November 9, 2022 

The Meeting of the Systemic Resolution Advisory Committee 

of the 

Federal Deposit Insurance Corporation 

Federal Deposit Insurance Corporation Building 

Washington, D.C. 

Open to Public Observation Via Webcast 

November 9, 2022 – 9:00 A.M. 

The meeting of the FDIC Systemic Resolution Advisory 

Committee (Committee) was called to order by Martin J. 

Gruenberg, Acting Chairman of the Board of Directors, Federal 

Deposit Insurance Corporation (FDIC or Corporation). 

Committee Members present in person at the meeting: 

Tim P. Clark, Distinguished Senior Banking Advisor, Better 

Markets (nonprofit organization) and Former Deputy Director, 

Division of Supervision and Regulation, Federal Reserve Board of 

Governors; Jay Clayton, Senior Policy Advisor and Of Counsel, 

Sullivan & Cromwell LLP and Former Chairman, U.S. Securities and 

Exchange Commission (SEC); H. Rodgin Cohen, Senior Chair, 

Sullivan & Cromwell LLP; Gary Cohn, Vice Chairman, IBM, Former 

Director, U.S. National Economic Council, Former Assistant to 

the President for Economic Policy and Former President and Chief 

Operating Officer, The Goldman Sachs Group, Inc.; Honorable 

Robert Drain, United States Bankruptcy Judge, Southern District 

of New York; D. Wilson Ervin, Former Vice Chairman and Global 

Chief Risk Officer, Credit Suisse; Richard J. Herring, Founding 

Co-Director, The Wharton Financial Institutions Center, Jacob 

Safra Professor of International Banking 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; Frank La Salla, President and Chief 

Executive Officer and Director, Depository Trust & Clearing 

Corporation (DTCC), and President and Chief Executive Officer of 

DTCC’s principal subsidiaries Depository Trust Company (DTC), 

Fixed Income Clearing Corporation (FICC) and National Securities 

Clearing Corporation (NSCC); Timothy J. Mayopoulos, President of 

Blend (NYSE-listed cloud-based software company), Former 

President and Chief Executive Officer of Fannie Mae and Former 

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General Counsel of Bank of America; Sandie O’Connor, Financial 

Industry Expert and Former Chief Regulatory Affairs Officer, 

JPMorgan Chase; Douglas L. Peterson, President and Chief 

Executive Officer and Board Member, S&P Global and Former Chief 

Operating Officer, Citibank, N.A.; John S. Reed, Former Chairman 

and CEO of Citigroup, Former Chairman of the New York Stock 

Exchange and Former Chairman, Corporation of Massachusetts 

Institute of Technology (MIT); and Margaret (Meg) E. Tahyar, 

Partner and Co-Head of Financial Institutions, Davis Polk LLP. 

 Committee Members attending by video conference: Sheila 

Bair, Former Chairperson, Federal Deposit Insurance Corporation; 

and Honorable Shelley C. Chapman, Senior Counsel, Willkie Farr & 

Gallagher LLP and Former United States Bankruptcy Judge, 

Southern District of New York. 

 Committee Member Dr. Ben S. Bernanke, Distinguished Fellow 

in Residence with the Economic Studies Program at the Brookings 

Institution and Former Chairman of the Board of Governors of the 

Federal Reserve System, was absent from the meeting. 

 

 Members of the Corporation’s Board of Directors present at 

the meeting: Martin J. Gruenberg, Acting Chairman; Rohit Chopra, 

Director (Director, Consumer Financial Protection Bureau); and 

Michael J. Hsu, Director (Acting Comptroller of the Currency). 

 Corporation staff in attendance at the meeting: Susan L. 

Baker, Tawanta L. Brinson, Shaheerah M. Carmichael, Mary 

Calkins, John P. Conneely, Kymberly K. Copa, Laura C. Crawford, 

Jermain Cunningham, BalKrishna N. Dave, Angela Dean, Debra A. 

Decker, Samantha G. Ekholm, Gerald M. Evans, Elizabeth Falloon, 

Andrew J. Felton, Sheila R. Finlayson, Joanne Fungaroli, Gregory 

Gelzinis, Michelle G. Gilbert, Patricia S. Gurneau, Sheridan L. 

Hill, Krista Hughes, Kete M. Iluyomade, Veronique R. James, 

Rosilyn L. King, James L. McGraw, Arthur J. Murton, Nikita 

Pearson, Harrel M. Pettway, Jerrod Sanders, Alfred L. Seivold, 

James P. Sheesley, Richard Penfield (Pen) Starke, Nicole J. 

Tettegah, Ryan P. Tetrick, Mona L. Thomas, Jenny G. Traille, 

David Wall, Aaron W. Wishart, and Allen Yarbrough. 

 Other guests in attendance: Elke Koenig, Chair, Single 

Resolution Board, European Union; and Jon Cunliffe, Deputy 

Governor for Financial Stability, Bank of England (attended via 

video conference). 

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November 9, 2022 

Welcome and Introduction 

 Acting Chairman Gruenberg presided over the proceeding. He 

began by welcoming everyone to the in-person meeting, noting 

that it had been two years since the last meeting which was held 

virtually in October of 2020 due to the pandemic and four years 

since the Committee had actually met in person. He shared his 

intention to resume the regular annual meeting schedule for the 

Committee, further pointing out the important role the Committee 

plays in helping FDIC work through the challenges involving 

systemic resolution and the value in meeting in-person more 

regularly to receive the Committee’s input on the work FDIC is 

undertaking. 

 

Acting Chairman Gruenberg introduced the five new members 

of the Committee: Timothy (Tim) Clark - Distinguished Senior 

Banking Advisor of Better Markets and Former Deputy Director of 

Supervision and Regulation at the Federal Reserve Board of 

Governors; Frank La Salla - President and Chief Executive 

Officer of the Depository Trust & Clearing Corporation (DTCC); 

Jay Clayton - Former Chairman of the SEC; Margaret (Meg) Tahyar 

- Partner and Co-Head of Financial Institutions at Davis Polk 

LLP; and D. Wilson Ervin, Former Vice Chairman at Credit Suisse. 

Acting Chairman Gruenberg also introduced Elke Koenig - 

Founding Chair of the Single Resolution Board for Europe, who 

was attending the meeting as a special guest. He said that Ms. 

Koenig’s service on the Single Resolution Board (SRB) would be 

ending next month due to term limits and that she has agreed to 

join the Committee upon her term end. 

The Acting Chairman then recognized the four former members 

of the Committee who had cycled off the Committee since the last 

meeting: William (Bill) Donaldson (former Chairman of the SEC); 

Peter Fisher (former Undersecretary of the Treasury and Senior 

Fellow of the Center for Global Business and Government at the 

Tuck School of Business at Dartmouth University); Gary Stern 

(former CEO and President of the Federal Reserve Bank of 

Minneapolis); and Michael Bodson (former President and CEO of 

the DTCC). 

Acting Chairman Gruenberg concluded his welcoming remarks 

by providing an overview of the session topics for the meeting. 

 

The Acting Chairman thanked and welcomed back the returning 

members of the Committee, and recognized FDIC Board Members 

Michael Hsu and Rohit Chopra, who were also in attendance. Both 

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November 9, 2022 

Directors Hsu and Chopra made welcoming remarks. 

 The Acting Chairman then turned the program over to John 

Conneely, Director of the Division of Complex Institution 

Supervision and Resolution (CISR), to moderate the proceeding. 

Mr. Conneely reviewed the agenda and made a statement regarding 

the Sunshine Act, confirming that this was not a meeting to 

conduct business of the FDIC Board of Directors and that the 

Board members present would only engage in general or 

preliminary discussions that do not relate to specific proposals 

for action pending before the FDIC. He also made an announcement 

regarding a recently-issued advanced notice of proposed 

rulemaking (ANPR) that was jointly approved last month by the 

FDIC and Federal Reserve Board for public comment on potential 

new resolution related resource requirements for large banking 

organizations, stating that staff will not respond substantively 

to any comments on the ANPR and generally will be in listening 

mode and will not indicate the direction the agencies are likely 

to take with respect to a future notice of proposed rulemaking 

or final rule. 

Session 1: Integration of Supervision and Resolution 

Mr. Conneely recognized James McGraw, Senior Deputy Director, 

CISR; Andrew Felton, Deputy Director, Systemic Risk Branch, 

CISR; Alfred Seivold, Deputy Director, Institution Risk Branch, 

CISR; and David Wall, Assistant General Counsel, Complex 

Financial Institutions Section, Resolution and Receivership 

Branch, Legal Division, to provide an update and field questions 

from members on the recent work in CISR to integrate FDIC’s 

supervisory and resolution responsibilities into the one CISR 

division. 

Mr. Conneely started with a brief introduction of the approach 

utilized by CISR to integrate supervision and resolution 

responsibilities. He also mentioned coordination with other 

divisions in the FDIC, other financial regulatory agencies and 

internationally through the work of supervisory colleges and 

crisis management groups. 

Mr. McGraw described CISR’s organizational structure, which has 

brought together supervision and resolution expertise into one 

division. He also discussed the responsibilities of the 

different branches in CISR and how they work together. There was 

also discussion of the international coordination handled by 

CISR. 

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November 9, 2022 

Mr. McGraw utilized cyber risk as an example where interaction 

between supervision and resolution staff is crucial. 

Mr. McGraw noted the importance of information and insight 

obtained through supervisory staff on the Title I plan review 

and the Title II resolution planning processes. CISR staff has 

also been participating in recovery plan reviews with other 

banking agencies. 

Mr. McGraw mentioned the responsibility for resolving nonbank 

financial companies and some of the inherent challenges. There 

will be further discussion on this topic in the context of CCPs. 

Member Reed asked about informal interactions with the 

institutions. Mr. McGraw provided some examples. 

Member Ervin asked whether there might be hesitation about 

turning an issue over from supervision to resolution. Mr. McGraw 

noted that with the creation of CISR, one team is working 

together and there is ongoing collaboration. Mr. Conneely added 

comments about some of the difficult issues and some of the 

successes. Mr. McGraw provided a specific example of an issue 

discovered during a supervisory exam that was identified as a 

possible resolution issue. 

Member Herring noted that internationally there is a strong 

separation between supervision and resolution and asked whether 

there was a way for other countries to join the two approaches. 

Mr. Conneely stated that the FDIC is in a unique position in 

that it has supervisory and resolution authority. 

Ms. Koenig discussed some of the issues and process regarding 

the division of supervisory authorities and resolution 

authorities in Europe. 

Member Peterson asked about changes in expectations of the role 

of internal audit and the audit committees of the boards. Mr. 

McGraw did not think that expectations had changed. Mr. Conneely 

added that firms are now auditing for resolution issues. 

Member Kohn asked about factors that would trigger resolution 

before a liquidity run. Mr. McGraw noted resolution staff is 

involved throughout the process, so when there is stress, 

preparations for an event can begin. Mr. Conneely added that the 

chartering authorities make the decision to close an institution 

but the FDIC is monitoring in real time. Mr. Felton also noted 

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how Title I resolution planning has improved governance 

mechanisms and quantitative triggers. 

Member Tahyar stated that for GSIBs with single point of entry 

strategies, there is the concept of liquidity execution need 

that is calculated daily. She noted that this development is a 

welcome change from 2008, since a GSIB would now end up in 

bankruptcy before it would be closed by a chartering agency. 

 

Member O’Connor asked how the FDIC is integrating the evolution 

of markets into both recovery and resolution. Mr. Connelly 

stated it is an area in which CISR is looking to build up its 

capabilities. Mr. McGraw added that he and Mr. Fulton had been 

working on this topic together. 

Member Clark asked about efficiency of the current resolution 

planning process and the role of guidance versus rules in the 

process. Mr. Connelly said that FDIC implements the guidance and 

the rules and it is up to policymakers and others to determine 

whether guidance should be rules. Mr. McGraw added that there is 

a lot of authority in Title I to push firms to fix issues that 

have direct implications on resolution readiness. 

Member Clark added to his prior question on whether the dynamic 

regarding resolution planning has changed due to the discussions 

of rulemaking through guidance. 

Member O’Connor noted that financial institutions should take 

guidance seriously, as there is an ultimate assessment of 

whether plans are credible or not. 

The Acting Chairman added that Title I started with rulemaking, 

which lays out the framework for implementing Title I 

authorities for resolution plans. The guidance documents provide 

greater detail for implementing the rule. 

Director Hsu posed a question for the Committee with regard to 

resolution issues. He noted the challenge of keeping resolution 

issues from the 2008 crisis in the forefront and not turning 

resolution planning into a paper exercise. Director Hsu asked 

about what can be done to keep this issue front and center, 

especially as new risks arise. 

Member Ervin agreed with Director Hsu that it is difficult to 

keep alive the memories of 2008 and to having the appropriate 

staffing. He suggested that training exercises could help. 

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Member O’Connor suggested keeping the resolution planning cycle 

short and doing playbook exercises. 

The Acting Chairman discussed mobilizing staff in a stress 

environment. He noted some available resources. In the current 

economic environment and uncertain outlook, there is thinking 

about additional staffing needs on both the supervisory and 

resolution sides. 

Ms. Koenig noted the need for training for a potential 

resolution situation and the importance in Europe to train with 

all of the national authorities for a cross border institution. 

She suggested testing and fire drills are the ways to prepare 

together. 

Member Cohn noted that the 2008 crisis still heavily influences 

thoughts and actions. However, it is certain that the next 

crisis will not be a repeat of 2008, but something different. It 

might also happen in a much more accelerated manner than 2008 as 

the world is highly accelerated. 

Member Clayton agreed with Member Cohn and noted that March 2020 

was a little bit of a crisis- but not the same as 2008. He asked 

when was the last time it was all hands on deck for a 

resolution, even as an exercise. 

Mr. Conneely thought that 2020 was an all hands on deck event 

and there have been market and geopolitical events with all 

hands on deck. He explained how the FDIC is ready all of the 

time for a crisis because no one knows when one will happen and 

it could come very fast. 

Member Clayton suggested that it would be interesting to get 

updates on what you wished that you had during the last crisis 

and could be useful the next time. 

Member O’Connor asked about how to horizon scan more effectively 

and how to think about an economy that is more open. He is not 

sure whether the answer is to regulate more or use existing 

powers of the banking agencies to identify and address risks. 

 

Member Cohen reiterated that the FDIC does not have the data for 

nonbank financial institutions, which leaves an information gap 

as the nonbank sector grows. He asked whether FSOC could 

designate nonbank institutions solely for the purpose of 

providing data. 

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November 9, 2022 

The Acting Chairman responded that Member Cohen raised an 

important question and that it is a subject that we’re hoping to 

address. 

Director Chopra noted that there are other ways of getting 

information for nonbank financial institutions, but also that it 

is incredibly difficult to use Title II for one of those 

institutions and not really know what is going on internally. 

Mr. Conneely agreed that it is a difficult situation and the 

authorities are very broad. The decisions will be made at the 

time based on the facts and circumstances, and the parties can 

prepare by having discussions and making sure everyone knows 

their roles. 

Director Hsu described the challenge of preparing for the next 

crisis and not the last one. He said that you need to pick the 

training wisely because of resources and have training that is 

flexible because change is happening so quickly. He noted that 

more creative thinking about this issue is needed. 

The Acting Chairman suggested moving on to the second agenda 

item. 

Session 2: Resolution Planning Update 

Mr. Conneely introduced Ryan Tetrick, Deputy Director, 

Resolution Readiness Branch, CISR; Elizabeth (Betsy) Falloon, 

Senior Advisor, Resolution Readiness Branch, CISR; Susan Baker, 

Corporate Expert, Systemic Risk Branch, CISR, and R. Penfield 

(Pen) Starke, Assistant General Counsel, Resolution & 

Receivership Policy Section, Resolution and Receivership Branch, 

Legal Division, to provide an update and respond to questions 

from members on Title II resolution planning for Global 

Systemically-Important Banks (GSIBs) and the need for greater 

public transparency, along with the challenges and strategic 

options for resolving non-GSIB large banks. 

Ms. Falloon started the session by introducing the topic of 

transparency and explaining how CISR uses Title I plans to 

inform Title II resolution readiness. She also noted how CISR is 

building out its road map for thinking about Title II 

resolution. She emphasized the importance of internal tabletops 

and exercises. She also mentioned the coordination work with 

U.S. financial regulatory agencies and international supervisory 

and resolution authorities. 

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Ms. Falloon continued on the topic of transparency and whether 

the stakeholders understand the resolution planning process. She 

discussed some of the information that is available publicly 

with regard to Title I plans. She noted that there has been 

discussion of Title II issues in various venues but wants to 

know how FDIC can better set expectations and improve confidence 

in the process. 

Ms. Baker continued on the theme of transparency and suggested 

considering which stakeholders need transparency regarding Title 

II resolution. She also noted that there is thinking on what 

messages to convey and when to convey such messages. 

Ms. Baker shared a slide with potential topics for transparency 

and asked the Committee for feedback. 

Ms. Baker continued with a question about the topics that would 

be helpful to put in the public domain now to improve confidence 

and raised questions about the Title II process generally. She 

also asked about how to best set expectations with public 

stakeholders. 

Member Herring voiced appreciation for the FDIC’s desire for 

more public disclosure. However, he was pessimistic about the 

FDIC’s ability to communicate messages to the public because of 

his own experiences. 

Member Herring noted that the public is less interested in the 

details of resolution planning. The strategy should be to 

disclose as much as possible to the professionals. He added that 

the information should generally be available so it can be 

readily accessed. He also noted that the general public does not 

have the patience to absorb all of the elaborate and careful 

planning that has been done. 

Member Cohn agreed with Member Herring and added that the public 

could be scared if so much information is released. He stated 

that the FDIC needs to think about the unintended consequences 

of releasing this kind of information to a general public that 

has confidence in the banking system. 

 

Member Tahyar acknowledged the work done by Ms. Falloon and Ms. 

Baker on this issue. She stated that there is more information 

that can be made public without being scary, and that timing is 

part of the issue. Member Tayhar also noted that transparency 

leads to accountability. 

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November 9, 2022 

Member Tayhar added that now there is an additional group of 

stakeholders that need to know more about resolution planning, 

e.g, fintech nonbank lenders, digital assets, etc. She suggested 

that making more information public is good, but maybe not 

everything. 

Ms. Koenig described her experiences trying to achieve more 

transparency in Europe. She noted that parties need to be 

mindful about timing when making the information public. 

Member O’Connor made suggestions regarding the types of 

communications that would be useful and appropriate. 

Member Ervin noted the need for fast communications and the 

appropriate communications for the various stakeholders. 

Member La Salla commented on the need for accurate information. 

Member Clayton also noted the effect of economic conditions on 

how statements will be treated by the public. 

Member Kohn wondered whether there are market tests that might 

show whether transparency in resolution planning is having an 

effect on the market. 

Director Hsu made further comments about setting expectations 

and making stabilizing statements. 

Member Peterson thought the most stabilizing comments have come 

from the CCAR tests. He noted that information should be geared 

towards professional investors, but also available to anyone. 

Member Ervin made further comments regarding the capital 

markets. 

Member Herring described his experience on the Committee with 

regard to market reactions. 

Mr. Conneely turned the floor over to Mr. Tetrick to discuss the 

resolution of non-GSIB large banks. 

Mr. Tetrick started by acknowledging that this is the first 

discussion of a large bank resolution in the SRAC, and further 

discussed the meaningful steps the FDIC has taken to improve 

resolvability of large banks, including regional banks and 

domestic systemically important banks. Mr. Tetrick further 

discussed how the FDIC handled the failure of the largest 

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insured depository institutions (IDIs) during the global 

financial crisis. 

Mr. Tetrick shared a slide discussing the Federal Deposit 

Insurance Act (FDIA) authority under which IDIs would be 

resolved, including a discussion of the least cost test and the 

Deposit Insurance Fund. 

Mr. Tetrick shared a slide discussing resolution under the FDIA 

authority as it pertains to IDIs with over 100 billion dollars 

in assets, versus IDIs with over 250 billion dollars in assets, 

and the impact of institution size, complexity, and operational 

continuity on resolution, as well as foreign affiliates and 

foreign banking organizations of U.S. IDI subsidiaries. 

Mr. Tetrick shared a slide showcasing the unique challenges from 

a resolution perspective for large banks, as distinguished from 

resolution of both global systemically important banks (G-SIBs) 

under Title II of the Dodd-Frank Act, and the resolution of 

ordinary community banks. The challenges that Mr. Tetrick 

discussed ranged from necessary capital and operational 

resources, loss absorbency, implementation of bridge bank 

strategies, receivership management and the receivership entity 

the FDIC would be responsible for, as well as projections about 

valuations from failure through the course of the bridge period. 

Mr. Tetrick discussed the FDIC’s two resolution specific record 

keeping requirements related to large bank resolution, as well 

as the FDIC’s IDI specific resolution planning requirement. 

Member Mayopoulos commented on the scale of failure and the 

likely cause being a macro event likely to affect multiple 

institutions at once, and asked about the ability to 

collectively coordinate all of that with possible knock-on 

effects. 

Mr. Tetrick responded that the focus is on strategies that 

reduce the resource need of the FDIC, and that there is decision 

making with other authorities to manage failures at multiple 

institutions. Mr. Tetrick further discussed the related 

challenges, and knock-on effects to uninsured depositors. 

Member Ervin commented that additional challenges would include 

the need for acquirers, especially given that interested foreign 

banks may find it more expensive to operate cross border, and 

other legal issues such as existing litigations that may 

accompany an acquisition. 

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November 9, 2022 

Mr. Tetrick responded that the FDIC is looking at opportunities 

to expand the range of scenarios for an acquirer, and will also 

look into legal risk. 

Member Clayton commented that WaMu’s failure happened quickly, 

and there was an option to retain certain liabilities in the 

receivership and pay them pursuant to the priority scheme. 

Member O’Connor commented on how Title I and Title II resolution 

plans for G-SIBs compared to the discussion on large bank 

resolution, and the correlation between bank size and risk. 

Member O’Connor further commented on being careful of bailouts 

and moral hazards. 

Member Tahyar commented on the ANPR, and being carefully 

balanced in the imposition of long term debt in a rising 

interest rate environment. Member Tahyar further discussed 

consideration of uninsured deposits being brokered deposits, or 

a small business payroll, and suggested careful thinking around 

the ANPR. 

Ms. Koenig commented on what makes a successful resolution, and 

finding a qualified buyer and timing. Ms. Koenig further 

discussed increasing optionality without jeopardizing the firm. 

Member Ervin commented on the differences in Europe and UK with 

respect to MREL, and internalizing an externality and cost of 

dealing with a contingency. 

Member Tahyar commented on the tool of contingent capital and 

the effect of it being a tax blocker. 

Member Herring commented on the prior GSIB scores of all of the 

major U.S. banks, and how they indicated that these institutions 

were different. 

Mr. Tetrick commented on systemic risk and how it depends on the 

scenario. Mr. Tetrick also shared a slide discussing outlining 

the three strategic options for a large bank resolution, and 

that the focus would be on the second option, a bridge bank, as 

opposed to a sale to a third party acquirer or liquidation. Mr. 

Tetrick further discussed deposits passing in a bridge, the 

least cost test, and franchise value. Mr. Tetrick also discussed 

bridge strategy, including ways to exit from the bridge and 

timing. 

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Mr. Tetrick shared a slide discussing some of the things the 

FDIC is doing to enhance large bank resolvability, including the 

IDI resolution planning process, joint feedback with the Federal 

Reserve to provide guidance to some of the largest banks that 

file Title I resolution plans, and the ANPR on long-term debt. 

Member Ervin asked whether there was a dividing line in terms of 

the systemic risk scores, and expressed concern of the 

continuity to the U.S. banking system. Member Ervin further 

elaborated that U.S. G-SIBs have remained the same since 

designated, and that other banks have stayed within their 

buckets, and that there may be instances where the system could 

work smoother and provide optionality amongst banks that are 

similar in size but that fall in separate buckets. 

Member Peterson commented that there are other considerations in 

addition to size. 

Mr. Tetrick commented that some regional banks are larger than 

some G-SIBs based on scores and sizes, and that consideration is 

also given to complexity of the activities and cross border 

activity. 

Member Peterson commented that size is only one-fifth of the G6. 

At the conclusion of this discussion, the meeting stood in 

recess from 11:14 a.m. to 11:26 a.m. 

Session 3: Central Counterparty Resolution Challenges 

Mr. Conneely recognized Jennifer Traille, Associate Director, 

Systemic Risk Branch, CISR, and Sir Jon Cunliffe, Deputy 

Governor for Financial Stability, Bank of England and Chair of 

the BIS Committee on Payments and Market Infrastructure (CPMI), 

to provide an overview of the challenges associated with the 

resolution of Central Counterparties (CCPs). 

Ms. Traille started the session by revisiting the topic of CCP 

resolution under Title II that was discussed in the last SRAC 

meeting in 2020. Ms. Traille continued by stating the focus 

would be on key challenges faced domestically in thinking about 

resolving one of these institutions, and highlighted the ongoing 

work that the FDIC is involved in internationally to address 

some common challenges across authorities and jurisdictions. 

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Ms. Traille discussed the first challenge of CCP resolution 

being a lack of resources that are available to support a CCP 

resolution. Ms. Traille further discussed that the FDIC has 

authority to use the tools and resources within the CCP’s rule 

book in Title II, however their application or availability 

would be weighed against financial stability consequences. Ms. 

Traille further elaborated that unlike SPOE for G-SIBs, CCPs do 

not have financial resources available to absorb loses and 

recapitalize a firm to ensure operational continuity of critical 

functions for the market during a resolution. 

Ms. Traille discussed the second challenge of CCP resolution 

being the lack of a requirement for CCPs to file resolution 

plans with the FDIC, and how this is contrasted to G-SIBs that 

are required to file resolution plans under Title I. Ms. Traille 

elaborated that the resolution plans have not only greatly 

informed the FDIC’s resolution planning and resolution readiness 

under Title II along with firm engagement and capabilities 

testing, but have also been beneficial to the firms in 

developing capabilities that have proven useful both in business 

as usual and in stress. 

Ms. Traille discussed the third challenge of CCP resolution 

being that the FDIC does not benefit from a direct resolution 

engagement with CCPs given that the FDIC relies on the 

supervisory authorities of other U.S. regulatory counterparts. 

Ms. Traille further elaborated that this informs the FDIC’s 

understanding of CCP resolvability, and prohibits the FDIC from 

directly removing the barriers to CCP resolution, or proactively 

enhancing the resolvability of the CCPs. Ms. Traille continued 

that the FDIC has worked with U.S. regulatory counterparts and 

within the FDIC’s existing authorities to make progress in Title 

II resolution planning, better understanding the supervisory 

monitoring and actions during business as usual, and to develop 

ex-ante frameworks and legal documents to support resolution 

planning. 

Ms. Traille shared a slide discussing the FDIC’s involvement on 

the international front to further progress in CCP resolution. 

Ms. Traille discussed the FDIC’s participation in international 

standard setting bodies, as well as the FDIC’s direct engagement 

with foreign supervisory and resolution authorities through 

bilateral and multilateral workstreams. Ms. Traille discussed 

the role of the Financial Stability Board (FSB), and the FDIC’s 

involvement with the FSB including Acting Chairman Gruenberg’s 

chairing the FSB’s resolution steering group and Art Murton cochairing the working group on FMI cross border crisis 

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management. Ms. Traille further discussed the FSB’s series of 

joint workshops over the last two years with the Committee on 

Payments and Market Infrastructure (CPMI), the International 

Organization of Securities Commissions (IOSCO), and the Basel 

Committee on Banking Supervision (BCBS). Ms. Traille also 

discussed the FSB guidance of November 2020 that laid out a 

framework for authorities with respect to supporting an orderly 

resolution, which led to further work by the chairs of the FSB, 

CPMI, and IOSCO on financial resources for both recovery and 

resolution. Ms. Traille further discussed that there was a 

report published in March 2022 that was part of an effort to 

determine future policy work on the subject. 

Ms. Traille highlighted other venues in which the FDIC works 

with foreign counterparts on CCP resolution, including U.S.-UK 

principal level engagement among the Bank of England, Board of 

Governors of the Federal Reserve System (FRB), the U.S. 

Securities and Exchange Commission (SEC), the Commodity Futures 

Trading Commission (CFTC), and the FDIC. Ms. Traille also 

discussed the FDIC’s role in hosting crisis management groups 

jointly with the CFTC and SEC for the three U.S. CCPs, in which 

both U.S. and foreign regulatory authorities participate, and 

how these meetings are valuable to understand shared challenges, 

share approaches and progress, and to try to identify improved 

resolution options. 

The Acting Chairman thanked Ms. Traille for laying out the 

background and context before turning to the guest speaker, Sir 

Jon Cunliffe. Mr. Gruenberg provided an introduction of Mr. 

Cunliffe, the Deputy Governor of the Bank of England for 

financial stability, and discussed the collaborative work on 

resolution issues done with Mr. Cunliffe in the past. 

Mr. Cunliffe started the session with a description of what he 

does as Deputy Governor for Financial Stability, including his 

micro-prudential and macro-prudential responsibilities for CCPs, 

settlement systems, and payment systems for supervision and 

regulation. Mr. Cunliffe stated that he will speak from the 

perspective of the FSOC from a financial stability perspective, 

and the CFTC and the SEC and CCP regulator perspective. Mr. 

Cunliffe stated that he would set out why effective regimes are 

needed to deal with CCP failures, why CCPs are different than 

banks, and the risks they take and how they manage them, and 

what the UK regime will do. 

Mr. Cunliffe discussed CCP’s role, and what makes them systemic. 

Mr. Cunliffe further discussed that the mandate of CCPs for some 

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key financial derivatives following the great financial crisis 

have made them more systemic globally. Mr. Cunliffe discussed 

the role of CCPs in commodity markets and in hedging and forward 

contracts. 

Mr. Cunliffe continued that given the CCPs are not banks, and 

role they play, the design of any resolution framework needs to 

reflect some of the essential differences. The first difference 

Mr. Cunliffe discussed is that the risks that CCPs run are very 

different than the risks in banks. Mr. Cunliffe elaborated that 

the two risks CCPs face are essentially counterparty credit 

risk, and operational risk of some sort of operational failure. 

Mr. Cunliffe discussed counterparty credit risks, describing 

that CCPs would need to be able to absorb loses to restore 

matchbook, by both using the prepositioned resources of the 

defaulting members, and effectively passing losses with limits 

back to their clearing members through both a default fund and 

making cash calls. Mr. Cunliffe explained that unlike banks, 

CCPs cannot go bankrupt with respect to default losses. 

Mr. Cunliffe discussed non-default operational losses, such as 

fraud, cyber, or investment losses. Mr. Cunliffe elaborated that 

CCPs generally have no power to pass those losses on to members, 

and that they have to be absorbed by CCP capital, which could 

ultimately lead to CCP insolvency. 

Mr. Cunliffe discussed how resolution should address the two 

risks discussed, and that even with respect to default losses, 

the CCP rule book allows for an effective wind down of the CCP 

without bankruptcy. Mr. Cunliffe discussed the impact on 

financial markets if clearing services are lost, and the 

recovery action choices of CCP management. 

Mr. Cunliffe discussed the importance of the resolution 

authority taking control prior to the exhaustion of CCP recovery 

actions, so that the resolution authority is able to use the CCP 

recovery tools flexibly. Mr. Cunliffe further discussed the need 

for additional resolution tools for the resolution authority, as 

well as a resolution plan. 

Mr. Cunliffe discussed the current UK regime with respect to CCP 

resolution, and what the legislation that is now going through 

Parliament will grant to the UK regime, such as extra powers 

that do not currently exist in some of the CCP rule books. 

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Mr. Cunliffe raised the question, for default losses, is there a 

need for extra pre-funded resources in recovery or resolution to 

supplement what already exists. Mr. Cunliffe raised two reasons 

why an increase in the pre-funded resources in the CCP may be 

beneficial. Mr. Cunliffe discussed the first reason being the 

question of incentives, as CCP equity is not going to be written 

down, and therefore it is important for CCPs to have skin in the 

game. Mr. Cunliffe further elaborated that the key objective is 

to ensure that the incentives are sufficient and rightly placed 

to avoid resolution by incentivizing CCP management. 

Mr. Cunliffe discussed the second reason of why an increase in 

pre-funded resources in the CCP may be beneficial as being to 

ensure that there are enough resources in resolution so that the 

CCP does not have to rely on cash calls, haircutting the 

variation margin, or in the later stages tear up contracts once 

the resolution authority comes in. Mr. Cunliffe further 

elaborated on an option to raise extra resources for the CCP by 

issuing bailout bonds, and why that may be preferably to cash 

calls and the cutting of margin and other tools. 

Mr. Cunliffe continued that this complex debate would be 

informed by the first stage of the international work which 

looked at pre-funded and non-prefunded resources in a number of 

systemic CCP’s ability to absorb loses in recovery and 

resolution. Mr. Cunliffe elaborated that the work had suggested 

that the systemic CCPs could absorb failure of up to four of 

their largest clearing members, above the international standard 

of two large clearing members. Mr. Cunliffe further explained 

that the cash calls would be within the capacity of the 

remaining clearing members which tend to be the larger financial 

institutions, and if they resist these cash calls they would 

effectively be in default, which is unlikely. 

Mr. Cunliffe continued that if three or four of the largest 

clearing members fail, that this would impact not just one CCP, 

but across the board and across the financial system. Mr. 

Cunliffe further discussed that if two to four G-SIBs also 

failed, the resolution would enable those members to continue to 

meet their obligations to a CCP without default. Mr. Cunliffe 

stated that in the end, it is a question of how far into the 

tale of risk distribution should be explored with protection, 

and do the costs outweigh the benefits. 

Mr. Cunliffe discussed an example of if CCP issued bonds were to 

equal the default bonds, the CCP would have a full reload in 

resolution, however the annual coupon of the issued bonds could 

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be equal or greater than the CCP’s capital. Mr. Cunliffe 

discussed that these costs would likely be passed back to the 

CCP users. Mr. Cunliffe stated that the benefits would need to 

be measured against the costs. Mr. Cunliffe further discussed 

that in some circumstances, a reservoir of pre-funded resources 

that can be accessed only in resolution might be necessary to 

enable CCP clearing services to continue to operate. 

Mr. Cunliffe discussed non-default losses, and that the capital 

to absorb these losses is limited, and so the resolution 

authority would need access to other resources separate from the 

waterfall. Mr. Cunliffe further discussed that in the UK, new 

powers are being considered by Parliament that would allow the 

resolution authority to make a cash call in order to absorb nondefault losses or recapitalize the CCP. Mr. Cunliffe further 

discussed the importance of a resolution authority having access 

to some resources to keep the clearing service in operation. 

Mr. Cunliffe concluded that the CPMI-IOSCO standards are for the 

operation of CCPs, and do not include resolution. Mr. Cunliffe 

elaborated the need to think about recovery and whether CCPs 

should have better options to deal with non-default losses. 

The Acting Chairman thanked Mr. Cunliffe for the lucid 

presentation on a pretty complicated subject, and asked if there 

were questions from members of the committee. 

Mr. Herring thanked Mr. Cunliffe for the terrific overview, and 

stated that in a bank resolution, there is hope to have a 

resolution weekend. Mr. Herring asked how the shorter time for 

action will be dealt with given that with a CCP there is almost 

no time to intervene and try to take control of the situation to 

keep it from deteriorating quickly. 

Mr. Cunliffe responded that this was a real challenge, and in 

circumstances in which two clearing members have defaulted there 

would be a situation of general stress given very fast moving 

markets. Mr. Cunliffe stated that there is a case for the 

resolution authority to be closely involved with the business of 

the CCP, as well as to have close cooperation with the CCP 

supervisors. Mr. Cunliffe also stated that the resolution plan 

has to have stabilization. 

Mr. Cunliffe discussed past defaults, and how CCPs were able to 

go through the default waterfall quickly, such as in the case 

with Lehman Brothers. Mr. Cunliffe continued that the UK will do 

some dry runs and resolution testing. 

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November 9, 2022 

Member Ervin thanked Mr. Cunliffe on a terrific presentation on 

a tough subject. Member Ervin asked whether minimum initial 

margins could be a solution if there are different types of 

waterfalls, and if equity is not being wiped out, how would 

incentives align of the CCP towards systemically positive 

events, and how would alignment be improved going forward. 

Mr. Cunliffe discussed the need to look at the responsiveness of 

CCP margins to shocks, and whether there should be a calling of 

margin more prudently in good times or normal times so that the 

jump to stress margin is not so great in their terms. Mr. 

Cunliffe further discussed the interest in looking at the 

responsiveness of CCP margin models, and the hope to receive 

views on how to measure pro-cyclicality of margin and stress, 

which is what will cause default. 

Mr. Cunliffe discussed the problem with equity if the CCP is 

subject to no creditor worse off protection, and if the CCP’s 

rule book states that the CCP can make unlimited calls on its 

members and then wind itself and still preserve equity. Mr. 

Cunliffe continued that this cannot be squared with writing down 

the equity and resolution with a no creditor worse off 

guarantee, and stated that consideration would be given to 

whether the no credit worse off guarantee should offer that 

level of protection to shareholders in terms of incentives. 

Member O’Connor inquired how the non-default losses and the 

resolution authority having the ability to make a cash call were 

being considered given that the risks occurring are solely 

brought on board by the CCP management. Member O’Connor further 

added that the discussion is about de-neutralizing CCPs, not 

neutralizing CCPs, and questioned the backstop of doing a cash 

call of clearing members that have no engagement in the CCP’s 

risk management. 

Mr. Cunliffe responded that whether pre-funded resources or a 

cash call, there is a clearing obligation and mandate on the 

services, and that the costs are going to be passed back to 

users. Mr. Cunliffe further explained that if non-default losses 

wipe out CCP equity, there would be an incentive effect, and 

members would need the clearing services to continue. Mr. 

Cunliffe stated that public sector support would likely want to 

be avoided. 

Mr. Cunliffe continued in discussing that members would own the 

clearing services in the event there was a resolution where a 

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CCP’s capital is wiped out by members, the losses are absorbed 

by the cash call, and the CCP is recapitalized by the cash call. 

Mr. Cunliffe discussed that the more members are exposed to 

these risks, the more they will demand, and there needs to be 

more involvement in risk management and an understanding of 

CCPs’ expectations. 

Mr. Cunliffe discussed how CCPs have informed regulators that 

there is pressure from their members to charge less margin, and 

to reduce the costs of failing all the time. Mr. Cunliffe 

further discussed that clearing members at senior levels are 

worried about the CCPs’ risks and not having influence over 

CCPs. 

Member O’Connor asked if, with respect to up front resources, 

and inclusive of bail-in-able debt, this was really the 

preferred recapitalization mechanism because it moves from a 

demutualized to a mutualized model. Member O’Connor further 

inquired why is the collective having a hard time if everyone 

says they want more pre-funded, more TLAC, and better 

collateral. 

Mr. Cunliffe responded that there are reports that CCP clearing 

members are under pressure to complete a margin because the 

clearing members will go to the cheaper action, and pre-funded 

resources costs money, and such costs are going to come back to 

members. Mr. Cunliffe discussed the need for more transparency 

around margin models and their pro-cyclicality, how they will 

react in stress so clearing members may plan for it, and metrics 

so that clearing members have a view on whether they want to use 

CCPs with more or less pro-cyclical models. Mr. Cunliffe also 

discussed the need for regulators to think about whether to 

adopt a prefunded approach, or whether there should be a use of 

margin models that attune between pre-stress and stress. 

Member O’Connor responded that he agreed with Mr. Cunliffe, and 

would suggest that clearing members raise certain issues that 

are related to risk, whether it’s margin or collateral, or 

things of that nature. Member O’Connor further stated that there 

is a need for transparency so that regulators can be helpful in 

understanding the risks that are coming on board. 

Mr. Cunliffe responded that he agreed with Mr. O’Connor, and 

discussed the need for regulators to have the power to be able 

to make those decisions, and that different jurisdictions have 

regulators who have different powers for the approval or not of 

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November 9, 2022 

new clearing products. Mr. Cunliffe concluded that he thinks 

there is a need for more options in the future. 

The Acting Chairman thanked Mr. Cunliffe for his superb overview 

of an important issue, and this will be an ongoing issue and 

matter of attention for the FDIC and will be brought back to 

committee as well. 

Mr. Cunliffe thanked the Acting Chairman for the information and 

for taking on the international work, as these are basically 

global infrastructures that the regulators need to manage. 

Member Reed discussed the contrast between the Bank of England 

work on CCP’s and the procedural progress being made in the 

U.S., and asked whether the U.S. regulators have the capability 

to deal in a timely manner with a CCP serious trouble. 

The Acting Chairman stated that he would be glad to respond, but 

will give Ms. Traille the first response. 

Ms. Traille responded that a number of the challenges had been 

highlighted during the session, including the likelihood that 

runways would be short. Ms. Traille continued that the FDIC 

would need to look at the existing planning, and its existing 

authorities and tools. Ms. Traille also mentioned procedure, and 

how the FDIC works with supervisors and other authorities to 

build its understanding and information. Ms. Traille mentioned 

the work on planning for individual firms, and the 

acknowledgement that there are challenges and more work to be 

done, such as planning to operationalize the strategy to 

preserve the CCP’s critical operations for the market. 

The Acting Chairman discussed the gap on the resolution side 

relating to non-bank financial companies, and that Dodd-Frank 

put in place a coherent framework of authorities for agencies to 

deal with the resolution of a global systemic banking 

organization through the Title II orderly liquidation fund 

backstop, and Title I resolution plans. The Acting Chairman 

further discussed the progress made domestically and 

internationally on TLAC additional loss absorbing resources, as 

well as in terms of cross border cooperation in light of both 

Ms. Koenig’s and Mr. Cunliffe’s presence at the meeting. 

The Acting Chairman continued that a fairly credible framework 

has been built that has not been tested or executed yet in 

practice, and that until it is, caution must be exercised with 

respect to making representations. The Acting Chairman further 

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discussed the authorities, capabilities, and resources across 

international relationships that did not exist prior to 2008, 

that put the FDIC in a different place. 

The Acting Chairman stated that the FDIC would bring the default 

Title II authorities to bear for a systemic firm failure, 

whether it’s for a bank or nonbank, but that supervision 

responsibilities are in the market regulators. The Acting 

Chairman discussed the future work to do in both the U.S. and 

the international side, and that putting in place the framework 

and infrastructure on the nonbank side should probably be where 

attention and priority is place in a post-crisis world. 

Member Clayton commented that he agreed with the Acting 

Chairman, and that the members of the CCPs are the entities that 

are being looked at, and therefore CCP resolution cannot be 

considered in isolation from resolution of financial 

institutions because they are going to happen at the same time. 

Member O’Connor commented on the good news that in most 

financial institutions resolution recovery plans, their largest 

counterparty exposures are included. Member O’Connor discussed 

ways in which the model may become less stable from the 

centralized approach, and restrictions of clearing members 

versus end users. Member O’Connor further discussed variation 

margin haircutting, and the equivalent in the bank recovery and 

resolution plan space versus the CCP space. Member O’Connor 

concluded that this really important work should continue. 

The Acting Chairman asked if there was anything else for today’s 

meeting. 

Closing Remarks 

 Following the presentations and all of the related 

discussion, Acting Chairman Gruenberg thanked the members for 

participating in the meeting and for their very helpful 

feedback. He expressed that he is looking forward to meeting 

with the Committee again next year. 

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November 9, 2022 

 There being no further business, the meeting was adjourned 

at 12:33 p.m. 

 _________________________________ 

 Debra A. Decker 

 Executive Secretary 

and Committee Management Officer 

Federal Deposit Insurance Corporation 

 FDIC Systemic Resolution Advisory 

 Committee

176
Minutes

of

The Meeting of the Systemic Resolution Advisory Committee

of the

Federal Deposit Insurance Corporation

Held in the Board Room

Federal Deposit Insurance Corporation Building

Washington, D.C.

Open to Public Observation via Webcast

November 9, 2022 – 9:00 A.M.

I hereby certify that, to the best of my knowledge, the attached minutes are accurate and 

complete.

________________________________

Martin J. Gruenberg

Chairman

Board of Directors

Federal Deposit Insurance Corporation