75:19

83:17 87:3 235:1

submit 89:22

submitting 84:2

subs 49:12 99:1 279:3

subsidiaries 25:20

26:20,21 27:1 39:14

42:1 49:9 53:2,6 56:9

56:12,18 58:14 62:10

70:14,16 76:11 88:6

108:13 115:2,15

117:3 123:7 125:21

129:10 170:13,19

267:2 278:6 279:20

281:8

subsidiary 26:12 36:9

52:14 57:1,10,13

58:22 64:1 72:12

115:7 116:16 117:8

275:4 276:14 286:14

substance 23:4 148:11

208:4

substantial 41:6 48:20

62:8 84:3 87:4 145:12

173:13 178:14 188:5

199:20 203:7 204:5

substantially 87:3

144:17

subtle 100:9 293:9

succeed 212:8

success 147:17,20

190:1

successful 167:2

169:22 254:14

successfully 295:1

sudden 294:9

suddenly 64:2 89:11

sued 30:20 31:1 51:14

suffered 196:15

suffering 41:20

suffice 142:6

sufficient 132:22

202:22 280:4,8

sufficiently 203:1

suggest 204:8

suggested 216:4

suggesting 281:12

283:13,21

suggestion 114:17

suggestions 106:16

suggests 49:21

Sullivan 2:7

summarize 19:5

summarized 25:2

summed 269:22

summer 130:5

Sunday 243:6,10

superlatives 137:8

supervise 46:12

supervising 253:21

supervision 3:10 8:16

14:12 112:20 196:2

supervisor 51:3

supervisors 46:16

112:4 242:10 258:6

261:10

supervisory 3:9 40:7

48:4 60:7 87:8,10

179:11 242:4,8 247:6

247:9 261:13 262:5

275:6

supplementary 182:18

suppliers 171:19

support 15:21 56:14

77:4 83:11 101:11,14

101:16 105:2 107:19

108:17 115:19 123:10

132:18,22 221:17

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232:7

supports 66:10 84:7

196:4 237:3,5

suppose 275:7

supposed 44:2 73:14

73:15 162:7 186:14

300:18

surplus 29:8 95:14

surprise 304:22

surprised 116:11

254:19 290:17 299:7

survey 304:19

surveys 120:17

survive 56:12 69:13,15

98:2 199:16 307:19

surviving 96:20

Susan 3:2 251:5 254:15

269:14 270:19 272:11

306:22

Susan's 298:5

suspenders 32:15

55:20 123:22

suss 271:5

sustained 76:12

Swain 137:22

swallow 245:7

Swaps 173:16

swiftly 148:20

swing 129:6

switch 23:2 248:4

Switzerland 255:21

268:7

sympathetic 306:17

symposium 147:13,21

synchronized 256:2

synergies 250:3

synthesizing 244:15

system 2:13 17:9 38:13

38:19 73:2,6 117:15

129:21 130:16 162:10

170:8,22 180:7

185:13 187:5,7

203:11 226:7 228:9

248:1,8 288:10 300:2

systemic 1:3 5:9 17:12

42:4,6,7,12 53:3,4

67:10 73:15,17 89:11

108:14 113:1,7

165:12 182:7 186:9

187:6,14,18 189:11

193:19 207:13 218:11

220:12 233:12 266:12

279:18,19

systemically 9:1 63:22

76:16 92:16

systems 44:3 72:4

153:6 179:5 204:2

246:19 248:11 262:21

285:19

T

tab 247:21

table 6:3 58:2 193:20

307:2 311:8

tables 162:17

tackle 273:8

tailored 13:14 177:16

tailoring 177:14

taken 10:16 122:6

190:18 201:18

takes 101:2 183:2

232:19 257:9 277:9

277:10,21 278:1,17

279:8

talented 141:18

talk 10:15 14:21 17:18

21:2 23:3,19 25:15

33:17 35:1 40:9 41:14

52:11 58:13 75:20

83:18 88:17 94:20

124:8 135:6 136:7

163:13 164:3 172:13

189:7,15 190:2

201:13,19 234:7

237:12 257:12 258:15

259:8 261:3 262:14

264:9 265:1 268:17

268:19 269:1,10

271:3,15 272:18

273:7 285:17,18

298:14 304:1

talked 9:18,20,21 38:16

40:15 47:16 80:22

81:9 149:21 152:14

163:1 165:5 181:10

192:13 196:12,12,14

217:15 226:2 246:12

246:13 249:20 261:22

261:22 270:20

talking 17:6 22:15,16

59:3 89:6,7,13,15

94:1 104:10 121:13

130:8 132:11 142:21

150:17,21 159:18

162:16 184:17 218:5

227:19 234:11,14

235:6,8 236:14

239:16 246:11 284:13

287:12 288:2 289:6

307:11,12

talks 248:22

tangible 272:18

tangibly 306:14

targeted 215:11

tax 216:13

taxi 178:12

taxpayers 7:9 34:18

67:12 186:1 207:11

214:18

Taylor 137:22

team 260:4

teams 20:3 24:10,11,13

120:18 121:2,2 134:1

tearful 154:1

technical 264:3 303:19

technology 2:16 248:12

tee 8:18

teed 23:6

teeth 92:9

telescope 286:10,10

tell 109:19 118:11

242:17 288:10 289:20

telling 138:9 198:3

212:11

temporary 229:12

ten 225:6,13 287:20

291:1,1 292:18 293:8

295:21

ten-year 138:3

tend 178:16

tendency 205:13

283:17 296:15

tension 39:2

term 22:17,17 72:15

97:10 101:5 156:10

156:12 164:22 165:3

165:17 166:1,11,15

166:17 167:10 168:4

170:12 171:4 172:2

173:7 177:13 215:10

215:19 267:6 293:5

terminable 155:17

terminate 38:7,9 78:11

173:4

terminated 153:12

terminates 38:8

termination 35:12 36:5

36:13 37:1,10 78:6

143:7 152:21 163:15

172:22 173:7 216:16

terminations 145:3,4

158:7

terms 10:6 17:21 21:17

29:12 36:4 41:2,14

50:15 62:19 72:4

101:1 111:5 113:6

118:6 142:4 200:2

220:20 221:15 222:20

223:18 225:19 244:16

244:17 264:4,5

275:16 277:15 287:19

289:6,9 298:13

304:11 306:12

terribly 104:1

terrific 278:12

test 42:5 48:7 67:7 95:9

99:10 211:2 233:4

243:1

testament 87:5

tested 63:12 189:3,4

290:14,16

testify 180:19

testimony 154:1 212:13

212:14

testing 97:12 192:17

240:13

tests 95:6

Tetrick 3:14 190:14

202:4 208:20 216:21

223:8 224:7,17,22

225:16 232:21 234:10

236:9 237:19 238:3

238:15 239:12 241:11

241:21 242:2,13

244:10 245:11,15

246:21 249:3 250:12

251:7 267:14 268:9

273:11 274:14,17

275:3 296:20

thank 8:8 12:12 15:16

91:17 93:10 106:6

114:14,14 122:3

135:4,22 136:2 149:9

176:8,9 177:19

250:20,22 251:9

270:14 307:13,16

308:6,15,19 309:16

311:8,8,10

thankfully 145:19

thanks 25:1 172:15

260:3

thematic 264:1

theme 77:6 309:18

theoretically 300:17

theory 62:18 157:3,4

158:4 277:15 293:9

They'd 196:18

things 14:9,12 15:7,8

15:20 23:18,18 24:1,1

36:20 47:7 49:10

54:12 58:11 62:20

63:2 66:7 68:7 77:12

77:19 89:8 102:20

105:19 112:1 114:20

143:4 155:20 161:2

163:10 171:20 188:7

197:8 214:22 216:16

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306:10 307:4

thinks 197:18 285:10

third 39:17 43:9 95:12

146:12 170:14 197:18

207:3 215:17 221:2

251:5 285:21 304:7

third-parties 27:8

139:17

Thirty 18:2

thought 11:8 16:17

69:8,21 70:4,6 71:18

72:17 85:1 88:3 90:15

103:13 111:9 112:14

152:17 160:12 162:6

165:11 166:16 168:3

225:3,4 242:17

251:12 270:11 287:8

301:21 303:8

thoughtful 151:3

thoughts 8:6 109:5

172:9

thousand 140:9,18

141:10 143:8 176:6

thousands 115:14

141:5 154:19

threat 248:22

threaten 9:13

three 13:2 31:9 108:8

142:3,7 143:2 176:6

197:15 209:13 245:13

253:14 263:3 298:7

307:21

threshold 161:18

208:15 239:5 289:17

thunder 270:15

Thursday 1:10 307:19

tie 114:11

tied 83:2 182:19 229:13

tier 167:5 175:17

247:19 295:22 296:1

ties 98:8

timely 11:20 28:22

times 20:19 78:6 193:6

247:11 253:10

timing 150:21 256:5

283:8

tipping 280:17

titled 21:7

TLAC 26:4,13,14,19,20

27:4,5,13,14,19,21

31:13,19 39:3 50:8

65:13 66:3,17 162:16

163:10 164:16 165:15

165:22 166:8 167:4,5

167:5 168:14 169:17

172:9 182:19,19

183:5 184:13,13

185:2 210:2 214:10

253:3 260:15 264:3

265:4 266:20,22

267:6,12,15,21

268:10 273:8,13,18

274:8,9 275:14

296:21 303:20

TLACs 213:6

today 7:6 8:8 10:5,13

10:21 17:6,18 20:14

20:19 23:4 26:15,17

39:4 63:2 75:10 76:1

78:6 134:10 136:3

142:22 149:5 176:10

176:11 177:20 180:22

188:10,20 204:20

216:9 217:16 240:5

240:21 247:12 251:4

257:3 307:15 308:15

310:2,9

today's 276:8

Tokyo 243:6

told 184:19 197:22

tolerance 239:2

tolerant 309:2

tool 9:10 60:7 175:13

180:18,21 181:3

217:12 271:12 297:8

tools 18:19 48:5 60:7

187:6 193:8 202:7

213:10,11 221:20,22

240:6 242:3,6 243:12

243:19 244:16 245:21

259:4 275:6

Toomey 292:3

top 125:2,2 163:21

218:13,17 219:8

293:11

topic 39:9 252:14 254:9

258:4 259:9 267:8

307:9

topics 75:10 260:12

261:20 263:12,13

308:5

total 26:3 163:19

165:16

totality 286:17

touch 12:21 20:13 27:4

35:20 70:12 121:4

133:21 189:14 233:6

237:2

touched 123:9 253:15

259:20

touching 35:11 59:10

TPLE 239:18

track 300:13

trade 138:14 171:7

trade-offs 197:12

trademarks 125:21

tradeoffs 301:13

trades 143:10 153:8,9

trading 143:18 153:2

300:2

tradition 14:11 193:3

traditionally 178:1

traffic 257:16

training 24:11 250:1

trainings 24:12

trains 188:19

trajectory 237:13

transaction 139:5

158:19

transactions 119:2

140:19 170:4

transfer 30:21 33:18

36:13 37:13,16 38:5

44:15 48:19 76:21

155:10,12 163:15

174:15

transferred 26:6 95:15

95:15 156:14

transferring 18:12

transformation 207:22

translate 275:15

translation 275:15

transparency 21:5 22:5

23:12,13 45:14 91:21

109:2,18 110:5,18

111:1 142:12 190:9

192:19 204:13 252:17

253:8 264:18 271:10

304:3 306:13

transparent 15:4,14

41:2 65:12 190:7

301:7 305:11

travel 217:1

treasurer 88:17,20

235:4,18

Treasuries 104:11

treasury 10:18 87:20

88:5,8,16 97:19

189:13 193:12 206:4

209:5 214:21 216:3

223:5,9,17,22 224:2

224:12 226:2,7,15

229:9 234:21 235:11

238:18 244:13 261:9

treat 95:11 135:1

treated 134:14,16 260:6

treatment 215:8

tremendous 151:12

152:20

trial 228:7,15

trials 145:14,17

tried 78:15 198:15

201:22 205:6 208:7

230:11 250:5

trigger 45:17 46:7,13

48:3 50:3,5,5,6

241:12

triggered 45:19

triggers 43:17,18,18,19

45:19 46:16 50:11,14

50:22,22 51:9 107:22

178:3 196:15,21

237:7 241:15

trilateral 262:1,22

trillion 139:20 140:12

troth 101:10

trouble 178:1

troubling 102:9

true 199:13 205:1 306:1

truly 135:5 142:1

187:14,18 289:7

308:9

trust 2:5 26:9 74:3,6

156:14 285:14 292:20

296:2 298:13

trusted 229:15

try 15:13 30:11 53:11

55:2 60:20 93:16

102:21 133:15 162:22

206:6 208:18 209:9

210:11,13 215:20

228:8,9 252:14

265:20 268:20 270:17

271:4 273:8 285:16

285:17

trying 32:18 33:16 58:7

60:11 72:17 82:3

91:22 100:14 114:3

118:12 128:6 153:2,3

161:10 184:3 186:20

187:5 192:9 200:22

201:8,9 211:9 217:12

254:18 256:5 280:21

284:1,8 294:8 300:14

306:6 307:6

tsunami 143:5

Tuck 2:9

Tucker's 256:22

tumultuous 103:9

turmoil 96:11

turn 65:14 88:16 126:19

165:15 172:12 269:6

309:14

turned 247:16

turning 13:12 23:6

190:15 220:4

twice 144:12

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83:4 92:11 96:15,15

99:18 147:11 152:2

157:8 163:10 164:19

167:14 183:20 197:14

207:9 218:13 219:11

219:15 223:8,21

255:12 264:2,15

276:8 279:14 306:10

309:2 310:1

two-day 213:4

two-year 145:13

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245:8 253:8 280:1

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types 165:9 236:12

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U.K 220:14 255:21

261:18 262:3 263:2

268:18 270:6,9

275:11,11 276:3

289:8 299:3

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12:20 13:1 20:15

27:20 35:22 40:1

41:15 77:13 79:10,22

90:3,6 112:10 131:17

132:19 133:1,2

144:21 147:15 149:2

163:21 164:6,6

167:20 169:14 172:14

172:17 173:4,22

174:4,13,18 175:3,10

175:13,20 176:3,4,7

176:12 177:6 189:13

220:13 228:11 230:11

234:6 251:16 252:1

253:19 267:14,15,15

267:17,20 270:6,7,8

272:14 273:21,22

275:9 283:15 286:2

289:9 292:9 299:6,7

306:7

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ultimate 68:3

ultimately 55:19 85:6

139:19 140:8 216:12

272:8

Um-hum 99:20 102:19

116:7,20 118:8

unable 132:21

unacceptable 189:10

unavoidable 251:21

uncertain 290:2

uncertainty 207:20

211:21

unclear 57:19

uncomfortable 130:4

uncommitted 276:12

undercut 281:20

underline 183:4

underlying 63:12

309:18

undermine 18:15

281:18 283:3

undermines 280:19

underneath 159:8

understand 15:12,13

27:11 43:8 45:9 55:17

61:3 76:22 79:5 94:7

98:11 101:22 105:21

105:22 113:22 116:1

146:18 154:12 173:12

201:15 213:21 224:13

237:20 248:15 253:1

253:3 277:3,6,7,12

278:11 289:12 291:14

296:4 297:7

understandable 205:5

understanding 62:9

72:2,8 82:8 94:10

97:15 109:3 110:10

133:16 148:21 151:3

157:13 252:17 270:17

296:5 298:2

understandings 79:10

296:17

understands 113:8

288:9

understood 19:8 21:18

74:13 102:15 131:13

252:22 290:18

undertaken 305:14,15

undertakes 263:22

undertaking 303:19

304:5,16

undetermined 139:19

undue 295:14 297:1

unfair 149:15

unfamiliar 25:15

unfolded 138:21

unfortunate 280:12

unfortunately 11:6

181:5

unhappy 102:13

union 221:1 262:4

unique 5:12 8:22 13:12

16:22 135:20 168:16

240:14 262:6

unit 111:12

United 2:6,6 6:20,22

7:21 80:15 82:16

133:6,8 139:13 140:8

220:11 255:21 257:14

259:12,16 270:8

275:22 277:8 281:6

290:1 300:9

units 69:2

universal 173:20 175:2

175:22 217:7

universe 90:14 127:17

127:21 139:18

University 2:3,9,11

147:14

unknown 205:8

unleashed 138:13

unlock 70:7

unnecessarily 282:21

unpaid 167:6,11

unprecedented 79:15

unquestionably 145:20

unreasonable 17:3

46:7

unsecured 27:6 70:14

144:11,15 167:21

unsympathetic 33:2

untapped 248:3

untested 7:6 67:17

148:17

unviable 178:12

unwilling 132:21

unwind 172:20

upcoming 177:18

Update 4:5,7,10,13

updates 176:18

uplift 108:15

upping 274:20

upstream 170:18

urge 134:22

use 15:9 37:20 102:22

103:18 141:13 144:22

177:8 215:20 226:16

230:5 233:13 234:1

250:7 259:5 271:14

272:18

useful 220:15 233:5

237:14 239:7 271:12

272:1

uses 273:2

USEU 261:11

usual 26:15 122:8

239:11 240:17 300:15

utility 171:19

utilize 161:19

V

vague 196:2

valid 206:1

validated 63:13

valuable 112:19 148:4

148:9

valuation 225:9,17

value 39:15 49:6,11,13

56:9 65:20 70:5,7,20

71:5,7 72:10,16 73:5

73:18 127:3 145:4

152:20 154:3,4

168:16 199:21 200:3

225:10

values 138:15

vanilla 168:3

vanished 138:16

variance 70:15

varies 48:14

variety 80:10 219:4

various 70:13 107:22

191:15 260:12,12

272:19 298:16 299:4

306:18 307:5

vast 37:22 139:18

vehicle 253:17 304:2

vendors 185:15

venue 263:8

venues 39:11 222:15

270:2 272:11

version 271:13,14

versus 9:20 71:3,10

145:17 184:7 264:4

282:19 303:2

vertical 58:3 59:4 60:1

71:1 117:2

viable 212:22

vice 2:12 184:19,20

279:1 307:22

view 203:2 283:10

287:7 300:7

viewpoint 86:17

views 299:10

virtual 124:7

vis-a-vis 235:1

visibility 250:16

visible 250:17 297:17

visited 84:13

vitally 138:5

vocabulary 253:2

vocalized 105:15

volatility 58:16 59:16

116:17 167:1

Volcker 92:13,21 93:8

Volker 152:1

W

waiting 283:15

walk 19:22 57:9,18

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343

106:5

walked 188:9

wall 3:15 8:17 27:4

35:21 36:11 85:10,16

86:8 118:10 158:6,9

158:13 162:19,20

171:11,18,22 172:12

282:12

walls 282:18

wanted 10:7 20:17 41:6

44:18,22 45:13 53:18

57:2,3 64:11 91:16,17

92:10,18 133:4 182:6

183:20 194:10 257:20

269:20 304:14 305:5

wants 82:16 205:7

212:22

Warsh 113:14

Washington 1:18

wasn't 13:15 23:11,13

54:3 254:3 296:3

watch 286:20

watched 5:7

watershed 41:1

way 9:9 11:1,20 29:1

37:18 41:13 44:5,11

51:6,15,19 59:20 60:6

66:2 87:16 98:3

127:18 128:6,12

133:22 136:4 141:7

146:22 151:21 161:17

173:20 179:7 181:8

191:21 201:2,21

202:21 204:1 212:13

216:11 234:7 239:22

246:13 248:10 249:21

250:7,7 252:15

254:12,13 256:2

266:15,16 269:3

274:18 275:15 279:10

291:10 294:14 295:13

300:3,18 301:20

302:3 303:13 306:14

ways 9:20 13:12,16

28:18 40:2,5 76:7

78:17,17 97:8 110:9

122:9 123:21 126:17

132:15 135:7 168:18

190:7,10 196:7

201:11 209:5 224:19

237:4 250:17 252:13

252:21 253:12 260:5

271:7 284:18

weakness 59:6

weaving 97:16,18

website 176:5

websites 21:12

week 138:19 141:2

153:1 184:12 249:7

267:10

weekend 150:8 151:1

154:13 155:8 219:1

224:9,14 277:9,21

279:8

weekly 121:4

weeks 294:7

weigh 204:16

weighted 166:5

weird 247:21

welcome 4:3 5:8 7:14

8:9,10 12:14 176:11

189:19 215:2

well- 88:1

Wells 114:3

went 21:17 70:17 91:10

188:16 235:13 240:5

251:2 308:6 311:12

weren't 122:16 229:16

285:7

west 283:6

Wharton 2:10,11

147:12,20

whatnot 67:5

whichever 29:9 302:7

white 51:4

wholesale 99:3

wide-scale 145:4

widely 231:3

willing 299:15

wills 9:8,21 10:10 16:14

58:12 90:1 112:2

wind 44:14 68:12 69:12

72:21,21 128:4

258:12

wind-down 263:16

265:3

window 104:6 259:17

wire 226:7

wise 15:3

wisely 309:5

wish 34:6 92:5 109:22

256:11,19

withdraw 229:4,19

withdrawn 56:19

wonder 178:20

wondered 47:17

wonderful 67:15 126:15

235:12

wondering 257:1

wood 62:19 156:15

word 57:11 79:17

256:10,11,18 286:20

words 14:18 36:17

53:13 54:18 129:9

296:1,7

worked 40:22 41:13

118:18 146:1 192:1

194:5 226:5 249:8

254:10 270:9 307:16

working 22:2 33:12

49:10 52:21 79:6

106:18 134:2 148:22

190:17 194:15 209:14

217:11,12 242:20

244:19 255:8 258:1

268:3 269:14 270:5

271:18 294:17 296:12

306:16 307:6

works 44:17 49:14

56:15 62:18 64:10

73:16 147:5 192:7

258:20 284:22

workshop 306:3

workshops 260:13

264:22 307:4

world 7:3 15:11 23:10

28:13 37:19 41:17

52:6 55:8 63:18 68:11

80:2 81:16 99:11

109:16 138:13 142:5

142:20 146:11 178:15

208:1,11 244:14

257:20 277:20,22

278:15,16,16,19

279:7,9,11 281:4,5,11

282:4,6 283:6,6,14

284:15 286:3,5

287:11 292:16 293:4

293:7 300:7,16

305:11 308:5

worried 33:9 187:8

201:8 245:4 274:13

277:2

worrier 180:18

worries 296:11

worry 64:7 88:4 114:20

116:19 180:11,13,14

180:15 181:4,9 205:3

245:12 286:8 295:15

295:17

worrying 283:16 296:18

worse 134:20 139:3

180:8 285:12

worst 194:8 243:17

worth 32:17 65:22 70:3

85:10 246:6 295:17

wouldn't 15:13 16:2

56:8 79:11 105:15

131:11 156:21 203:16

205:20 244:22 286:22

wound 191:17

Wow 188:4

wrap 249:19 268:11

303:3 307:8

write 85:3

writes 105:1

written 27:10 193:4

wrong 37:8 62:20 63:1

194:6 236:5 286:9

wrote 83:10 100:10,10

X

x 31:15 101:19 117:19

XYZ 18:2

Y

y 101:19

year 20:10 105:8 132:3

148:12 167:8 176:16

177:7 184:20,20

215:10 223:1 234:5

255:12 261:19 264:2

266:1 275:12

years 9:15 10:2 11:22

12:16,19 23:8 24:19

38:16 39:18 87:4

90:15 108:8 114:6

136:15 137:1 138:17

142:3,7 143:2 147:11

163:7 167:14 181:11

190:22 255:12 257:19

260:18 263:13 277:10

277:11 278:1,1,17,17

287:20 288:1 291:1,1

292:18 293:8 295:9

295:21 310:1

yen 243:6

yield 308:13

York 2:7 7:22 82:9,20

148:1 247:15,16,16

younger 136:16

YY 132:6 164:2

Z

z 101:19

zero 194:14 243:13

zillion 181:11

0

08 66:11

09 66:11

1

1.2 140:11

1:10 139:14

1:30 188:17

10 43:12,15 140:18

143:8 145:15 250:21

10:18 91:10

10:34 91:11

100 70:19 80:18 194:20

195:16 225:2

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344

11 80:10 136:22 137:7

140:7,10 141:8,13

142:3,7 145:21 213:2

300:8

11/Chapter 299:6

12 4:5

12:06 188:16

121 182:16

124 144:5

13 114:4

13.3 227:20

14 34:4 139:11 299:6

14,799 141:4

15 91:3 143:1,20 250:22

16 140:1 256:6

165(d) 9:5

17th 1:17

18 36:2

189 4:13

19th 308:11,14

2

2 188:20 219:3 295:22

296:1

2:33 251:2

2:50 251:3

20 152:17 175:8 231:5

2008 69:22 82:2,14,21

104:9 112:15 135:9

139:11 143:1,21

146:21 182:3 243:8

2010 265:17

2011 8:20 144:14

152:14 194:14 215:8

244:9

2012 77:20 220:3

2013 76:5 215:4,4 217:4

2014 16:13 17:1 106:14

114:4 136:20 220:9

256:6

2015 22:7 40:16,18

106:21 107:1 173:19

175:3

2016 10:8,12 13:5,7

14:20 19:6 20:4,9,10

20:12 21:4,6,21 33:15

39:18 40:1 75:5 93:14

107:11 119:20 120:4

120:14 163:18 176:14

220:21 255:11 262:7

2017 41:4 75:19 105:20

107:10,11,13 118:18

119:21 120:2,5 121:9

122:4 132:2,13

173:22 266:9

2018 1:11 5:9 75:7

132:4,14 175:8,10

184:20 262:8

2019 89:13 175:18

2020 266:2

20th 308:11,14

21st 308:13

23 140:10

25 304:10,20

250 135:2

251 4:16

3

3:55 311:12

30 98:21,22,22 100:3,4

100:7 157:20 228:22

230:7

30- 100:15

30-day 95:8 99:9

300 141:5

308 4:18

311 4:20

4

40 144:16 228:22 230:7

42 145:18

450 247:17

5

5 4:3 170:20 216:22

50 135:1 195:17 287:7

55 240:22

550 1:17

59,113 141:3

6

6 1:11

6010 1:17

67 140:9

7

7 250:10

70 274:12

75 274:5,6 276:5 286:5

286:15,17,22,22

287:6

8

9

9:00 1:15

9:01 5:2

90 225:9,11 227:2 274:5

274:6 276:5 286:2,4,6

286:12,15,18 287:1

99 195:22

UNOFFICIAL/UNREVIEWED
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS 

1323 RHODE ISLAND AVE., N.W. 

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

C E R T I F I C A T E

This is to certify that the foregoing transcript 

In the matter of: 

Before: 

Date: 

Place: 

was duly recorded and accurately transcribed under 

my direction; further, that said transcript is a 

true and accurate record of the proceedings. 

 

 - Court Reporter 

345

Committee on Systemic Resolution

FDIC

12-06-18

Washington, DC

UNOFFICIAL/UNREVIEWED