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FEDERAL DEPOSIT INSURANCE CORPORATION

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SYSTEMIC RESOLUTION ADVISORY COMMITTEE

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MEETING

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THURSDAY,

APRIL 14, 2016

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

in the Federal Deposit Insurance Corporation

Board Room, 550 17th Street, N.W., Room 6010,

Washington, D.C., Martin J. Gruenberg, Chairman,

presiding.

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PRESENT:

MARTIN J. GRUENBERG, Chairman

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

 of Finance and Economics, Graduate 

 School of Business, Stanford 

 University

CHARLES A. BOWSHER, Former Comptroller General of 

 the United States

MICHAEL BRADFIELD, Former General Counsel, FDIC 

 and Federal Reserve Board

H. RODGIN COHEN, Senior Chairman, Sullivan & 

 Cromwell, LLP

THOMAS J. CURRY, Comptroller of the 

 Currency

WILLIAM H. DONALDSON, Former Chairman, U.S. 

 Securities and Exchange Commission (SEC)

PETER R. FISHER, Senior Fellow, Center for Global 

 Business and Government at the Tuck School 

 of Business at Dartmouth University

RICHARD J. HERRING, Co-Director, The Wharton 

 Financial Institutions Center and Professor 

 of Finance, The Wharton School, University 

 of Pennsylvania

THOMAS H. JACKSON, Distinguished University 

 Professor and President Emeritus, Simon 

 Graduate School of Business, University of 

 Rochester

SIMON JOHNSON, Ronald A. Kurtz Professor of 

 Entrepreneurship, Massachusetts Institute of 

 Technology, Sloan School of Management

DONALD KOHN, Former Vice Chairman, Board of 

 Governors of the Federal Reserve System and 

 Senior Fellow, Economic Studies Program, 

 Brookings Institution

DOUGLAS L. PETERSON, President and Chief 

 Executive Officer, McGraw Hill Financial

JOHN S. REED, Former Chairman and CEO of 

 Citigroup and Former Chairman, Corporation 

 of Massachusetts Institute of Technology

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

Call to Order, Welcome, and Introduction 5

 Martin Gruenberg

Title I Living Wills Updates . . . . . . . . . . . 8

Break

Title II Orderly Liquidation Update. . . . . . . 169

Lunch

Developments in the European Union . . . . . . . 229

Guest Speaker: Elke Konig, Chair,

Single Resolution Board

European Union

Closing and Adjourn. . . . . . . . . . . . . . . 274

 Martin Gruenberg

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

2 9:06 a.m.

3 CHAIRMAN GRUENBERG: Good morning,

4 everybody. You know, timing is everything.

5 (Laughter.)

6 So, we want to welcome you to this

7 meeting of our Systemic Resolution Advisory

8 Committee. I think we have an exceptionally9 interesting program to go through today. I think

10 the work we are doing, the FDIC is doing, in

11 regard to help the living will authority under

12 Title I of Dodd-Frank, as well as the orderly

13 liquidation authority under Title II of Dodd14 Frank, is really quite exceptional and moving the

15 ball forward on this broad issue, like the

16 resolution of systemically-important financial

17 institutions.

18 I will keep my remarks very brief and

19 just walk through the agenda for today. First,

20 we are going to have a presentation of the

21 results of the living will review that were just

22 announced yesterday, actually, by the FDIC and

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1 Federal Reserve.

2 Then we will walk through both the

3 results of the review and the process by which

4 the outcomes were reached and which we think very

5 important. A particular effort was made, if I

6 may say, and as I hope will become apparent, that

7 we made a real effort in regard to transparency

8 relating to this process, to explain clearly how

9 the results were arrived at and the basis for the

10 results.

11 So, the staff, which has really done,

12 I think, extraordinary work here, will walk you

13 through it and will very much welcome your

14 questions, reactions, and input on the work which

15 has been done.

16 And then, following that, we will have

17 a presentation on the work we have been engaged

18 in relating to the orderly liquidation authority

19 under Title II of the Dodd-Frank Act. We will go

20 over some of the internal operational exercises

21 we have been undertaking to develop increased

22 capability for us to execute our authorities

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1 under Title II, discuss some of the important

2 cross-border work we have been doing with the key

3 foreign jurisdictions in regard to resolution

4 planning and outline the further development in

5 our thinking relating to our public resolution

6 authorities, the orderly liquidation authority

7 under Title II.

8 And then, after lunch, we will be very

9 fortunate to have with us Elke Konig who, as you

10 know, is the Chair of the new Single Resolution

11 Board for the European Banking Union. The SRB,

12 as it is called, is a new creation of the

13 European Union. It spent last year in a setup

14 phase in which the FDIC made a particular effort

15 to provide support. We have already developed a

16 very close working relationship with the SRB. 

17 They actually opened their doors for business on

18 January 1. And we are really fortunate to have

19 Elke with us here this afternoon to talk about

20 the important work that she and her Board are

21 undertaking.

22 So, I think this will be an

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1 interesting and informative day. During the

2 course of it, we will welcome your questions and

3 input on the work that is being done.

4 I am very pleased that Comptroller

5 Curry could be here today to take part in this

6 meeting.

7 And if there are no other comments or

8 questions to open the program, I will turn it

9 over to Art Murton, the Director of our Office of

10 Complex Financial Institutions, to begin the

11 presentations.

12 MR. MURTON: Great. Thank you.

13 So, this first panel is going to focus

14 on the work we just released on the resolution

15 plans. I am joined here by Brent Hoyer, Rick

16 Delfin, and David Wall. These are the people who

17 led that work.

18 What I want to do, before I turn it

19 over to them, is just sort of account how we got

20 to this point, starting with what the

21 requirements are under the Dodd-Frank Act,

22 Section 165(d) of Title I of the Dodd-Frank Act.

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1 What that does is require that firms

2 submit plans that show that there could be a

3 rapid and orderly liquidation of the plan under

4 the Bankruptcy Code. This is a joint authority

5 between the Federal Reserve and the FDIC. After

6 receiving the plans, the agencies may determine

7 that the plan is not credible or would not

8 facilitate orderly resolution under the

9 Bankruptcy Code. If both agencies make such a

10 determination, they are required to issue a

11 Notice of Deficiencies to the firm. This

12 indicates what the weaknesses of the plan were,

13 and the firm is given an opportunity to respond

14 to that Notice of Deficiencies.

15 If that response is inadequate, the

16 agencies may, again, jointly determine that

17 further actions are necessary, such as higher

18 requirements for capital and liquidity or

19 restrictions on operations or activities or

20 growth. If that set of measures proves to be

21 inadequate after two years, the final stage is

22 that the agencies could jointly, again, require

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1 divestiture of assets or operations.

2 So, that is the framework that the

3 statute laid out. We will talk about our recent

4 findings and where we are with respect to

5 different firms.

6 But I want to go back and just, again,

7 review how we got here. After the law was

8 enacted, the agencies in 2011 issued a joint rule

9 laying out the process and what we were looking

10 for. We asked that in their plans, the first

11 plans, that the firms describe their structure,

12 their operations, their interconnectedness,

13 describe their strategy for resolution, and also

14 required that the plans have a public portion

15 that would be available.

16 The firms submitted their first plans

17 in 2012. And the agencies did not review those

18 plans under the standard. We were taking them in

19 and, basically, forming our view of the next

20 steps.

21 In 2013, in the spring of 2013, the

22 agencies jointly released public guidance to the

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1 firms for their next submissions. In that

2 guidance, the meat of that was that the agencies

3 identified five obstacles to orderly resolution

4 under the Bankruptcy Code. Those obstacles were

5 capital and liquidity, global cooperation,

6 counterparty actions, continuity of operations,

7 and the possibility of multiple competing

8 insolvencies.

9 So, the firms were asked in their next

10 plans to address those obstacles. We received

11 those plans in October of 2013. We reviewed

12 them, and in August of 2014, we released the

13 findings. I think it was this Committee last met

14 in December of 2014. So, it was not long after

15 the review was made public.

16 In the review, the findings of the

17 agencies were that the firms tried to overcome

18 those obstacles, largely by relying on what we

19 viewed an unrealistic assumptions, and that they

20 failed to make or even identify the changes that

21 would facilitate an orderly resolution under

22 bankruptcy.

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1 And so, the letters to the firms of

2 August of 2014 indicated that the firms had to

3 act on five different action areas, including

4 legal entity rationalization, aligning legal

5 entities with business lines; having a holding

6 company structure that facilitates resolution;

7 thirdly, amending financial contracts to avoid

8 the early termination of these contracts that

9 caused such disruption in 2008, and the ability

10 to continue to shared services that provide

11 support-critical operations. And then, finally,

12 having information systems that would facilitate

13 resolution.

14 So, that is what we asked of the

15 firms, indicated that they needed to make

16 demonstrable progress in their next plans on

17 those fronts, and, also, asked for improvements

18 in their public plans. I think it was generally

19 viewed that the public plans portions up to that

20 point had not been very complete or fulsome.

21 I should also mention that in the

22 fall, later in the fall of 2014, we made a

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1 finding on the plan of Wells Fargo, one firm. I

2 should step back a minute and just say that, in

3 August, the FDIC Board made the determination

4 under the statute that the plans were not

5 credible or would not facilitate resolution. Our

6 Board made that finding, but it wasn't a joint

7 finding.

8 In the fall, our Board did not make

9 such a finding for the Wells Fargo plan and

10 indicated that it formed the basis, which it

11 further developed, to provide for orderly

12 resolution.

13 So, we also promised in the letters

14 more engagement with the firms in the process. I

15 think it was fair to say that, up until August

16 2014, the engagement between the agencies and the

17 firms had been less than ideal, and we committed

18 to heightened engagement. I think it is fair to

19 say that that took place. We had multiple

20 meetings with the firms, I would say dozens and

21 dozens in some cases with various firms.

22 We also allowed them to preview their

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1 submissions at the end of 2014. In February, we

2 issued staff guidance, further guidance to the

3 firms. So, we think there was much more

4 engagement with them.

5 Then, the plans came in in July of

6 2015. That is what we are about to talk about. 

7 But, as I had said, we had asked for a more

8 fulsome public portion of the plans. I think, if

9 you will recall, at the last Committee meeting

10 this Committee discussed that. Dick Herring made

11 a presentation on that. And so, we received

12 those public plans.

13 I think I would like to ask Dick his

14 view of it. I just would mention that we asked

15 the firms to provide more information about their

16 structure, indicate their strategy and the steps

17 that they had taken to improve resolvability,

18 and, also, what they pictured the firm looking

19 like as it exited resolution.

20 MEMBER KOHN: Art, could you say

21 something about how this works with the Federal

22 Reserve? So, are these meetings joint between

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1 the Fed and the FDIC?

2 MR. MURTON: In almost all cases they

3 were, yes. I think it is fair to say there has

4 been active involvement and engagement between

5 the agencies on that.

6 MR. HOYER: Yes, maybe just a little

7 more detail on that, and we will get into the

8 review process in a little while.

9 But, to Art's point, after the 2014

10 communication that both Boards voted on, we

11 communicated to all of the firms that we wanted

12 to actively engage at whatever level they wanted

13 to. And so, it was really kind of up to the

14 firms to reach out to us and set that up.

15 The majority of those were joint, so

16 that you could ensure that a common message was

17 sent. Obviously, there are times where we have

18 individual meetings, and so on. But I want to

19 separate the interim process of between 2014 and

20 the July submission. In the July submission we

21 will talk about how the review process worked

22 there, which is collaborative as well.

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1 But think of it as a mix, but at all

2 occasions we have continuous weekly, if not more

3 frequent, meetings with our Fed counterparts

4 throughout the entire cycle.

5 MR. MURTON: Yes, yes. Yes. And so,

6 on the public plans, I think two things. I will

7 just make two observations before I turn it over

8 to Dick.

9 I think it showed that the majority of

10 the firms chose a strategy that looks similar to

11 what we call our single-point-of-entry strategy. 

12 They attempted this, something like this, under

13 bankruptcy.

14 Also, the public plans indicated that

15 the firms coming out resolution looked

16 significantly different from what entered the

17 bankruptcy proceedings, smaller spinoffs and a

18 much smaller organization.

19 So, with that, I would ask Dick to let

20 us know how we did.

21 (Laughter.)

22 MEMBER HERRING: Everybody has had

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1 access to them. I really don't like talking

2 about the public plans, which I have been

3 following with particular interest because I have

4 been curious about what really is going on. This

5 is a window, and I would also add it is a unique

6 window.

7 It is something we don't see about

8 foreign banks. But the U.S. regulators, although

9 I wish they were still little more transparent,

10 by the way, there is nothing we really know about

11 what is going on with living will processes in

12 other countries.

13 The public sections of the living

14 wills that we saw in July last year were

15 dramatically better in some respects. I can give

16 you both a half-full and a half-empty response. 

17 But the half-full response is that there was

18 certainly more quantity. Many of the submissions

19 were at least three times as long as they had

20 been before. Now that itself is not a hallmark

21 of improved disclosure, but they really did have

22 qualitatively more substantive, more responsive

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1 disclosures.

2 We did have a good sense of the

3 resolution strategy. They were much more clear

4 about structure. They had, I think, a better

5 description of the organizational structure. But

6 -- and here is where I wish for still more -- we

7 really are lacking some details that would enable

8 us to see how particular institutions have

9 progressed over time and how they look relative

10 to each other. The problem is we don't have a

11 standardized quantitative measure.

12 Let me just give you an example of

13 something that I looked up last night, which is a

14 very simple fix that could be made. I am not

15 quite clear why it isn't.

16 But, if you look at JPMorgan Chase --

17 and I am not picking on them; it is just they are

18 top of the list I looked at -- I looked up last

19 night what the Fed and the National Information

20 Center says is their full set of entities. The

21 number of 5,280. If you look at their SEC

22 filing, there are 42 entities. If you look at

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1 their living will filing, there are 25 material

2 entities.

3 This raises real questions about well4 aligned their legal structure is with their

5 business structure. I suspect that a lot of this

6 is unnecessary. What I would like to see in a

7 future document would be taking the National

8 Information Center data, which are the best

9 public data we have got, and reconciling them to

10 what goes into the living will report.

11 I am sure that a huge number of the

12 5,280 legal entities are simply irrelevant. But

13 it would be very simple to have a reconciliation

14 in which the bank simply listed the entities that

15 would pose no threat to an orderly resolution and

16 why, and perhaps maybe have three or four

17 different categories that they fall into.

18 And if we had the satisfaction that

19 they were adding up, you would have a lot more

20 confidence in the identification method. 

21 Moreover, you would be able to tell what was

22 happening over time. Have we actually whittled

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1 it down? Are we getting a better integration of

2 legal and business structures?

3 So far, we really can't tell because

4 the definition of material entity is not really

5 standardized, and companies seem to change over

6 time with what they regard as a material entity. 

7 Some of the things that we raised questions about

8 on the first-round filings have now shown up as

9 material entities. They weren't before, but we

10 are not quite sure what happened with the

11 transition. We could have a lot more clarity in

12 the process.

13 And I guess one other thing I would

14 mention is that, as I understand it, the agencies

15 did provide guidance for improving the living

16 wills. I think that is very commendable. I am

17 pleased they are doing it. But I think that

18 should be publicly released. I can't imagine it

19 has any proprietary information in it, but it

20 would enhance the transparency of the whole

21 process for us to know what the dialog is like.

22 I really there are enormous gains to

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1 be made both by the agencies and the banks in

2 improving the transparency of the process. I do

3 believe a lot of progress has been made, but it

4 is difficult to sort it out in the available

5 data.

6 MR. MURTON: Okay. Thank you. 

7 Thanks.

8 I will take a glass half-full right

9 now at this point.

10 (Laughter.)

11 MR. DELFIN: Briefly, as Dick pointed

12 out, we hadn't in the past put out specific

13 guidance, but I think in your binders you will

14 note that part of the public release that the

15 agencies did yesterday included the new guidance

16 that the agencies issued.

17 MR. MURTON: Excellent.

18 MR. DELFIN: Included in that is a

19 description, actually, of the public section and

20 improvements that can be made there, not to cut

21 to the end, but --

22 MR. HOYER: You probably haven't had

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1 a chance to read the public section. It is in

2 the back of it. I would like to tell you that it

3 goes as far as you asked, but it specifically

4 does go a little farther on material entities.

5 MR. MURTON: Great.

6 MR. HOYER: So, it will help

7 incrementally get you closer to where you are at.

8 MR. DELFIN: And financial

9 interconnections are also in there, I think.

10 MR. MURTON: Great. Yes.

11 So, before I turn it over to my

12 colleagues, I just should mention that you may

13 have seen the GAO released a report earlier this

14 week on the process that the Fed and the FDIC

15 have been using for the resolution plans. I

16 think, by and large, it was positive on our

17 process and our framework for doing that, and it

18 did have a couple of recommendations that are

19 worth noting.

20 The first was that we be more

21 transparent about our process and our framework. 

22 As we just indicated, I think the Boards this

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1 week released information about the process and

2 the findings that really sets a new level of

3 transparency for the agencies. I hope you feel

4 the same way about it.

5 They also recommended that we, in a

6 sense, lengthen the cycle for this review

7 process, that an annual cycle is, in a sense, too

8 challenging for both the agencies and the firms. 

9 I think we welcome both those recommendations. I

10 think the first was already well in process.

11 MEMBER JOHNSON: I'm sorry, can I ask

12 about that cycle point that you brought up? I

13 mean, one question that has already arisen with

14 regard to this round of reporting on living wills

15 is whether or not they are still current and

16 whether or not they reflect the current situation

17 of these entities. And specifically, there is

18 some commentary, which I don't know if it is

19 right or not, saying that foreign banks, for

20 example, have moved on and are in a different

21 position.

22 If you are going to address the cycle,

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1 I think you have to also address the lag between

2 when the reports come out and when your

3 determinations are public.

4 MR. MURTON: I think that is fair. I

5 think we have engagement with the firms

6 throughout the process. So, I think we are aware

7 of changes in the firms as this has happened.

8 MR. HOYER: Yes, it is a great point

9 that you make, Simon, of course, and particularly

10 with the duration of the review process, as

11 everyone is well aware of here.

12 While during the review process the

13 level of engagement with the firms is more

14 focused on the plan they submitted, as you can

15 imagine, at the senior-most level there are

16 continued meetings with the heads of resolution

17 planning for the firms as well as senior staff on

18 continued progress.

19 So, yes, the firms do not, nor would

20 the agencies expect, that they submit their plan

21 on July 1st and they stop. They have a very good

22 idea of, and we were very clear with them, on the

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1 project plans that we think are the appropriate

2 plans, and they should continue to close. And

3 they have a very good idea on the areas that they

4 need to continue to develop.

5 So, your point is taken, but by no

6 means do the agencies encourage, nor do the firms

7 stop their process along the way. You will find,

8 and we do greatly expect, that some of the things

9 that were in the July submissions of 2015 have

10 progressed over the last several months.

11 MEMBER ADMATI: Can I ask a question? 

12 So, I didn't have a chance to look at the most

13 recent thing. But I was just quoting from the

14 August 5th, 2014, some of the things that you

15 said they needed to improve, like having made

16 unrealistic or inadequately-supported

17 assumptions; for example, bad behavior of

18 customers, counterparties, investors, central

19 clearing facilities, and regulators.

20 So, especially like the

21 counterparties, because the counterparties are

22 usually each other, so what I am wondering about

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1 always is the system. These paths are just

2 individual.

3 My question fundamentally is, how are

4 they able to make the assumptions? How are the

5 companies themselves having enough information to

6 answer questions, you know, asking them? So,

7 when they say, "This is impossible to do. We

8 don't know how to pass," I kind of have sympathy

9 with that because I don't know how they can

10 actually pass that. I mean, if I am a teacher, I

11 will give exams. So, it is like, are we

12 admitting that it is really very difficult --

13 MR. HOYER: Yes.

14 MEMBER ADMATI: -- even for them? You

15 know, so you can press all you want, but it is

16 like, do they know enough about their

17 counterparties and their counterparties'

18 counterparties to actually answer that question?

19 You didn't mention here assumptions

20 about other nations' insolvency laws or in

21 subsidiaries or the cross-border issues, which

22 are not even mentioned here, but counterparties

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1 sometimes are abroad or the subsidiary is abroad,

2 or whatever.

3 So, my question is, just how are they

4 really able or how are you able to, then, be

5 comfortable with that? Or is it fundamentally

6 kind of too difficult because of

7 interconnectedness?

8 MR. HOYER: Yes, so it is a great

9 question. It is a really broad question. It

10 covers a lot of categories. And we will touch

11 upon many of those components today.

12 But, just to kind of briefly have that

13 conversation now -- and I will use one example. 

14 You brought up counterparties. You think about

15 counterparties along multiple lines, whether it

16 be funding, right, whether it will be collateral,

17 et cetera.

18 And so, this process is really meant

19 to leverage off of existing business-as-usual

20 systems when they are making those sorts of

21 assumptions. They understand a great degree the

22 counterparties that they deal with, the clients

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1 that they deal with. This is really looking at

2 kind of the array of possibilities.

3 We are looking for, it is an FDIC

4 consideration, that this strategy work under a

5 range of plausible failure scenarios. One thing

6 we know for certain. We will give you the one

7 certainty. We don't know what the next stress

8 will look like. We do not know how it will flow

9 throughout that particular firm.

10 So, we want it to work under a range

11 of plausible failure scenarios and we want it to

12 work under a range of different market

13 conditions. The one thing that all the large

14 firms have is they have a series of stress tests. 

15 They have stress tests on capital, one being run

16 right now by the Federal Reserve. They have

17 stress tests on liquidity. They have contingency

18 funding plans.

19 So, the understanding of stresses that

20 have occurred in the past, not that the history

21 is necessarily indicative of what is going to go

22 forward, tweaking those assumptions to

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1 understand, well, what is the sensitive to that;

2 what is my break-even point; is it substantially

3 mitigated or am I vulnerable?

4 So, there is, actually, a great deal

5 of knowledge. There is the part about

6 understanding the assumptions and think about it

7 relative to what is the sensitivity. Are you

8 very, very close and very little adjustment could

9 cause failure of your strategy or do you have a

10 pretty good gap there? So, that would be kind of

11 one component I would discuss, and we will get

12 into that a little bit more in detail relative to

13 our framework discussion.

14 And the second thing is absolutely a

15 valid point, is MIS capabilities. Do we have the

16 ability to produce the information, produce the

17 data in firms of this size and of this magnitude? 

18 That is something that I would recognize kind of

19 two fronts on that. Obviously, all of the

20 agencies, the OCC, the Federal Reserve, the FDIC,

21 have been pushing MIS capabilities across the

22 firms for quite some time.

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1 Secondly, there are systems

2 capabilities checks. The Federal Reserve has

3 SR 14-1 that is specifically around MIS

4 capabilities across the various components. You

5 mentioned one of the components being a

6 counterparty.

7 So, it is a difficult thing. These

8 are complex firms with difficult challenges. And

9 those are all key vulnerabilities to overcome,

10 but there are ways to accomplish it.

11 MR. WALL: I was going to say, one

12 other thing you asked about the cross-border

13 implementations, and that is, indeed, one of the

14 items that we have been particularly strong in

15 requiring the firms to analyze. They need to

16 look at the legal regimes, legal frameworks, in

17 the countries in which they operate. And they

18 need to be in communication with the regulatory

19 supervisory authorities in those jurisdictions

20 that would be implicated in a resolution

21 scenario. So, that has been a focal point for

22 our analysis.

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1 MR. MURTON: Yes. So, again, great

2 point.

3 I'm sorry.

4 MEMBER BOWSHER: Yes, I read The

5 Financial Times this morning. Of course, you are

6 the lead article on the front page there. But

7 the thing that jumped out was when they reported

8 that the FDIC went one way on the Goldman Sachs

9 and the Fed went the other, and then, vice versa,

10 for Morgan Stanley. And so, for the laypeople,

11 how do you explain that two agencies have that

12 much difference?

13 MR. MURTON: So, we are going to talk

14 about our framework and our findings.

15 CHAIRMAN GRUENBERG: Take my word, we

16 will get to that.

17 MEMBER BOWSHER: Oh, okay.

18 CHAIRMAN GRUENBERG: I think maybe it

19 will help with that process.

20 MEMBER BOWSHER: Okay.

21 MR. HOYER: Yes, we have received that

22 question a lot.

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1 (Laughter.)

2 MR. MURTON: Yes, yes.

3 MEMBER BOWSHER: That's what jumped

4 out at me.

5 MR. MURTON: Yes. So, just a final

6 point on transparency, again, we think it has

7 been much improved. We have released the

8 guidance to the firms. We have released a

9 comprehensive report on our framework and our

10 findings. These are public documents. And the

11 Federal Reserve Board released redacted letters

12 that the agency sent to the firms. So, I think

13 there has been a great deal of transparency on

14 this, and we really look forward to the feedback

15 from the Committee on the work that we have done.

16 If I may, I might just suggest that we

17 try to focus the discussion on the framework and

18 the guidance and avoid delving into firm-specific

19 issues. But that last question was, obviously,

20 one that comes up, and we will address it.

21 With that, let me turn it over to

22 Brent, Rick, and David to continue what is

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1 already started.

2 MR. HOYER: All right. Thank you,

3 Art.

4 Good morning, Committee Members.

5 Maybe the first thing we should do, we

6 will go through and introduce and, then, we will

7 just kind of tag-team this next area.

8 So, I am Brent Hoyer. I'm Deputy

9 Director for Risk Management Supervision's

10 Complex Financial Institution's Group.

11 MR. DELFIN: And I am Ricardo Delfin. 

12 I'm the Deputy Director for Policy in the Office

13 of Complex Financial Institutions.

14 MR. WALL: And I am David Wall,

15 Assistant General Counsel in the Legal Division

16 for Complex Financial Institutions.

17 I think this is Brent's first time and

18 Rick's first time, but I have been here before.

19 (Laughter.)

20 MR. HOYER: All right. So, following

21 kind of a sequence, I know everyone is anxious to

22 get to the results. We will cover the other "R"

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1 word first, the review. But, as we are going

2 through this, please feel free to ask questions,

3 as you have thus far.

4 As Art had mentioned, it is important

5 when you are thinking about the sequence of what

6 has occurred here, this really started with the

7 release of the August 2014 letters. After that

8 point, it was very clear in the letters, it was

9 made very clear to the firms, that the agencies

10 would be willing to engage at whatever level they

11 wanted to engage.

12 We, then, had, as you saw in the -- I

13 refer to it as the public narrative -- the 2015

14 communication where we reemphasized that

15 communication engagement as well. And many of

16 the firms engaged in an extremely material way. 

17 We used that particular process, as you would

18 expect, to provide input, direction, to review

19 certain aspects to get comfort level with. That

20 obviously helped in the scoping process, not only

21 within a particular firm, but from a horizontal

22 perspective.

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1 MEMBER REED: Is there anybody been at

2 the Board level to talk to?

3 MR. HOYER: At the Board level, for a

4 firm, no. No, it was generally senior staff is

5 the way you can think about this. All of the

6 agencies have quarterly, if not more frequent,

7 meetings with the senior-most executive officers

8 for the banks in the corporate area. They

9 typically in and hit all three. During the peak

10 of the resolution cycle, the heads of resolution

11 planning is really what you can think about, and

12 their core staff, they may be coming in to

13 present on a certain area and they will bring

14 staff with that, but not within, not Board

15 members, no.

16 In discussing the review that we do,

17 I think it is really probably helpful to kind of

18 break it up into two components, if you will. 

19 There is the process itself, kind of what we do,

20 and there is the framework that guides the

21 process.

22 I know there have been a lot of

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1 documents released in the last 48 hours, and you

2 may or may not have had a chance to read through

3 the GAO report that Art previously mentioned. 

4 Our framework and our process, as well as our

5 Federal Reserve counterpart's process, is briefly

6 discussed in there. And so, I will give you kind

7 of a quick overview of that.

8 From a framework standpoint, as I

9 mentioned, supervision. I have been supervision

10 my whole career. So, it probably is no surprise

11 that the framework that I would design for this

12 particular process would be very supervision13 like. And so, to the extent that you are

14 familiar with the CAMELS process, this very much

15 mirrors that.

16 There are five core components. We

17 call them pillars. And those components really 

18 capture everything that you could imagine from

19 the statute to the rule, to the letters, any

20 guidance, any communications. So, it is holistic

21 across those particular components.

22 Underneath those components are a

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1 series of factors for assessment. And then,

2 underneath that are a series of assessment

3 criteria to guide consistency among the process

4 that we will discuss in just a little while.

5 The one thing that I would say is

6 don't think about this. You know, when you start

7 seeing factors and criteria, people can think,

8 well, it is a checklist. It is absolutely not. 

9 These are very, very in-depth types of assessment

10 factors. If I was going to give you one example

11 that we will talk about a little bit later today,

12 I will match it up to something that Rick or I

13 will talk about.

14 If we were in the world of operational

15 readiness, is this strategy something that can be

16 implemented? Something that is near and dear to

17 the FDIC's heart is optionality. As we mentioned

18 before, we don't know what the stress will look

19 like. We don't know how it will flow through the

20 organization.

21 And so, to the extent that we are

22 looking at what sorts of options the firm has for

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1 separating business lines, entities, and actually

2 executing sales. So, you can see the assessment

3 criteria, the factors, going through a series of

4 questions of how they identified certain objects

5 of sale. So, that would be kind of a step one. 

6 Early you can see a series of questions around

7 that.

8 Step two, how meaningful are they? 

9 What does it represent for revenue, for assets,

10 for equity? What does it represent on business

11 lines?

12 Then, you can see it going into the

13 next step of, can they execute on them? There is

14 a difference between identifying an object of

15 sale, knowing how meaningful it is, and then,

16 actually being able to pull the trigger in a

17 timeframe that is relative to your preferred

18 strategy.

19 So, they thought through the processes

20 of the people associated with it, the systems

21 associated with it, the financials, et cetera. 

22 You know, is it a particular building; they have

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1 got to deal with lease? And then, it moves on

2 into what is the timeline for executing that

3 potential buyer. So, it is a very, very in-depth

4 analytical process that could be tailored to any

5 particular firm, their plan, their particular

6 strategy.

7 That framework has been trained to all

8 the staff that were associated with that review. 

9 The Comptroller, I am glad that he is here today. 

10 He supplied supporting personnel to the review

11 this year as well, which were greatly welcomed,

12 and they have participated in that training

13 program as well and the framework.

14 The framework is a living document. 

15 It is constantly being updated to capture

16 information relative to changes in firms'

17 strategies and things of that nature. And so, it

18 will be retrained every year across the core

19 team.

20 So, from a process standpoint, to

21 facilitate it, the framework is really the

22 guiding document that does the heavy lifting. 

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1 So, how do we, then, facilitate that particular

2 framework? You can really think about it along

3 two lines. There is a vertical approach and a

4 horizontal approach.

5 And so, from the vertical approach,

6 this is a multidisciplined team. As you can

7 imagine, this is looking at the largest, most

8 complex global firms that we have here in the

9 United States. And so, when we are putting

10 together the teams of individuals to assess these

11 plans, they contain individuals from my unit that

12 are familiar, knowledgeable with large banks, how

13 they operate, how they work, the entities, et

14 cetera. That is supplemented with OCC examiners,

15 as I mentioned before, that bring that type of

16 expertise as well.

17 Within the resolution world of Art's

18 particular area, there is policy, there is

19 international, there is resolution expertise,

20 there is legal expertise. While there is a core

21 team, there is a body of experts behind them

22 where questions are funneled, and so on.

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1 So, the vertical teams are responsible

2 for just their firm, applying that particular

3 framework to their firm and really understanding

4 every aspect of that. The vertical teams are

5 responsible -- I kind of think of it as the three

6 "F's": applying the framework, communicating and

7 engaging with the firm, and collaborating with

8 the Federal Reserve counterparts.

9 That way, by the time everything gets

10 done, there should be no surprises as to what

11 issues may exist, maybe not the level of the

12 issue, right? And there should be no disconnect

13 on the fact pattern with our Federal Reserve

14 counterparts. So, everything is a collaborative

15 process from the ground up at that level.

16 The review teams are also

17 supplemented, as you can imagine. In addition --

18 we will talk about the horizontals later -- you

19 can have a vertical slice, which is helpful

20 because you have to go deep. Across the five

21 components, we have groups that we call pillar

22 leads. And so, as they are looking at common

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1 strategies, common operating businesses, those

2 pillar leads, those component leads are ensuring

3 consistency of application, consistency of

4 questions.

5 So, if I were to use an example, I

6 know we are not calling out firms here, but let's

7 just say if were in the universal -- I think we

8 are fine here -- if we are in the universal

9 firms, the large wholesale and retail

10 organizations that use a particular strategy. 

11 Let's say they used an SP, single-point-of-entry

12 strategy. You can imagine the teams coming

13 together and coordinating across each pillar to

14 ensure X saw this, Y saw this, how did you apply

15 it, and so on.

16 So, the vertical component also has a

17 horizontal component across the pillars.

18 Go ahead.

19 MEMBER JOHNSON: This is very helpful

20 to understand this level of granularity. Are

21 foreign supervisors involved in any, hopefully,

22 seamless fashion in these conversations, the UK

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1 or the Europeans or anywhere else?

2 MR. HOYER: Not at this point in the

3 review process, no.

4 MR. DELFIN: We have to break it into

5 component parts. So, we work with foreign

6 regulation on things called CMGs, Crisis

7 Management Groups. We all get together and

8 discuss individual firms and resolution planning

9 strategies.

10 Then, the Title I discussion is

11 actually something that we talk about so that

12 folks are aware. We also make sure they have had

13 access to the plans, if they have the firms. And

14 also, they have the other plans, in addition. 

15 So, there is that, but they are not involved in

16 the plan review process.

17 MEMBER JOHNSON: I am glad we are

18 going to hear from the Europeans directly this

19 afternoon. But I think there is a very big set

20 of concerns about their strategy for dealing with

21 failure, which is based, as I understand it,

22 including having been there recently and talked

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1 to them about this, on resolution, not

2 bankruptcy. Whereas, what we are talking about

3 and what the living wills is supposed to assure

4 us is that we can have bankruptcy in the United

5 States.

6 I don't think, if we put one of these,

7 my understanding is if we put one of these large

8 entities into bankruptcy here, that is not going

9 to mesh well with what the Europeans are going to

10 do. Title II I think will mesh more easily with

11 resolution. That is fine. But we really focused

12 on the living wills which are about bankruptcy.

13 And then, if their supervisors are not involved

14 or can't be involved in that conversation, it

15 just reinforces my concern.

16 MR. DELFIN: Well, it is different. 

17 We should break it into component parts. So,

18 obviously, there are challenges associated with

19 having a bankruptcy that would not exist under a

20 Title II process. And the firms under their

21 plans need to address those obstacles. Some of

22 those obstacles are, obviously, multiple

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1 competing insolvencies, as I have pointed out,

2 the risk of ring-fencing.

3 And so, what they need to do in their

4 plans and in their planning process is either

5 ensure that ring-fencing won't take place or

6 provide necessary capital and liquidity to make

7 ring-fencing irrelevant or provide some sense of

8 comfort that, whether it happens or not, their

9 plan will not --

10 MEMBER JOHNSON: I don't think firms

11 can determine that ring-fencing won't take place. 

12 That is not their decision. It is not even the

13 decision of the regulator in other jurisdictions. 

14 It is a matter of the legal code, right?

15 MR. DELFIN: That's true, but they can

16 address the obstacle or the risk associated with

17 that, associated with capital and liquidity.

18 MR. HOYER: So, a couple of points on

19 that, and we will get into the liquidity aspect,

20 which is fair, before we delve too far into ring21 fencing.

22 So, relative to their participation in

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1 the review process, your direction question, no,

2 that does not occur. Routine conversations with

3 them. I think it is important to point out,

4 though, that members of various European groups

5 have come over and participated in work sessions

6 here. During that period of time, I personally

7 brief them on our framework in detail, share with

8 them the framework in detail.

9 Also, there have been members of the

10 FDIC that have been on assignment in their

11 particular agencies as well, and there have been

12 presentations made from the standpoint of knowing

13 our framework, being able to even leverage it or

14 use it. At least they understand what we are

15 applying at a very, very detailed level. So,

16 that is one connection point.

17 MR. DELFIN: And there is a lot of

18 information on what Brent just said. Would it

19 help to step back and big-picture it for a

20 second?

21 So, a plan comes in, and what we do is

22 we create, as pointed out, vertical teams and

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1 horizontal teams. And they are implementing a

2 tool that we call the framework. And so, the

3 framework is designed to address all the issues

4 and things that you would think about when

5 looking at a plan. Plans have different

6 strategies. They offer it in different

7 jurisdictions. There are different components. 

8 And so, the framework is designed to allow the

9 reviewer to really think through each issue.

10 When we say vertical, that is firm11 specific. So, there will be a team on X firm,

12 let's say Lehman Brothers. That is the one that

13 I use because it no longer exists.

14 (Laughter.)

15 So, there is a Lehman Brothers team,

16 and they have this framework. That framework

17 allows them to break up the plan into component

18 parts, and each one owns those component parts. 

19 Brent mentioned there is a pillar lead. That

20 person knows this part of the plan and can

21 compare that part with every other plan's part,

22 so that we can ensure some consistency across

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1 those component parts.

2 Yes, sir?

3 MEMBER FISHER: I just want to ask a

4 different question.

5 MR. DELFIN: Sure.

6 MEMBER FISHER: If you could talk to

7 me, before we get to termination, how do you

8 prioritize the feedback you are given by the

9 firms? Let me give a context. Because, as a

10 Board member of a non-bank SIFI, so not in this

11 process but earlier in the foods chain, I observe

12 through the process of being on the Board that

13 the staff of both the firm and the regulators are

14 driven to the facts, things that can be known. 

15 It is a big detective story to find out

16 everything you can drilling down.

17 MR. HOYER: Uh-hum.

18 MEMBER FISHER: Which makes it is less

19 time, it seems to me, for the things that we

20 don't know about how could we simplify the

21 process. That is, there are questions that staff

22 can't answer about what could be done to simplify

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1 a big holding company. And that gets squeezed

2 out in deference to the detailed

3 questions/feedback coming from the agencies,

4 which I understand the need for, but it is a very

5 awkward thing, as a Board member -- and I just

6 speak for myself in this capacity -- to see the

7 tide of specific detailed questions, which I

8 understand the need for, drives out time

9 management and what the Board can spend on how do

10 we simplify this function.

11 And it doesn't drive it -- and I just

12 want to be careful -- but the feedback tends to

13 come in laundry-list form, at least as it is

14 presented to a board. And it is very hard to see

15 there is enough time set aside for the hard

16 questions of how do we rationalize and lots of

17 time set aside for the specific details of how

18 the bankruptcy laws are going to interact with

19 some foreign jurisdiction, which the staff are

20 driven to the specificity of that.

21 So, I would just ask you to talk to me

22 a little about how you prioritize the feedback. 

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1 Or is it really flowing through the senior

2 management and they are spending time on the

3 things where they can make a difference?

4 MR. HOYER: It is a great question. 

5 It is like the third area we are going to get to

6 here, but I am going to go ahead and kind of jump

7 ahead just a little bit. We are going to walk

8 through the process, explain how that process

9 rolls up, explain how we coordinate with the

10 Federal Reserve to get to those priority areas. 

11 So, I will get into how we manifest the priority,

12 if you will, of the issues.

13 But, relative to the point of the

14 details and how that occurs, I would suggest two

15 particular aspects. So, one, the onsite portion,

16 if you will, of the reviews this year, I think it

17 is laid out in the GAO report, roughly 60 to 75

18 days. The staff is actively engaged with the

19 firms, the heads of resolution planning, their

20 particular areas for those components where they

21 have questions.

22 As you can imagine, as they are

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1 engaging those particular firm-level

2 counterparts, when questions are asked, "Do you

3 have this?", "Does this do this?", it becomes

4 pretty obvious as to what is missing and what is

5 needed. And those discussions ensue, as they

6 would in the normal supervisory process.

7 And so, the list starts to grow. It

8 becomes very apparent to the individuals on both

9 sides of the table as to -- because if we find

10 something is missing, something we need to close

11 out, and the firm can't provide it, it is pretty

12 obvious that they are going to need to do that

13 next year.

14 We roll that up to the end of the

15 process and, as we mentioned, following August

16 2014, I will use one example. There was one firm

17 that we engaged 65 times between August 2014 and

18 the July 1st submission. There is active

19 engagement. There are monthly, in some cases

20 weekly, meetings with firms to have very detailed

21 discussion with whatever senior-level executives

22 they want on any particular issue.

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1 So, there are sort of two venues, if

2 you will, to escalate, whether it be the detail

3 of a specific item or go beyond what is in the

4 letter, through the review process, as that

5 dialog is taking place every day, and then, after

6 the review process until the next plan

7 submission.

8 Now, as far as how the agencies

9 prioritize what is going to get into the feedback

10 letter, as I go through the rest of the

11 discussion here, I will kind of raise that.

12 Do you want to --

13 MR. DELFIN: Yes, I would just add on

14 I am not from the supervision side. And so, part

15 of this process is not a compliance exercise. 

16 What we are trying to engage here is a problem17 solving exercise. And so, the firms' engagement

18 with us is the firms come into us with questions

19 about how they would overcome their particular

20 obstacles that are associated with their

21 structure, their strategy, their organization. 

22 And so, we try to give them guidance and feedback

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1 on that.

2 But in the area you mentioned

3 specifically, which was corporate structure, we

4 will talk about it in a little bit. We call it

5 legal entity rationalization in the guidance. 

6 But that is actually fairly indicative of the

7 approach here. Under the Title I process, firms

8 need to have a criteria, their own criteria -- we

9 don't set it; we don't put it on them -- a

10 criteria that is tailored to their structure,

11 their operations, and their firms. And then,

12 they need to implement that criteria in a way

13 that works for them, that works with their

14 strategy, and overcomes the obstacles like the

15 obstacles that Simon addressed.

16 We can look at that criteria, see how

17 they execute it, test it to see if it is actually

18 synched-up. And we did and we provided guidance

19 on it.

20 But we are not going to them with "You

21 must do this," and taking all their Board's time

22 with solving our little problems. It is more

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1 helping them on the problem-solving exercise of

2 overcoming all the obstacles that obviously exist

3 and we have pointed out in our previous guidance.

4 MR. HOYER: And for many of the firms,

5 they have been very good about bringing in,

6 really tailoring the individual discussions with

7 the staff that are applicable with executing on

8 it. And so, to Rick's point, using legal entity

9 criteria, some firms would set up a specific

10 meeting just on that to just talk about it and

11 the folks that are dealing with that.

12 Then, of course, it is within the

13 governance process of the individual institution

14 to escalate that through for approval all the way

15 up to its Board.

16 MEMBER JOHNSON: It is amazing, given

17 the late interaction you are describing, that so

18 many of these banks failed this round in living

19 wills on so many dimensions.

20 MR. HOYER: I didn't say every firm

21 engaged 65 times.

22 (Laughter.)

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1 MEMBER ADMATI: Before doing the

2 horizontal, can you describe this horizontal?

3 MR. HOYER: Sure. Yes, that was next. 

4 Thank you for bringing this back up.

5 MEMBER BRADFIELD: I want to ask an

6 embarrassing question, and I want to give you an

7 opportunity to answer it. What you have

8 presented in public is that, of the eight firms,

9 seven have failed to provide adequate plans and

10 only one is at least on the path. Now it is five

11 years, five-and-a-half years since Dodd-Frank,

12 and you have been in this process for two years. 

13 And it seems you are not getting very far.

14 Is this a reflection on the

15 willingness of the banks to participate or are

16 they gaming the system? Is it a reflection on

17 the real possibility of developing living wills? 

18 Is it a real reflection on the possibility of

19 making Title I work?

20 MR. HOYER: So, I am going to hit that

21 question real short, and we will go through the

22 review process. When we get into the

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1 conclusions, maybe we can reframe how you pose

2 the question relative to how you interpreted

3 conclusions.

4 We will clarify the actual conclusions

5 of the eight firms, and then, we can discuss the

6 fact that, as was released in the public

7 narrative and with what the Federal Reserve

8 released with the letters, it discusses the

9 progress the firms have made, and for certain

10 firms how seriously they have taken it,

11 integrated it into their frameworks.

12 But let us finish the review process. 

13 When we get past the review process and we get

14 into the results, we will reframe how you have

15 viewed the outcome. And that way, it is very

16 clear as to what that was.

17 MEMBER COHEN: Sorry for pulling you

18 off, but just a quick recommendation. John

19 started and raised the question about the Board. 

20 Peter picked it up. Ultimately, I think all

21 three prudential regulators have direct

22 roundtables which I find most directors believe

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1 are highly successful. Recommendation to

2 consider maybe holding a directors roundtable on

3 the resolution plans.

4 MR. HOYER: Yes. No, I think it is a

5 great idea, Rodgin. Some of the firms have

6 engaged the agencies before, where we have

7 routine meetings with outside directors from the

8 supervisory standpoint. And so, there would be

9 absolutely no reason why we wouldn't do it on

10 this front as well.

11 COMPTROLLER CURRY: I think that is a

12 great idea, Rodgin. We actually have sessions

13 for independent directors aside from the

14 interaction that we have during an examination of

15 sort of the ordinary crisis supervision.

16 MEMBER COHEN: That is what I am

17 referring to. The directors come back thinking

18 they have learned a lot.

19 COMPTROLLER CURRY: It makes sense to

20 do so on an interagency basis.

21 MR. HOYER: All right. So, we will

22 pivot back to the review process. We will speed

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1 through it. I knew that everybody would be

2 anxious about results. And so, putting review in

3 front was, I would say, tactical, but maybe not.

4 (Laughter.)

5 So, back to horizontal real quickly. 

6 We have the horizontal area, as I said, in the

7 engagements that we had with the firms that kind

8 of helped lay out areas that we wanted to engage

9 horizontally across all the firms. That is

10 really laid out, many of those categories are

11 laid out on page 9 of the public narrative,

12 things like legal entity rationalization,

13 governance mechanisms, liquidity, et cetera, et

14 cetera.

15 And so, those horizontal teams were

16 put together, and they were really looking at the

17 range of practice across each of the firms for

18 similarly-situated strategies. That information

19 is coordinated back and forth with the vertical

20 teams. And so, this is really looking at level

21 of granularity, strengths, weaknesses, progress,

22 and so on, from a comparative standpoint. Both

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1 the vertical and the horizontals, as you can

2 imagine, have core sets of deliverables that

3 really help kind of finalize or conclude the

4 process that they have there.

5 Moving more quickly into the

6 governance process that we, then, have --

7 MEMBER KOHN: I wondered about the

8 interactions.

9 MR. HOYER: Uh-hum.

10 MEMBER KOHN: If in the horizontal

11 reviews you see some firms seem to have solved

12 problems that others are struggling with --

13 MR. HOYER: Absolutely.

14 MEMBER KOHN: -- I assume that --

15 MR. HOYER: Yes.

16 MEMBER KOHN: -- the vertical guys say

17 to the firm, others firms have -- or "Here are

18 some suggestions about how you" --

19 MR. HOYER: Exactly. No, exactly as

20 you would expect.

21 This is a perfect segue into the

22 governance process. So, the vertical teams and

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1 the horizontals are in constant communication as

2 to what is going on and what they are seeing. 

3 The pillar leads are guiding those particular

4 discussions within their components.

5 And then, what we had sitting on top

6 of that from a pyramid standpoint is the

7 oversight group. As you can imagine, Art,

8 myself, Rick, David Walls are members of the

9 oversight group.

10 On a routine basis, vertical teams

11 with the horizontal teams with the pillar leads

12 were providing status updates, conversations

13 about any item they saw. So, there are multiple

14 points along the way to ensure, if you will,

15 cross-coordination on issues, application, et

16 cetera, to do that.

17 And this really kind of all culminated

18 into one final discussion where the oversight

19 group met and we spent in some cases half-a-day

20 with each team, with each component there, as far

21 as the vertical teams, the horizontals, and the

22 pillar leads really having a vetting session

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1 across all the dynamics of strengths, weaknesses,

2 progress, and so on. We got to really facilitate

3 it.

4 MR. MURTON: We got to sit on that

5 side of the table.

6 MR. HOYER: Yes, yes. We have got to

7 turn around and do that back the other way. We

8 are not looking forward to that.

9 All that information, that is the

10 staff-level framework for assessing, right, the

11 plans and the information within the plans. 

12 That, then, rolls up into what we call our

13 assessment framework. That assessment framework

14 is also communicated in the GAO report.

15 The primary objective, of course, that

16 we are trying to achieve here is the statutory

17 standard, right, really determining whether the

18 resolution plan is not credible or would not

19 facilitate an orderly resolution of bankruptcy.

20 This assessment framework really rolls

21 up into three primary components. 

22 Straightforward, I think when you think about

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1 resolution planning, the first one is strategy. 

2 It is really, does the firm provide a strategy

3 that has a credible path towards resolution in

4 bankruptcy? We are looking at those common

5 elements of, did it substantially mitigate

6 systemic risk transmission? Are the assumptions

7 around all of its various component parts

8 reasonable and supported? Are the obstacles that

9 Art mentioned and its key vulnerabilities, have

10 they been addressed, substantially mitigated?

11 As I mentioned before, very, very

12 important to us, is it flexible? Will it work

13 under various failure scenarios, under various

14 market conditions? We do not want a very

15 sequenced kind of plan that I need this entity to

16 fail first. If any other entity fails, it

17 doesn't work. Or I need these funds to be able

18 to move to here. We need it to be flexible. And

19 that is a key component that we are looking for.

20 The second element within our

21 assessment framework is operational readiness,

22 plain and simple. Can they execute on it? And

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1 this gets to the components we mentioned before

2 around MIS and other core operational components

3 to execute on it.

4 And the last piece really within that

5 that I would mention are a combination of

6 governance mechanisms. Are all the Board actions

7 there, all the things that they would need to do

8 at the moment that they need to do it? Are there

9 triggers corresponding to those actions -- and I

10 don't want to steal much of what we will talk

11 about later -- to ensure that, to the extent they

12 have a good working knowledge of what is going

13 on, what they need to do, and it will help

14 facilitate from communication strategies to

15 financial execution, and so on?

16 And the last piece within that is the

17 optionality, as I mentioned before, and

18 separability. Do they have identified objects of

19 sale that help promote that particular

20 flexibility?

21 The last, the third and final piece,

22 is governance and responsiveness. This is

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1 particular typical for most supervision. You

2 know, have they done what we told them to do? 

3 Have they met the statutory requirements? Have

4 they demonstrated progress on all the prior

5 elements? And very, very important to both of

6 the agencies, have they really integrated this

7 into their overall governance structure? Is it

8 part of their day-to-day who they are, and so on?

9 And then, to the point, Peter, that

10 you raised, that information, then, is all rolled

11 up. The oversight group, then, begins the

12 conversation. We are having routine

13 conversations with our Federal Reserve

14 counterparts all along the way from the staff

15 level. So that by the time it works up to this

16 point, the facts, everyone is in command of the

17 facts of what the list of weaknesses are. 

18 Everyone is in command of the facts of the

19 progress, the strengths, potential guidance

20 considerations, and so on.

21 That rolls up to the Oversight

22 Committee, where we begin at our level,

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1 coordinating with Federal Reserve counterparts at

2 our level, to discuss communication. What do we

3 put into guidance? What do we put into letters? 

4 How do we get that out, and so on?

5 So, that kind of flows you through. 

6 I kind of expedited it since we had some good

7 questions along the way. But it flows you

8 through the framework that we use, the vertical

9 and horizontal components, the pyramid approach

10 of governance up to the oversight, to the

11 ultimate release of the communication.

12 Yes, any other questions?

13 MEMBER ADMATI: I have one important

14 question about the process actually here. And it

15 is related, again, to what the firms know and

16 what you know, because you see all the other

17 living wills. And also, you are on the other hat

18 of FDIC anyway. In your office you are Title II,

19 actually, and this is Title I.

20 So, when somebody makes an assumption,

21 you might be in a better position to evaluate, I

22 mean you are in a better position to evaluate

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1 that assumption. So, my question is, when you

2 say -- and this is picking up on your flexibility

3 thing -- how specific is that exercise? Because

4 when I was looking for, when you said a

5 horizontal, it is not just so consistency across,

6 but interactions between.

7 MR. HOYER: Exactly.

8 MEMBER ADMATI: In other words, one

9 feeds into another because the counterparty is

10 this other person that submitted another living

11 will. So, how much do you do across the living

12 will?

13 Because I go back to the very first

14 meeting of this Committee where Paul Volcker, who

15 is not here today, you were presenting to us --

16 you were not there, Rick, but the people who were

17 there. It was back to Wiggins' day. But you

18 were doing Lehman. Okay? So, that was kind of

19 the first document that was presented to this

20 Committee.

21 And I remember Paul Volcker's first

22 question, and I think it may have been the first

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1 question anybody on this Committee has asked,

2 was, so what would you do on day two, three, and

3 four, after you did Lehman in one night? What

4 would happen with Citi, et cetera? Would it also

5 be in your Title II resolution?

6 So now, Title I. Maybe one of them

7 goes to Title I, but, then, the others go to

8 Title II or any of the combinations there, if

9 bankruptcy was ever a possibility, which I think

10 many of us don't believe. But, then, we are back

11 in Title II, which I know is not living wills.

12 Still, in other words, in this FDIC

13 and in your office, there is sort of the various

14 work you do on Title II and you see all of those

15 firms. So, what does, then, the system look like

16 in a scenario? That is sort of where I am

17 interested in, and I understand the legal

18 processes, that you have to give them feedback,

19 et cetera, but you, yourself, have more

20 information than they do in evaluating whether

21 their assumptions, together with everything else

22 that you know about, because when they say

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1 assumptions about regulators, it is assumptions

2 about you, about the Fed, about everybody else. 

3 You know, is that likely? Is that possible, what

4 they are assuming, et cetera?

5 And so, just to say my other questions

6 that we can defer until later, you keep talking

7 about progress. And so, my question is, you

8 know, is any progress good enough? In other

9 words, when you said in August 2014 they have to

10 make significant progress towards X, Y, Z, now we

11 have another -- are you telling us that they made

12 some progress, any progress, enough progress? 

13 And what will it take in five months when you now

14 give them, you know -- so, we can defer that

15 until later. But the word "progress" seems to be

16 so vague that it seems like any kind of progress

17 is good enough, and we can iterate kind of

18 forever on this process. Because it is part of

19 the process, in other words.

20 MR. DELFIN: One way is horizontal.

21 MEMBER ADMATI: Yes.

22 MR. DELFIN: So, the outline, the

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1 structure that Brent just described is our

2 internal FDIC approach. If you look at the GAO

3 report, the Fed has its approach, which is also

4 pretty similar and connected.

5 So, at each point in our process we

6 are trying to make sure that on the key issues

7 that are two independent sets of eyes looking at

8 it, verifying it, checking it, and just doing it. 

9 Our vertical team looks at it; our horizontal

10 team looks at it, looks at it across firms, and

11 then, presents to our oversight group, and it can

12 be distilled.

13 When they do those presentations, they

14 do them together, so that similarly-situated

15 strategies in firms, if they are leads, not the

16 firms themselves, are hearing the issues and can

17 make sure that, "Oh, we had that same issue" or

18 "No, this firm solved that problem in this way." 

19 So now, we can ensure that we have got additional

20 levels of consistency in our own organization,

21 the way we are thinking about these plans.

22 That all rolls up and, then, we match

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1 it with the Federal Reserve. We make sure that

2 we agree on the facts, the weaknesses, the

3 issues. That distills down into what we have

4 here, shortcomings and deficiencies. And that

5 lays out, ultimately, into the letter.

6 So, at each point in this process

7 there is a check, a recheck, a distillation, that

8 leads ultimately to the letters that just came

9 out. So, that is step one.

10 Then, you asked about the relationship

11 between Title I and Title II.

12 MR. HOYER: Exactly.

13 MR. DELFIN: So, obviously, these are

14 different paradigms, but they go to address the

15 fundamental issues that were laid out, which is

16 lack of preplanning and ability and authority to

17 address the resolution of a large systemic

18 institution that existed during the financial

19 crisis.

20 And so, Title I is obviously the first

21 step under the statute. Firms needs to show

22 under 165 that that firm can fail in bankruptcy. 

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1 That is what we are doing here today. That is

2 what we are discussing. There is a backstop

3 under Title II that exists.

4 Obviously, we have tools, the FDIC has

5 tools under Title II that are not available to

6 the firm under Title I, which is why they have

7 these additional obstacles, obstacles like

8 liquidity and working with foreign regulators

9 that are much easier for the FDIC under Title II. 

10 The firms need to overcome that in their

11 strategies.

12 Now these two things work together

13 because all the progress we can make on Title II,

14 obviously, helps us because those are obstacles

15 that might exist. The progress we can make under

16 Title II helps us if we ever need to do a

17 backstop or if a failure scenario is different

18 than the one that might have been addressed under

19 Title I. So, those two work together, and the

20 Title II team will talk about that. So, I think

21 that is the next part of that.

22 MR. HOYER: Yes, there are kind of two

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1 components I would come off of, because it was a

2 long, multifaceted question for like a meta3 Senate panel.

4 (Laughter.)

5 The use of the Title I information

6 integrate into Title I. As you can imagine, it

7 is highly connected, right? There are a lot of

8 common issues there.

9 So, as you would expect, all of us are

10 steeped not just in Title I, but in Title II, and

11 they are core aspects that the industry is

12 working through from a Title I standpoint that

13 also has Title II ramifications. So, absolutely,

14 we would be utilizing that.

15 I think the second part of your

16 question that I heard -- and maybe I

17 misinterpreted this -- was that, when we are

18 running our horizontals, absolutely, we are

19 looking for range of practices; absolutely, we

20 are looking for does this help facilitate the

21 strategy.

22 But the one thing that I want to make

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1 clear is that we are not looking to make

2 everybody the same. So, I want to make sure that

3 it is relative to their strategy. And I will

4 give you like one specific example in their

5 business operations.

6 So, let's just say that they chose a

7 single point of entry in Title I, bankruptcy, not

8 Title II. And they have multiple aspects they

9 are going to have to deal with. But let's just

10 talk about the financial aspect of downstreaming

11 resources.

12 They can choose whether they want to

13 leave money at the top of the house, and when the

14 parent fails, try to downstream those. They can

15 choose to preposition those funds. They can

16 choose a balanced approach.

17 And so, when we are looking at who did

18 what, how, and what sort of obstacles they needed

19 to mitigate, obviously, a consistency approach

20 across governance mechanisms to capture that,

21 obviously, a consistency approach across

22 financial to capture that.

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1 But, if we did have one firm, let's

2 say, that was more prepositioned with some

3 flexibility at the top, it is a different

4 consideration than someone who is completely

5 reliant upon all the money being downstream, has

6 a much bigger obstacle.

7 So, I didn't want it to, when I heard

8 the consistency, yes, absolutely, we look across

9 those big-ticket items to understand how they

10 address that vulnerability, but we are absolutely

11 by no means looking to make everybody the same

12 because they fundamentally operate differently.

13 MR. WALL: I think one other aspect to

14 what you are concerned about, a very good

15 question, a very good issue that we need to

16 address, I think as you were indicating, is the

17 central interconnectedness amongst institutions. 

18 And I think you will see -- and I don't frontrun

19 our subsequent discussion -- but I think you will

20 see that there is a renewed emphasis in the

21 guidance that we have put out for the firms about

22 making the plans have what we call optionality to

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1 address a range of adverse scenarios, so that

2 firms can't just rely on a very rosy, single,

3 idiosyncratic scenario, but the plans must be

4 able to address states of the system in which

5 there are perhaps other issues going on.

6 And it is a very hard thing to do that

7 because, if you were to assume the full range of

8 possible scenarios, you would have a plan that

9 would take over the world. But I think we have

10 done that. We have recognized that that is an

11 issue and our guidance this year takes that into

12 account.

13 MEMBER JOHNSON: Are they allowed to

14 say or how impressed are you when they say, "We

15 will sell this or that asset."? I mean, do the

16 states work with --

17 MEMBER DONALDSON: We are going to

18 talk about that in detail.

19 MEMBER JOHNSON: All right. All

20 right.

21 MEMBER DONALDSON: In detail.

22 (Laughter.)

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1 That is a key question.

2 MEMBER JOHNSON: That was the best

3 terms in the Lehman plan, too, right?

4 MEMBER DONALDSON: There are key

5 issues that we are going to identify. Maybe we

6 can like, because we are running out of time,

7 maybe we will have David talk about the

8 determinations. We might catch a break. And

9 then, we will go into --

10 MEMBER JOHNSON: Of course.

11 MEMBER REED: Do you use governance

12 and management as the same? In other words, are

13 you looking at the managerial structure or the

14 legal governance?

15 MR. DELFIN: I think we break it into

16 component parts.

17 MEMBER REED: I never have seen the

18 word "management".

19 MR. HOYER: You are going to see two

20 words come up. First, I want to back up and say

21 you will see us reference governance. What you

22 think about is overall corporate governance,

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1 which is the boards, senior management, et

2 cetera.

3 MEMBER REED: And legal.

4 MR. HOYER: Exactly, everything that

5 you would typically think about within a banking

6 organization, falling under its corporate

7 governance structure. And we want to see

8 resolution planning integrated into that, no

9 different than we want to see risk management or

10 audit.

11 You are also going to see reference to

12 a term which is different around governance

13 mechanisms. So now, what are the mechanisms to

14 facilitate Board actions, triggers, et cetera,

15 which we will talk about a little later?

16 MEMBER BOWSHER: Can I just raise an

17 issue? Referring to the GAO report -- and I

18 heard it a few times -- would it be good if all

19 the members got a copy of it?

20 MR. DELFIN: I think it is in your

21 binder.

22 MEMBER BOWSHER: Oh, it is in the

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1 binder?

2 MR. DELFIN: Yes.

3 MEMBER BOWSHER: Oh, good. Okay.

4 MR. DELFIN: And I think pages 19 to

5 21, or so, is a real detailed discussion of the

6 frameworks that the agencies would use and their

7 approaches.

8 MEMBER BOWSHER: Oh, yes. I would 

9 like to raise one other issue. I have served,

10 because of my background on audit, as chairman of

11 many audit committees of main boards and a couple

12 of banks, too. I would be very worried at this

13 point because the chairman of the audit committee

14 always gets the opportunity to appear before

15 Congress when the bank really gets in big

16 trouble, along generally with the CEO.

17 And so, have you had much contact with

18 audit committees as you issue these reports? 

19 Because it would seem to me the boards now must

20 be concerned that they are not getting on top of

21 this. I mean, the audit committee, I would

22 think, would be one of the focal points.

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1 MR. HOYER: Yes, absolutely. I would

2 address that question from two standpoints.

3 So, first off, every institution has

4 its corporate governance process. Relative to

5 how they close out or address a weakness will

6 typically run through an audit review, as you can

7 imagine. Whenever they put together their

8 resolution plan or anything that is going up the

9 senior management chain or out to regulators goes

10 through a corporate governance process, which

11 includes audit.

12 Now, relative to whether it be the

13 interactions that we have during the review

14 process or interactions that we have beyond the

15 review process, it is really, I would say, up to

16 the firms sometimes. When they have come in to

17 meet with me, they absolutely have had members of

18 the audit team there, and sometimes they have

19 not.

20 But the governance process they have

21 for closing out and addressing a weakness, no

22 different than they would with BSA/AML or

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1 anything else, runs through audit. And the

2 preparation of the resolution plan does as well.

3 MEMBER KOHN: So, any plan you get has

4 gone to and been approved by the board of

5 directors of the firms submitting?

6 MR. HOYER: That is a requirement of

7 the rule.

8 MEMBER KOHN: So, you may not be

9 interacting directly with the Board --

10 MR. HOYER: They have seen it.

11 MEMBER KOHN: -- but the Board has

12 seen it?

13 MR. HOYER: Yes.

14 MEMBER KOHN: They have debated it? 

15 They have spent a lot of time on it?

16 MEMBER REED: Maybe.

17 (Laughter.)

18 MEMBER PETERSON: I heard that some of

19 these plans are stacks this high, 2,000, 3,000

20 pages. How do you reconcile a 3,000-page

21 document, so that it is actually something you

22 can implement; it is actionable?

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1 MR. HOYER: Yes, that is a great

2 question. The first thing I would say is that

3 your range is a little short.

4 (Laughter.)

5 But I would say that you can kind of

6 envision anywhere from 1,000 pages to upwards of

7 100,000 pages. But bear in mind that, yes, bear

8 in mind that there are two aspects to think about

9 here.

10 The strategy, when you back up to

11 Title I, what Title I is really about, right, and

12 I know the lawyers will want to say it

13 differently, but it is about mitigating systemic

14 risk transmission, right? How do you wind

15 yourself down or how do you continue operations,

16 one or the other?

17 And so, the critical operations that

18 can result in that are a known set. They can

19 move around, but for most of these large

20 organizations they do not. It always has to be

21 reevaluated from time to time.

22 Material entities, to Dick Herring's

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1 point earlier, don't tend to change a lot as to

2 what the substance of the organization is and

3 where the critical operations are. So, there are

4 core foundational elements that don't change

5 year-to-year that you can simply look at, have

6 they changed anything, and move on quickly. And

7 so, can the firms in the production of that.

8 The other thing is the firms, as you

9 would expect, as they are trying to meet a rather

10 large, comprehensive rule, include things such as

11 policies, procedures, things that we have every

12 day at our disposal through normal supervisory

13 and monitoring efforts.

14 And so, what I would characterize is

15 that the core crux of the strategy, the core crux

16 of what gets past the foundational elements that

17 we have been dealing with for several years, can

18 really be condensed down to a much smaller group

19 of pages.

20 MEMBER HERRING: But could I follow up

21 on that, because I think the two points are

22 highly related? If you really expect meaningful

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1 oversight by the Board, you can't hand them

2 several thousand pages. There are just too many

3 other things they have to do.

4 MR. HOYER: Right, and so, the firms

5 -- no, it is a great question -- the firms will

6 put together what they will call a narrative

7 section, right? They will have an executive

8 summary, but they will have a narrative. And the

9 narrative really walks you through the quick and

10 dirty of the strategy. They may call it

11 something different plan-to-plan, but it will be

12 like a narrative.

13 That is where I am focused, if I am a

14 Board member, and I would ask questions: if you

15 know what your particular entities are, your

16 critical ops are, and so on, which will be laid

17 out in the narrative. But the narrative tells

18 you the story.

19 MEMBER KOHN: To get to Peter's

20 earlier point, that is the point at which the

21 Board ought to be doing the top-down.

22 MR. HOYER: Uh-hum. That's right. It

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1 would be no different than any other supervisory

2 matter that would make its way to a board. What

3 were the issues before? How did we address those

4 issues before we signed off on it?

5 MEMBER FISHER: If I could, I was

6 really trying to make a much simpler point, which

7 is both junior management in the firms and the

8 agencies are complicit in letting things that are

9 easy and fact-based to identify by about things

10 that are difficult and judgmental.

11 And it has happened, and I am looking

12 for you to be a little understanding of the

13 agencies' complicity in that process. By the

14 time it gets up to the Board, the subject is

15 9,000 pages long and a 100-page summary. And the

16 question is, should I go on a diet? Knowing how

17 much fat is in my pinkie and how much fat is in

18 my baby toe doesn't really help us figure out

19 what is the right diet for me.

20 CHAIRMAN GRUENBERG: If I could just

21 ask staff to address what I think, Peter, you are

22 asking. At the staff-level interaction both with

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1 the agency and the company, the facts to deal

2 with can become so overwhelming that in a sense

3 you would lose track of the big picture, and at

4 the staff level before it gets to the Board, you

5 don't yet put the pieces together and, from a

6 broader perspective, look at what should the

7 overall picture for the fund be.

8 MEMBER FISHER: And we are all

9 complicit in that. The system is --

10 CHAIRMAN GRUENBERG: And I think if I

11 could just ask maybe staff to respond to it?

12 MEMBER BRADFIELD: Just like the court

13 sets limits on the number of pages, why don't you

14 set limits on the number of pages and say, "Your

15 plan can't be more than 25 pages. You can have

16 all the annexes you want, but your plan has to be

17 25 pages."?

18 MR. WALL: Most of the pages are

19 annexes, yes, or tables, some of which are

20 repeated.

21 MR. DELFIN: And I do think we have

22 tried. Certainly, in our interactions with firms

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1 and in our letters, in our guidance, it is to

2 focus on the big issues. There is not a lot of

3 small-time, "Oh, on page 257...," but, rather on

4 the major issues of how you get the capital

5 liquidity where it needs to be, how to make the

6 decisions, and how to structure your operations,

7 I think is how we are trying to approach it.

8 MR. HOYER: Maybe speak indirectly to

9 the Chairman's point and Peter's point in telling

10 Peter at this time we get it. We are not

11 attempting to dodge it. There is a suggestion

12 that was put on the table earlier, which I think

13 is a fantastic suggestion. It is that we do deal

14 in the weeds as well as the high level with the

15 senior officials at the firms that are going to

16 be addressing this. And having that similar

17 conversation for the firms that want to engage

18 the Board, we more than welcome that at our side,

19 so that you can fully understand that. We can do

20 that at any juncture along the way.

21 And then, as it pertains to submission

22 materials, you know, that is a conversation we

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1 can definitely engage in as well.

2 CHAIRMAN GRUENBERG: I think as we

3 come to the actual discussion relating to the

4 determinations, it will become pretty apparent

5 that the focus here is on the four strategic

6 issues --

7 MR. HOYER: Yes, that's right.

8 CHAIRMAN GRUENBERG: -- impacting the

9 operations of the firm; that the preoccupation

10 was not, frankly, with details, but with the core

11 obstacles to resolvability for the funds and

12 directing the firms to address in a meaningful

13 way those obstacles. Well, we will come to that.

14 MR. WALL: So, in that vein, talking

15 about what we actually did, I think it would be

16 worthwhile going over briefly in summary what the

17 agencies found and what actions the agencies took

18 over the last couple of days.

19 So, Art already gave you sort of a

20 refresher, briefly went over the legal framework

21 of the statute and what the agencies are

22 obligated to do. As you know, plans that are

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1 submitted by firms that are subject to the

2 heightened prudential supervision of the Federal

3 Reserve are required to be reviewed by the

4 Federal Reserve and the FDIC. As a result of

5 that review, the agency, either agency or both

6 agencies, may make a finding that the plan is not

7 credible or would not facilitate an orderly

8 resolution under bankruptcy.

9 With respect to the plans that were

10 submitted for review in July 2015 by the eight

11 largest domestic bank holding companies, the

12 Board and the FDIC, first of all, did review all

13 eight of those plans and, as a result of that

14 review, jointly determined that each of the plans

15 submitted by five firms, Bank of America, Bank of

16 New York Mellon, JPMorgan, State Street, and

17 Wells Fargo, were not credible or would not

18 facilitate an orderly resolution under

19 bankruptcy. In addition, the agencies

20 identified, jointly identified, deficiencies in

21 those plans and issued joint Notices of

22 Deficiency to each of those firms.

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1 So now, with respect to two of the

2 firms, the agencies did not make a joint

3 determination. For Goldman Sachs, the FDIC

4 determined that its plan was not credible or

5 would not facilitate an orderly resolution under

6 bankruptcy. And for Morgan Stanley, the Federal

7 Reserve determined that its plan was not credible

8 or would not facilitate an orderly resolution

9 under bankruptcy. But, since there were no joint

10 determinations in those two cases, there was no

11 joint Notice of Deficiencies issued to the firm.

12 Finally, with respect to one firm,

13 Citigroup, neither agency made a determination

14 that the plan was credible or would not

15 facilitate an orderly resolution.

16 In addition, the agencies, with

17 respect to seven of the eight plans, one

18 exception being that of Wells Fargo, the agencies

19 determined that each of those seven plans had

20 specific weaknesses in the plans that, while not

21 rising to the level of deficiencies, constituted

22 specific shortcomings in the plans that the firms

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1 would be required to remediate.

2 Finally, as we noted earlier in the

3 discussion, the agencies prepared and have issued

4 a guidance document of general applicability to

5 the firms. The document is intended to assist

6 the firms in further developing their resolution

7 strategies. It describes what the agencies

8 expect from the firms' next full-plan submission,

9 which is due in July of 2017.

10 So, a little bit about the response

11 timing to these determinations. Yesterday the

12 agencies issued joint letters to each firm

13 containing the Notices of Deficiency or

14 identifying shortcomings, or both, as applicable

15 to the particular firm and, in addition, issued

16 the guidance document.

17 In the letters the agencies directed

18 the firms to make the following response: for

19 those firms whose plans were found not credible

20 or would not facilitate an orderly resolution,

21 and therefore, which the agencies issued Notices

22 of Deficiency contained in the letters, the firms

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1 are required to submit the revised plans

2 remediating the deficiencies by October 1st of

3 this year, so October 1st, 2016.

4 And I do note that the rule, actually,

5 provides a 90-day return date. So, we are giving

6 firms an extra three months to do their

7 remediation.

8 For each of the firms that received a

9 letter identifying shortcomings, which is just

10 that seven of the eight firms, they must submit

11 to the agencies by October 1st a report of the

12 progress they have made in addressing the

13 shortcomings. So, some of the firms will be

14 submitting a report that just addresses

15 shortcomings, and some will be submitting a

16 report that contains, hopefully, remediated

17 deficiencies as well as progress on --

18 MEMBER JACKSON: A question maybe out

19 of ignorance.

20 MR. HOYER: Sure.

21 MEMBER JACKSON: What is the

22 difference between a deficiency and a

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1 shortcoming, given that both need to be

2 addressed? The deficiencies probably are more

3 serious, which is why you are requiring them to

4 be addressed earlier.

5 MR. HOYER: Uh-hum.

6 MEMBER JACKSON: But, since both need

7 to get addressed, can you give me a brief -- I

8 don't need an example, but --

9 MR. HOYER: Sure.

10 MEMBER JACKSON: -- what is a

11 deficiency versus what is a shortcoming?

12 MR. HOYER: Yes, I will take that. I

13 know everyone has had so much time to read all

14 the documents that are out there.

15 (Laughter.)

16 I don't necessarily want to say it is

17 a definition, but at least, if you will, a

18 guiding principle on how we think about

19 deficiencies and shortcomings is in the public

20 narrative. So, you can find that.

21 But, real quickly, the way to think

22 about it is, this is an aspect -- and I am

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1 talking about a deficiency -- this is an aspect

2 of the plan that, first and foremost, the

3 agencies jointly agree upon the materiality of

4 that particular aspect; that it will or could

5 undermine the feasibility of the strategy. So,

6 that is kind of the first point, is that it is

7 joint. Secondly, we both feel that it could

8 undermine the feasibility of the strategy.

9 And a third point -- and I know you

10 have talked about this before -- is in the 2014

11 letters we were very clear that we wanted to see

12 demonstrable progress. And so, as we were

13 looking for that progress made from the 2014 and

14 2015 communication, that could also be an aspect

15 that could result in a joint deficiency finding.

16 Contrast that to a shortcoming. 

17 Before I go there, I do want to say all

18 weaknesses matter. All weaknesses have to be

19 addressed. And so, when we get to a shortcoming,

20 it could be -- think about the components I just

21 walked through -- it could be that the agencies

22 didn't agree on the materiality of it. It could

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1 be that we did agree upon it, but felt that it

2 just really raised questions about the particular

3 strategy, but maybe couldn't necessarily

4 undermine at this particular point or the

5 progress was there.

6 So, that gives you kind of the guiding

7 principle. The word-for-word sort of

8 definitions, you will find those in there.

9 MEMBER BRADFIELD: Do they have

10 different legal consequences?

11 MR. HOYER: Absolutely.

12 MR. WALL: That is a very good point. 

13 Coming at it from the legal viewpoint, a

14 deficiency, if not remediated by October 1st,

15 could provide the basis for further joint action

16 by the agencies, if the agencies were jointly to

17 determine that the lack of remediation was

18 sufficient to justify the imposition of further

19 prudential requirements, as provided for in the

20 statute. No guarantee, nothing that says that

21 that has to happen, but that is a possibility

22 with respect to an unremediated deficiency.

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1 The shortcomings are required to be

2 addressed by the next plan submission in July. 

3 If they are not adequately addressed at that

4 point, they could, then, become deficiencies and

5 be subject to a requirement for remediation. As

6 I said, the deadline for the next full-plan

7 submission is July 1st of 2017.

8 And I think I should mention one last,

9 but really very important item. As we have

10 referred to earlier -- and you have a copy of it

11 in your binder -- the agencies have released to

12 the public a report entitled, "Resolution Plan

13 Assessment Framework and Firm Determinations

14 2016". It is designed to be a descriptive title. 

15 I don't know if we succeeded or not.

16 But the point of that document is to

17 lay before the public the resolution planning

18 requirement that we are fulfilling and to provide

19 further information on the agencies' processes

20 for reviewing the plans. And we believe it is a

21 big step forward in promoting the transparency of

22 this process.

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1 MEMBER ADMATI: I have a quick

2 question. I just didn't read the documents right

3 or about this one specific piece of it that I

4 just became more aware of recently.

5 In the plan how did they and how did

6 you address central clearing? Because my

7 understanding is, from just reading, actually, a

8 recent article about this, that central clearing,

9 CCPs actually don't have an insolvency plan. Of

10 course, in the scenarios of failure, there would

11 be a CCP member that is defaulting somewhere in

12 there.

13 But the CCPs, I can tell you from

14 knowing some from the CFDC, you know, their risk

15 management and their stress testing is not that

16 transparent, either. But they also don't have an

17 insolvency procedure because they say probably

18 bankruptcy certainly won't work for them, but

19 Title II is also not going to work them. So,

20 what was assumed by the firms and by you about

21 that?

22 MR. DELFIN: Let's think of which lens

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1 we are looking through.

2 MEMBER ADMATI: Uh-hum.

3 MR. DELFIN: So, this panel is on

4 Title I. We are looking at the lens, looking at

5 the potential failure in bankruptcy of a USG,

6 say.

7 MEMBER ADMATI: Right.

8 MR. DELFIN: So, if the plan requires

9 that, let's say, material entities continue to

10 operate and function, a key component of their

11 ongoing functioning is access --

12 MEMBER ADMATI: Right.

13 MR. DELFIN: -- through a payment

14 clearance and settlement systems. So, one of the

15 obstacles that they need to overcome in their

16 plan -- and we provide more guidance -- is on

17 ensuring that they can achieve access if their

18 parent were to file bankruptcy. That is the lens

19 through which we are viewing this conversation

20 right here and the living will for those

21 individual firms.

22 In the next panel, they are going to

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1 take off their Title I hat and put on their Title

2 II hat and in that panel discuss how we use our

3 authorities under resolution to deal with

4 failures of other potentially systemic entities,

5 including potentially those failures, but those

6 firms are not part of the Title I process.

7 MEMBER ADMATI: But in the Title I

8 they had to make assumptions about CCPs. I mean,

9 you, yourself, said that it was deficient and --

10 MR. DELFIN: Right, they make

11 assumptions, but not about a CCP failure. They

12 make assumptions about a parent bankruptcy of a

13 USG and the ability to give access to a CCP for a

14 subsidiary.

15 MEMBER ADMATI: But in that scenario

16 that they are failing, what if the CCP is

17 failing? I mean, that's my question.

18 MR. DELFIN: Right. So, they are

19 assuming a severely-adverse scenario, right? The

20 world is not in great shape.

21 MEMBER ADMATI: Right.

22 MR. DELFIN: The USG scene is going

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1 down.

2 MEMBER ADMATI: Right.

3 MR. DELFIN: But they don't have to

4 assume that every other pillar of the financial

5 economy --

6 MEMBER ADMATI: But they, themselves,

7 would default on the CCP in that case?

8 MR. DELFIN: No.

9 MEMBER ADMATI: They would not?

10 MR. DELFIN: No, no, no.

11 MEMBER ADMATI: But the subsidiary --

12 MR. DELFIN: Therein lies the issue. 

13 One of the questions the firm has to overcome is

14 whether it is going to transmit systemic rights. 

15 So, they need to solve both their transmission to

16 CCPs and other counterparties as well as their

17 access in order to continue operations.

18 CHAIRMAN GRUENBERG: Let's interrupt

19 for just a minute because we were scheduled to

20 have a break at this time, but the conversation

21 seems to be moving forward. So, if everybody is

22 agreeable, we will just keep going to try to get

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1 through the agenda for this panel.

2 MR. HOYER: Yes, if I could just make

3 one additive point, everything obviously Rick

4 said is absolutely correct. And so, you will

5 hear about that, I assume, on the next panel.

6 But, as was provided in the 2014

7 guidance and as you will see conversations in the

8 2015 guidance that is out on the public sites

9 relative to this, the firms have multiple ways. 

10 Optionality is a key thing for the FDIC and the

11 Federal Reserve on this front.

12 And so, in addition to determining the

13 potential mitigants from a financial standpoint

14 for continuing to engage a CCP, there is also

15 communication around alternative strategies. And

16 so, those alternative strategies could also -- I

17 mean, while they could be used if they can't

18 engage a CCP for their own purposes -- could also

19 be used if, for example, the CCP itself failed,

20 but that is not the primary purpose.

21 But know that that alternative

22 strategy is being worked through as well as

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1 playbooks associated with that, but it would be

2 whether it is the Title I/Title II of the CCP

3 occurring simultaneously to effectuate that

4 transaction.

5 MEMBER PETERSON: Well, one of the

6 areas that markets are most interested in right

7 now relate to TLAC --

8 MR. HOYER: Uh-hum.

9 MEMBER PETERSON: -- and how do you

10 define different sorts of bonds. What are the

11 terms and conditions which would allow you to

12 bail in or to use them as a capital injection, so

13 to speak?

14 Some of the older senior debt which

15 has been issued before by the bank holding

16 companies, there is questions as to whether or

17 not you would be able to use it. There are new

18 rules coming out. At our agency we have been

19 defining our own definition of what we call ALAC,

20 which is basically available capacity.

21 So, I would be interested to know, how

22 are you seeing that in each of these different

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1 worlds and what are some of the implications of

2 what we seem to be back to the markets on on

3 TLAC?

4 MR. DELFIN: I think there are two

5 pieces to that. One is actually the Federal

6 Reserve has put out a rule, and the Federal

7 Reserve is going through that rulemaking process

8 and receiving comments and deciding on how they

9 want to define certain components. So, we can't

10 get into their rule.

11 But, obviously, in the Title I

12 process, the parent's ability to file bankruptcy

13 and have some lawsuits over incapacity that they

14 can use to recapitalize the material entities

15 comes from their losses or incapacity, which

16 would be defined or further enumerated by what

17 happens with that long-term debt rule.

18 And so, certainly, to the extent

19 holding companies have sufficient losses or

20 incapacity that they can use to recap the subs,

21 that makes their plans more or less reasonable,

22 depending on the strategy that they use. So, if

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1 they used the recap, then that would be a key

2 component.

3 MR. MURTON: I would note there are

4 other things to flag for it.

5 MR. HOYER: We will discuss a little

6 bit more, and it is in the guidance. After the

7 break, we are going to move into sort of those

8 key components, and we will talk about resources. 

9 But, relative to what qualifies and what does

10 not, as you know, as a rule-based measure versus

11 getting into the components of that, thinking

12 about we will have, if you will, a defined

13 amount. That is what is available. And we will

14 be thinking about more the obstacles of, where is

15 it, what is it, how do they get it where it needs

16 to be, and what do they need?

17 But it is a great question, but until

18 the rules are finalized, what qualifies will be

19 subject to a --

20 MEMBER JOHNSON: Yes, but I think you

21 are on a slippery slope here if you are deferring

22 to the rule and deferring to some legal issue. 

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1 This is back to the bigger point made by Anat,

2 right? Which is with the living will, you are

3 looking at living wills individually, but what

4 matters is the system.

5 So, if Bear Stearns had had some TLAC

6 in early 2008, would it have made much difference

7 at all? Maybe no, because the issue was what any

8 bail-in of any trader would do to the system and

9 how that would spread through the system. So,

10 there is a systemwide component to this, right? 

11 Who holds that debt? Who is going to get written

12 down? What is the potential contagion?

13 And I am afraid that -- and I

14 understand the living will -- but that matters

15 because you are not supposed to have a big

16 systemic effect.

17 MR. DELFIN: Yes. So, the challenge

18 is to the extent to which they have mitigated

19 that risk. Let's use Lehman as an example. They

20 failed in bankruptcy. If you look at the Valukas

21 Report on Lehman's failure, I think Alvarez and

22 Marcellus made that, roughly, $75 billion was

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1 lost to the market because of their rushed and

2 lack of planned bankruptcy process. That is

3 systemic contagion, just from lack of planning.

4 To that, they didn't have a strategy

5 to mitigate that risk. So, what we would need to

6 do is apply what would happen if Lehman Brothers

7 had done the planning, gone through the living

8 will process, built out a structure, addressed or

9 tried to address the capital liquidity to each of

10 the components we identify today, and then, see

11 to what degree would they have mitigated systemic

12 risk.

13 There was no, is there protocol? 

14 There was no long-term debt. There was no

15 capital liquidity position. There were none of

16 these rules.

17 And so, we don't know what the future

18 looks like. I don't want to say the future is

19 bright or not. All I am saying is that, to me,

20 is the more appropriate test, as opposed to what

21 would have happened there.

22 MR. HOYER: Yes, one other -- oh,

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1 sorry -- just one other point I wanted to make in

2 case it was assumed that we had deferred to TLAC

3 or the long-term debt rule that is being

4 developed.

5 So, in the assessment of this

6 particular plan, the 2015 plan, the firms had to

7 demonstrate the capability of recap if they chose

8 an SPOE strategy, not based on some future

9 requirement. We didn't pass on capital if that

10 had come out that particular way. They still had

11 to demonstrate at this particular time. As was

12 provided in the 2014 letter and the 2015

13 communication, they had to identify those gaps

14 and demonstrate how those gaps would be closed.

15 Sorry, Rodgin.

16 MEMBER COHEN: I was just going to

17 offer one observation and, then, a

18 recommendation, the observation being that I

19 think, Simon, and picking up with Anat said, is

20 absolutely correct. You are looking at

21 individual institutions, but the issue is

22 systemic.

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1 So, the faster that the agencies, I

2 guess the Fed in this case, can move on TLAC and 

3 single counterparty credit limit, because TLAC

4 also has a severe limitation on the ability of

5 other financial institutions to hold the bailable

6 debt, and the sooner that gets in, the single

7 counterparty credit limit gets in, the better

8 defenses will be to restrain.

9 The comment is -- and since it has

10 been touched on, I can't resist any longer --

11 that is the issue of the balloon goes up, and now

12 in bankruptcy, which I would suggest is a form,

13 at least in its present incarnation, ill-suited

14 to this. There is the question of,

15 notwithstanding everything that is there, will a

16 bankruptcy court intervene and create a real

17 problem?

18 MR. WALL: Rodgin, I think that is an

19 excellent question. It is one that has consumed

20 a lot of our attention and a lot of the attention

21 of the firms.

22 MEMBER COHEN: And it has, and it will

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1 continue, from what I have read in the letters. 

2 So, one thought would be to go in, take the

3 source-of-strength language in Dodd-Frank and

4 amend it to make it a preemptive source-of5 strength obligation. So, you knock out the

6 possibility of state law here and a bunch of

7 hedge funds going in, buying the debt, and then,

8 holding up the whole process.

9 There are going to be efforts made --

10 the word "flexibility" I heard a lot -- but a

11 legislative solution, as difficult as that might

12 be, would be the most effective here.

13 MEMBER BRADFIELD: Is short-term debt,

14 following on Simon's question, is short-term debt

15 a factor in your consideration of the sufficiency

16 of a living will plan?

17 MR. HOYER: So, I hit it from a couple

18 of angles. We have been discussing capital. We

19 have been discussing TLAC. We have been

20 discussing long-term debt. And in that same

21 vein, from the 2014 and 2015 discussions that are

22 in the public narrative, clean top-tier holding

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1 company.

2 Given the implications of short-term

3 debt on the marketplace and systemic disruption,

4 short-term -- again, we will see where the final

5 rule is -- does not qualify for that particular

6 aspect.

7 MEMBER COHEN: But you should take

8 more credit for this because, as a result of what

9 you did in reviewing earlier plans, there is

10 basically no short-term debt left --

11 MR. HOYER: That's correct. Yes.

12 MEMBER COHEN: -- at the G-SIFI.

13 MR. HOYER: Yes. At the parent.

14 MEMBER COHEN: Yes, at the parent

15 level, yes. Correct.

16 MR. HOYER: So, given a single point17 of-entry in Title I under bankruptcy, under the

18 assumption the parent company fails, there would

19 be no short-term debt defaulted upon, and

20 therefore, the holders of those would not be

21 affected.

22 MEMBER KOHN: And enough credit at the

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1 holding company to keep those operating subs --

2 MR. HOYER: Right.

3 MEMBER KOHN: -- that are itching. 

4 That is the key systemic --

5 MR. HOYER: Yes, right.

6 MEMBER KOHN: I mean, it is to access

7 to short-term wholesale funding, and there has to

8 be enough at the top under either Title I or

9 Title II to keep those subs, give them access. 

10 That would be the absolute bedrock for this.

11 MR. HOYER: Right. Uh-hum.

12 MEMBER KOHN: But you have to meet

13 that.

14 MEMBER JOHNSON: It is enough of what?

15 It is going to be enough that you can be bailed

16 in without that bail-in creating a significant

17 negative --

18 MEMBER KOHN: Right.

19 MEMBER JOHNSON: -- spillover

20 contagion effect, right? In any market, surely,

21 certainly any derivative market, it would be a

22 major concern.

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1 MEMBER HERRING: I get a little

2 concerned with these arguments about we couldn't

3 possibly get bond-holders. I think that was one

4 thing to talk about subordinated debt-holders

5 before this. But, once we have identified bonds

6 that you are buying with the firm understanding

7 they will be bailed-in, I think you are in a very

8 different ball game.

9 I think that is not what worries me as

10 much, although spillovers for sure are of

11 concern. What worries me most in the process,

12 frankly, is the delay in starting, because the

13 longer the delay, the bigger the losses; the

14 bigger the losses, the bigger the potential

15 spillovers.

16 What I have seen very little of in all

17 of these discussions is how prompt resolution or

18 prompt bankruptcy procedures started. That, to

19 me, has been a consistent problem in the whole

20 system over the last --

21 MR. DELFIN: So, we are actually going

22 to segue. We are going to talk about governance

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1 mechanisms. There was going to be a breaking

2 point.

3 MR. HOYER: Let's plow through.

4 MR. DELFIN: Do we want to close out

5 discussions on the conclusion aspect first of

6 all?

7 MEMBER ADMATI: I just want to throw

8 in one other question because we keep talking

9 about the holding company, which, again, I worry,

10 sitting in FDIC, you obviously need to worry. 

11 Again, it is another hat you wear about the

12 bank's subsidiary.

13 And so, what is the assumption about

14 the bank's subsidiary? Because that is where the

15 short-term debt and that is where the derivatives

16 are still right now. And so, what happens? What

17 is the assumption in this scenario, that the

18 bank's subsidiaries are fine, or what?

19 MR. DELFIN: Why don't we walk through

20 that and walk through the issues and, then, game

21 it out? Maybe that would help.

22 So, at this point we wanted to talk

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1 about some of the key issues that the agencies

2 identified in their feedback and in the guidance

3 in the report. These are the big-ticket items,

4 for lack of a better word.

5 To help put those into perspective, I

6 thought maybe we might walk through just the

7 general strategy that a number of firms, although

8 not all, put forth in their plan, which is a

9 single point-of-entry in bankruptcy strategy. If

10 we walk through that strategy, we might be able

11 to piece-in each of these issues and why they

12 matter and what the complexities are associated

13 with them.

14 So, under a simple -- and this is a

15 very simple -- SPOE in bankruptcy approach, you

16 would have some sort of shock or series of

17 shocks, combinations, losses, that puts a G-SIFI

18 on the path of distress. We, when we review

19 these plans, don't care about the shock. All we

20 want to do is see how a failure state and the

21 strategy the firm has set forth would flow

22 through the structure of that firm.

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1 We know the future is not anything

2 like the hypothetical scenario they put forth. 

3 So, we just assume it. The firm has taken

4 whatever recovery items it can take, but it is

5 now clearly on the path toward bankruptcy filing.

6 Around this point, and it could be

7 just prior to bankruptcy filing when we are

8 downstream sufficient capital liquidity to its

9 material entities, to its key subsidiaries in

10 order to ensure that those entities could

11 continue operating while the parent goes into

12 bankruptcy.

13 When the parent is in bankruptcy,

14 those entities would operate. They would wind15 down, they be sold off, or they would re-enter

16 the market at the end of the bankruptcy

17 proceeding.

18 That is the big-picture vision of SPOE

19 in bankruptcy. Now let's put forth those big20 picture items that you talked about.

21 So, the obvious No. 1 big-picture item

22 is the financial resources. That is, how do you

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1 have enough capital and liquidity to ensure that

2 those material items are going to be able to

3 operate throughout the bankruptcy process. And

4 Brent is going to talk about that in more detail

5 in just a second. That is question No. 1.

6 Question No. 2 is, how do you ensure

7 that the decisions that need to be made are made

8 at the time required? If your plan is based on

9 the downstreaming at an appropriate time or the

10 filing of bankruptcy at an appropriate time

11 before a window closes, then you need to have a

12 system in place, what we call a governance

13 mechanism, for ensuring that those decisions are

14 made when they are supposed to be made.

15 Then, let's say you go into

16 bankruptcy. There is obviously a host of

17 operational and structural challenges associated

18 with filing. And Rodgin pointed out there are

19 legal challenges. How do you overcome the

20 obvious legal challenges that are going to take

21 place? We need to discuss those, and there is

22 guidance on those.

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1 There are issues about whether or not

2 shared services can be provided among entities,

3 and there are key questions about the structure

4 of your corporation and whether or not it has

5 built itself toward resolvability and provides

6 real actionable objects of sale to facilitate the

7 sale and transfer of these entities. Because,

8 obviously, there are a number of key things that

9 can go wrong, and having optionality and

10 separability provides a great deal more

11 flexibility to the structure than operating just

12 under a single hypothetical.

13 Lastly is there is a specific

14 challenge associated with winding down a large

15 derivatives book, which the agencies also

16 identified.

17 So, with that, I will turn it over to

18 Brent to talk about the financial issues.

19 MR. HOYER: I am going to expedite the

20 financial issues because we have spent some time

21 talking about capital already. So, I won't

22 revisit a lot of the discussion.

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1 The one thing I would say, I know we

2 keep pointing to this, but I want to recognize

3 the fact that it is there. Obviously, since we

4 have spent a great deal of time with our Federal

5 Reserve counterparts writing it, we think it is

6 really good stuff. So, we want to encourage you

7 to read it.

8 But the guidance that we put out, the

9 first eight, nine pages are dedicated to just the

10 financial resources as far as the expectations. 

11 And I will briefly hit upon it without going into

12 details.

13 So, we already talked about,

14 obviously, the firm is under severe distress,

15 right? Capital is impaired. Liquidity is

16 strained. There is market uncertainty around it,

17 and so on.

18 And Rick has talked about the elements

19 within a single point-of-entry Title I bankruptcy

20 sort of aspect. And so, the decision points are

21 the same whether it is capital or liquidity. It

22 is sort of the entity location. You know, are

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1 you prepositioned? Are you putting the funding

2 at the top of the house or are you balanced?

3 What you will find within the guidance

4 that the agencies have put out on both parts is

5 that we are looking for more of that balanced

6 opportunity, because whether it is capital or

7 liquidity that you will be using, it is that

8 prepositioning, obviously, can avoid certain

9 types of other vulnerabilities that we will talk

10 about later, like fraudulent conveyance. But, if

11 you preposition, you have to get it right every

12 single time because how do you get it back up and

13 over, right? So, having some sort of balance to

14 how you think about your funding is very

15 critical.

16 I think the message there is that you

17 may be able to overcome one obstacle and create

18 another. So, you have to always keep in mind all

19 the particular obstacles.

20 Decision points on entity location,

21 when did they take the actions as far as what

22 Board actions are there associated with the

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1 financial aspect and what triggers do they have

2 to actually prompt that to ensure, kind of to

3 Dick's point, that they will take it and that

4 there is sufficient timing, that there is a

5 buffer of flexibility. Obviously, the larger the

6 buffer they go in with, the more successful the

7 outcome could be. If they do need to get the

8 proceeds, again capital or liquidity where they

9 need it, do they have the mechanisms to get it

10 there?

11 So, we have already had a good

12 conversation on TLAC and long-term debt around

13 the capital standpoint, and what the guidance

14 provides, what the expectations are from the

15 agencies, of course, is that the firms have the

16 capability of maintaining a methodology that can

17 size at the material entity level what is needed

18 from a capital standpoint to recapitalize those

19 entities, to get them to a point where the market

20 is confident, counterparties are confident they

21 can make it through kind of that destabilization

22 period after the point of failure.

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1 That methodology, of course, is bumped

2 against -- let's just do a forward look, Simon,

3 to kind of the counterpoints you had raised, that

4 whether it is TLAC, whether it is long-term debt,

5 whatever the mechanism would be for the recap, we

6 know what the defined resource is that the firm

7 will have at that point in time, and they have

8 the measurement system to say what they need

9 under multiple plausible failure scenarios, as we

10 have talked about, various different market

11 conditions that could occur.

12 And so, obviously, those two have to

13 be compared. At no point can what you need

14 exceed what you have, right? And that gets to

15 the key of the triggers we will talk about at a

16 certain point and, then, the sensitivity analysis

17 around that we discussed earlier based on a

18 question that Anat raised.

19 This is really making sure that we

20 understand under what particular circumstances

21 does that strategy break. Is it something that

22 it is really going to require something

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1 unprecedented beyond any historical levels that

2 we have seen? Or is it something that is very

3 vulnerable within an entity or across the firm?

4 So, that is kind of a real quick,

5 expedited way of you know what you are going to

6 have, the methodology and what you need, under

7 those various market conditions, bumping those

8 up. We will talk about the triggers, the Board

9 playbooks. We will talk about the mechanisms to

10 get it.

11 So, moving on into funding, it very

12 much works the same way, but I would kind of add

13 a little more detail on certain aspects of the

14 methodology, so the same aspect of balanced. 

15 While the financial condition is likely in most

16 cases invoked about some sort of uncertainty in

17 the balance sheet and some sort of uncertainty

18 with the capital, ultimately, in our experience

19 it is liquidity that ultimately results in the

20 failure and the distress.

21 And so, ensuring that you have

22 sufficient funding to execute your strategy is

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1 key. Ensuring that you have sufficient funding

2 to restabilize and meet those counterparties'

3 needs are key.

4 And so, having that measurement system

5 that can size the outflow through that runway

6 period to that point of non-viability and really

7 at the end measuring what do we need to execute

8 this, and you will find in the guidance this year

9 we have been very prescriptive to the firms on

10 this. We need them to build a size at the

11 material entity level, the minimum operating

12 liquidity for each entity. So, what is its

13 working capital? What is its daily estimates

14 that it needs for any kind of stabilization to

15 continue to survive, operating expenses, inter16 affiliate funds flows. We have talked about

17 ring-fencing. The frictions aren't just limited

18 to ring-fencing and external parties, but also

19 internal, across affiliates on moving funds.

20 And so, the minimum operating

21 liquidity need that they would need, in addition

22 to the peak funding requirement for any firm or

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1 any entity within the firm, whether it be a

2 broker/dealer, whether it be the bank, at that

3 point of non-viability, as they move into that

4 resolution period, there will be a point in time,

5 day two, day three, day seven, where there is a

6 peak funding need. And they are going to need

7 that minimum operating liquidity plus that peak

8 funding need, providing those daily cashflows, so

9 that they can see what that is.

10 As you can imagine, that calculation

11 on what that need is is moving as the firm

12 changes day to day and does its normal business. 

13 The liquidity that they have, the HQLA that they

14 have available is moving as the firm operates day

15 to day. So, having a good measurement system, a

16 very good, robust MIS system to measure that, to

17 understand it, to understand, as I said, with

18 capital, the sensitivities, under what

19 circumstances would this work, would this not

20 work, and bumping that against the HQLA on a very

21 routine basis to know when are we getting within

22 the threshold, back to Dick's point, of making

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1 sure we take our actions in a timely manner. 

2 Because once we cross that point, based on the

3 calculations, the strategy is no longer going to

4 work.

5 MEMBER KOHN: That is a key difference

6 between Title I and Title II, I guess

7 MR. HOYER: Yes. Yes.

8 MEMBER KOHN: In Title II there is a

9 source of funding. In Title I --

10 MR. HOYER: Absolutely. Couldn't have

11 said it better myself. I always hate to say it,

12 but it is the bottom line: there is lots of

13 vulnerabilities, but the financial vulnerability

14 is key. And it is not only in the capital front,

15 the vulnerabilities there, but the liquidity

16 front there.

17 But, also to that, you can measure it. 

18 You can understand what it is. You can

19 understand your sensitivities to it and that it

20 may work under circumstances that we have never

21 yet seen. As we have talked about, maybe we will

22 see that.

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1 But, at the end of the day, if you

2 also don't have the mechanisms to actually

3 execute it or the ability to do that, that is a

4 challenge, too.

5 Sorry, Simon.

6 MEMBER JOHNSON: So, isn't every

7 financial collapse that we have ever seen

8 triggered by the liquidity?

9 MR. HOYER: Yes.

10 MEMBER JOHNSON: Just to be a slight

11 more constructive, what if you go back and look

12 at Bear Stearns or Thornburg Mortgage, or any of

13 the other people that were collapsing in the last

14 crisis? Can you look at the extent to which they

15 had liquidity and tell them that they didn't? 

16 And then, if there had been a living wills

17 requirement, ask the question, could they have

18 satisfied you a week before they collapsed or a

19 month before they collapsed, based on your

20 criteria? Because, if they could have satisfied

21 you -- and you could do this based on the public

22 records probably -- if they could have satisfied

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1 you, then that is a problem.

2 MR. HOYER: Yes. No, it is a very

3 fair question and it is absolutely an exercise

4 that not only from a regulatory standpoint we

5 have thought, but, as you can imagine, from an

6 industry standpoint, as they are going through

7 their own contingency funding plans, their own

8 stress tests, their stress tests are very much

9 keyed off of real examples, historical examples

10 of what has occurred through time, as well as

11 constantly looking at what could be the next

12 potential crisis.

13 But you are absolutely correct, if we

14 took Lehman, if we took Bear, and under this

15 particular example, let's assume that they had a

16 methodology. We will talk in the liquidity

17 world. Let's assume they had a methodology to

18 look across their material entities, and that

19 methodology true did capture. What do we need

20 for today? What do we need for operating

21 expenses? What do we need for working capital?

22 Let's say it was robust. That's X. 

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1 What is our peak funding, which for them would

2 have been pretty high day one, day two, day

3 three, based on their operations. And they knew

4 we have to take that action with some sort of

5 buffer prior to that.

6 Then, in theory, it would have worked,

7 but you have to have all those components and you

8 have to have a Board that will take those actions

9 at that point. That is a fair question, and it

10 is exercises that have been done.

11 MR. DELFIN: And that is why so much

12 of our guidance is focused on nailing down,

13 because it is critically important.

14 MR. HOYER: I would love to sit here

15 and tell you that I think it is one of the

16 fundamental things that we always point back to,

17 is that the rule reads, the statute reads, it is

18 substantially mitigating the risk. It is no

19 different than the question that was raised with

20 CCPs, access to FMUs, TLAC. Every one of these

21 assumptions we have locked down; it is 100-

22 percent certainty it will work, we are not going

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1 to sit here and tell you that. We are looking

2 for the firms to understand those

3 vulnerabilities, deal with those vulnerabilities,

4 and work towards the best-possible outcome to

5 substantially mitigate it under a range of

6 scenarios and a range of market conditions.

7 But, yes, you can look at any

8 particular point and say, if an asteroid hit the

9 earth, would that work? And so, there will

10 always be some level of probability. There is

11 never a 100-percent certainty across any

12 particular aspect.

13 We are looking for really good,

14 comprehensive analysis that provides the best15 possible outcome under the greatest extent of

16 circumstances.

17 MEMBER JOHNSON: Has there ever been

18 a self-funded bankruptcy restructuring by a large

19 financial company in the history of the world?

20 MR. DELFIN: Well, I think the point

21 of this process is for firms to overcome the

22 obstacles associated with their potential

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1 failure. And Congress has created a process for

2 them to do that and they have set forth rules

3 with a strategy and overcoming these obstacles. 

4 We have evaluated that and set forth back to them

5 a guidance.

6 CHAIRMAN GRUENBERG: Never before in

7 our regulatory history in the United States has

8 there been a set of requirements like this. So,

9 in some sense, what we are trying to introduce is

10 a new set of standards and regulatory

11 requirements within our framework to at least

12 permit a possibility of this outcome, combined

13 with a public bankruptcy backstop in the event

14 that the bankruptcy option appears unworkable and

15 the combination of the two is really an entirely

16 new framework within our regime to try to see if

17 we can have a different outcome, whether it is

18 the bankruptcy or the Orderly Liquidation

19 Authority, than we had previously, which was an

20 open institution support for the company.

21 MEMBER JOHNSON: I understand what you

22 are doing, Marty, and I support Title II, as you

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1 know. But it also requires a viable, feasible

2 failure under Title I. I think you are trying to

3 change the laws of physics here. Because, as I

4 understand the historical record, firms fail when

5 they run out of liquidity and only when they run

6 out of liquidity. We don't trigger, we don't

7 have corrective interventions ever, right?

8 And they are failing because they are

9 running out of liquidity, and now you are having

10 them produce out of a hat magically the liquidity

11 that is going to finance the restructuring. That

12 is very hard to believe.

13 MR. HOYER: If I could back you up

14 just a bit, the way the sequencing of the stages

15 goes for financial institutions, let's just say

16 we are in business as usual, were today. The

17 eight firms are operating fine. They will

18 encounter a stress period, and those stress

19 periods actually occur quite frequently, and they

20 move in and out of them just fine.

21 There is a recovery period that they

22 can enter into. The OCC recently issued recovery

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1 planning guidance. Recovery plans have been

2 provided for the firms for quite some time. The

3 firms have sets of actions that they will take to

4 try to bend that curve.

5 And so, the whole time the agencies

6 from a supervisory standpoint are monitoring the

7 progress of that. There is a point, though,

8 where you start to move into where recovery is no

9 longer successful.

10 At the same time, that firm is

11 measuring this is what we need to execute our

12 resolution plan. They cannot cross that point. 

13 So, as they are entering into recovery mode, they

14 are trying to take certain actions. They may be

15 successful on that front. Many firms have been

16 in the past. They may hit that point where they

17 cannot, and this is a way for them to achieve

18 potentially an order resolution. So, versus just

19 saying it can't work, this is a potential

20 mechanism to achieve that.

21 MEMBER COHEN: Brent, in this context,

22 I have thought, maybe incorrectly, that Title I

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1 and Title II are not totally "either/or". So, if

2 you filed in bankruptcy and that was not working,

3 that you would have the right, then, to come in

4 under Title II and have --

5 MR. HOYER: That is absolutely correct

6 and an excellent point, Rodgin, yes.

7 MR. MURTON: I don't think the

8 authorities would have the capability to go to

9 Title II. You can't request --

10 MR. HOYER: But, if Title I was not

11 successful, you could then do --

12 MEMBER JACKSON: Rodgin, while I think

13 that is right, and this is one of my hobby

14 horses, I think the problem is the disconnect

15 between Title I, living will, and all the great

16 work that the FDIC has done under Title II. 

17 Title I does not ask them to be resolved under

18 the best-possible resolution mechanism that we

19 have available. It asked them to be resolved

20 under the current Bankruptcy Code, which is, to

21 go to Simon's point, a real disconnect I think.

22 And it is too bad that Title I doesn't ask them

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1 to be resolved under the best-possible resolution

2 mechanism that we have in place. So, their task,

3 and I think the task of the financial

4 institutions, is made ultimately more difficult

5 by this disconnect in the statute.

6 MEMBER COHEN: Absolutely. That, of

7 course, is why it would be great if the work you

8 are doing to get the Bankruptcy Code --

9 MEMBER JACKSON: The House has been

10 great; get the Senate moving.

11 (Laughter.)

12 MEMBER ADMATI: Again, just to pick up

13 on that, the Bankruptcy Code has not changed yet. 

14 And so, the notion these institutions, just

15 looking at the basic facts from the outside, you

16 know, the last time bankruptcy was invoked for a

17 SIF was Lehman, and it didn't work very well.

18 So now, we are asked to really, really

19 believe in miracles because --

20 MR. WALL: I think one of the issues

21 in Lehman is --

22 MR. DELFIN: I mean, I think we are in

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1 a vastly different world than we were in Lehman.

2 MR. WALL: Yes.

3 MR. DELFIN: Obviously, Lehman

4 occurred after Bear. The government stepped in. 

5 Implicit support began explicit. Counterparties

6 may or may not have had an expectation of future

7 government support, and Lehman was a surprise.

8 MEMBER JACKSON: I think one of the

9 big differences with Lehman is exactly what you

10 guys are talking about up here, which is pre11 bankruptcy planning, of which Lehman had nothing.

12 MR. DELFIN: There was no planning. 

13 There was no loss of serving capacity. There was

14 no ISDA protocol in place for those qualified

15 financial contracts. There was no Title II early

16 liquidation, and there was no living will.

17 MEMBER JACKSON: The whole living

18 wills process is to ensure that you never have a

19 Lehman enter bankruptcy without --

20 MEMBER JOHNSON: Rick, for the record,

21 Lehman had 11.6 percent Tier 1 capital, and they

22 reported two weeks before they failed. So, this

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1 question of, yes, exposed, nobody has enough loss

2 incapacity, but in terms of the regulation

3 requirements and in terms of what they reported

4 -- and they have not been held accountable in the

5 courts, so I think they weren't lying -- they did

6 have a lot of capital by today's measures.

7 MEMBER REED: Look, I think that any

8 institution that goes through this process, No.

9 1, is going to have to plan in ways that

10 traditionally one would not have planned. I

11 can't imagine, listening to it, that you wouldn't

12 also modify your business. In other words, as

13 you confront some of the difficulties here that

14 get called out as you start imagining how you

15 might do some of these things, you are going to

16 say, "You know what? It isn't worth having these

17 businesses that are so dependent on market

18 funding because there is no way I am going to get

19 enough capital down to them," and so forth and so

20 on.

21 It is going to have the effect that I

22 was sitting here telling Tom that, if I were

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1 running a bank, my prime mission would be not to

2 be one of your defined systemic banks.

3 (Laughter.)

4 I would get a set of businesses. 

5 Because the process of doing through this just

6 makes clear that you are going to have to have an

7 amazing amount of liquidity and capital, and

8 distributed in the right places with the right

9 legal structures and managerial disciplines, and

10 so forth and so on.

11 So, this process is going to have a

12 salutary effect, whether or not it proves that

13 someday somebody is going to be able to go on to

14 bankruptcy easily and there won't be a ripple on

15 the surface of the water.

16 MEMBER JOHNSON: John, I hope you're

17 right. And very soon, we are going to have some

18 data to let us look at that because the systemic 

19 risk reports that the Fed puts out, we have the

20 latest out of 2014. We will soon have the end of

21 2015 data. And then, we will be able to look not

22 at exactly the same level of details that these

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1 guys can look, but this public data will show us

2 a lot about the structure, the size, the

3 structure, the funding structure of these banks.

4 So, I suggest we all take a look at

5 those numbers when they come out as part of our

6 assessment of whether -- I think John put it very

7 well. If you process is working, you should see

8 the banks changing that profile, changing those

9 lines of business. I haven't seen in any

10 publicly-available information so far. But this

11 data that the Fed puts out is comprehensive and

12 it is clear, and they make them report exactly on

13 these issues in aggregate form.

14 MR. HOYER: So, one thing I would add

15 to that particular point, Simon, what would be

16 helpful, what I would encourage you to do in

17 conjunction with when you are looking at that

18 particular data is to read the expectations and

19 guidance document that the Federal Reserve and

20 the FDIC have put out for the firms.

21 While we have focused on the

22 measurement of what they need, you will also see,

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1 to your very point about adequacy and positioning

2 for resolution. And so, there is a nice couple

3 of pages around that particular point on, yes,

4 I'm not going to go into which firms have, which

5 firms haven't, but how firms are working through

6 inter-affiliate frictions, operational frictions,

7 external frictions.

8 Because, to your point, they need to

9 be able to size what they need in order to

10 execute their strategy, but they also need to be

11 able to make it through stress and recovery and

12 into runway. And so, I would encourage you to

13 read that particular point in conjunction.

14 CHAIRMAN GRUENBERG: We have got about

15 20 minutes that we had said we would set aside

16 for this discussion. You have got a pretty full

17 agenda. I would like to get through most of it

18 today, if we can.

19 So, needless to say, this discussion

20 has been exceptionally helpful, but I think if we

21 could take the 20 minutes at least just to lay

22 out the additional issues, so that we can at

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1 least be sure they are presented to you, and we

2 will run over a few minutes if there is

3 particular urgency to --

4 MR. HOYER: Yes, and we will try to

5 skip a few. But maybe we will move into

6 governance mechanisms next.

7 CHAIRMAN GRUENBERG: Yes.

8 MR. DELFIN: So, Brent just laid out

9 the key financial issues. One of them is

10 information. Do you know how much you need? And

11 the other is the amount. This is where it needs

12 to be.

13 Another variable is time. But, as you

14 pointed out, Simon, in history firms don't fail

15 with a lot of liquidity. Well, the key question

16 is, if you need X amount of liquidity, how do you

17 ensure that you are going to fail when you have X

18 amount of liquidity? We call that governance

19 mechanism.

20 So, governance mechanism is what are

21 the actions that need to be taken in order for

22 you to successfully execute your strategy and

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1 what is the degree of confidence that we should

2 feel from those actions. How do you ensure that

3 those actions will be taken?

4 And we look at are there clear

5 triggers for specific actions. There are

6 triggers for informing your Board that you have

7 moved from a bad stress scenario into a potential

8 recovery scenario. Clear scenarios specifically

9 laid out in the guidance for the downstreaming of

10 that capital and liquidity. That is a clear key

11 component of this. And how are you going to know

12 when to pull that trigger?

13 Finally, how are you going to know

14 when to file bankruptcy, so that you are still in

15 the window of when your strategy can function? 

16 And do you have as part of that trigger your pre17 filing actions? Are you going to know when to

18 start planning your bankruptcy? Are you going to

19 start now or did you start, hopefully, in our

20 process of building out what that filing looks

21 like, what the key legal challenges are going to

22 be, and how you overcome those challenges? That

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1 is a lot.

2 So, when we look at the pre-filing

3 error, we have the amounts, the information, and

4 the timing. Then, I will just try to quickly

5 move to the next part, which is you get into

6 bankruptcy. How do you deal with those

7 operational elements? We are going to try to fly

8 over some of them.

9 But one of them is there is going to

10 be a legal challenge associated with that

11 downstreaming. We can expect that counterparties

12 are going to say, "Wait a minute. That's my

13 money; that's not their money, and I'm going to

14 sue you."

15 And so, one question is, how do you

16 overcome those legal obstacles and, say,

17 fraudulent conveyance of preference? The

18 governance mechanism can help with that, too. 

19 And I am going to turn that over to David.

20 MEMBER COHEN: Who is going to solve

21 it?

22 (Laughter.)

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1 MR. HOYER: The industry is going to

2 solve it.

3 MR. WALL: With help. With help.

4 No, I think that, as Rick indicated,

5 the legal underpinnings of this strategy is key. 

6 It is fundamental to our consideration of the

7 success of a strategy to know that the firm has

8 adequately addressed what could be very

9 significant legal challenges to the strategy.

10 And those could occur both pre- and

11 post-filing. One of the things that we are

12 concerned about, in particular, is that the firm

13 set up a structure that enforces the Board's

14 responsibility to make a decision, and makes it

15 very difficult, if not impossible, for a Board to

16 walk away from a precommitment to pull those

17 particular triggers at the time that the firm is

18 entering into stress, material financial

19 distress.

20 The second part of that is, of course,

21 to address what could be potential challenges

22 post-filing to the provision of liquidity, and

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1 they could come in the form of fraudulent

2 transfer challenges, breach of fiduciary duty, a

3 number of different other legal theories that

4 would arise both under federal and state law.

5 And we have charged the firms with the

6 responsibility of identifying those issues and

7 figuring out how to overcome them. We have made

8 specific suggestions as to how the firms could

9 approach this. We have suggested that there

10 could be the notion of a contractually-binding

11 mechanism that is put in place prior to filing,

12 and in sufficient time prior to filing to survive

13 some of the time periods that are associated with

14 fraudulent conveyance and other challenges.

15 The other area would be to actually

16 have hard prepositioning in a manner that can't

17 be reversed or at least not easily. Also, part

18 of that strategy might be the creation of an

19 interim holding company that would work to

20 distance the actions of the Board from the

21 provision of liquidity to the subsidiaries. And

22 we are certainly willing to entertain any

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1 combination of those three.

2 Part of what we have asked the firms

3 to look at is the creation of perfected security

4 interests and collateral that would survive a

5 bankruptcy filing or a challenge to the potential

6 distribution that would be affected by the shift

7 to a bridge bank.

8 And we have actually, I think, gone

9 into some of the fairly-detailed legal issues

10 that would arise with this, and we have asked the

11 firms, told the firms that they need to address

12 it in specificity and achieve a level of

13 confidence that these mechanisms will work. And

14 that is all spelled out in the guidance.

15 MEMBER COHEN: David, I'm sorry.

16 MR. WALL: Yes?

17 MEMBER COHEN: Just at the risk of

18 repetition, I think the firms are making a major

19 effort to do this. As you know probably better

20 than anybody, this is not the clearest area of

21 the law. I don't think we want to leave to a

22 single bankruptcy judge somewhere the ability to

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1 unwind one of these. Again, it would take one

2 sentence to make clear that the source that is

3 that doctrine which is now codified prevails. I

4 really think it is in everybody's interest to get

5 that legislation in.

6 MR. WALL: I certainly don't disagree. 

7 I think anyone can sue anybody, can challenge

8 anyone, but to the extent that we can get

9 legislative support along those lines, I think

10 that would definitely make the approach more

11 certain.

12 MEMBER COHEN: Leave that to Congress.

13 (Laughter.)

14 MR. WALL: Right.

15 MEMBER BRADFIELD: Are you satisfied

16 with the responses on the legal framework that

17 the companies have said that they have created to

18 overcome these problems? Are you satisfied with

19 those?

20 MR. WALL: Well, the firms have

21 produced a spectrum of responses in this area,

22 but I think the general answer is no. We have

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1 identified specific areas in some of the firms'

2 letter and the guidance asks generally for

3 additional support for the positions that they

4 have taken. So, no, it is an identified

5 weakness, and it is something that the firms need

6 to come back to us on certainly by July of next

7 year.

8 MEMBER KOHN: I think, in practice,

9 the trigger is, in many bank failures the trigger

10 is the failure, right? So, you thought you had

11 access to the discount window; Monday morning you

12 don't. You thought your broker/dealer was the

13 primary dealer; Monday morning it isn't. So, I

14 think that is probably going to be a coordination

15 between the FDIC and the Fed about when to go

16 into bankruptcy or into Title II.

17 MR. WALL: So, I might suggest that

18 that might be the trigger for bankruptcy, but I

19 don't think it should be the trigger for the

20 position they have liquidity. I think the

21 liquidity mechanisms --

22 MEMBER KOHN: Yes.

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1 MR. WALL: -- have to trigger prior to

2 that.

3 MEMBER KOHN: I was thinking in

4 practice.

5 MR. WALL: Yes. Well, I think we have

6 talked about some mechanisms for kind of an

7 early-warning system, if you will, you know --

8 MEMBER KOHN: Right.

9 MR. WALL: -- maybe having to do with

10 some assessment of what the overnight rate is or

11 what the portfolio mix looks like in terms of the

12 average return.

13 MEMBER KOHN: Using access to the --

14 MEMBER ADMATI: As long as you don't

15 use negative or capital --

16 (Laughter.)

17 A key guide to what is going on.

18 MR. DELFIN: Today was to keep us

19 moving fast, and I think we are really out of

20 time.

21 MEMBER PETERSON: Just one?

22 MR. DELFIN: Oh, of course.

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1 MEMBER PETERSON: In terms of the

2 guidance legal entity rationalization, does this

3 move you into asking international banks to

4 release subsidiaries as to the branches?

5 MR. DELFIN: So, we were just going to

6 talk about it, but you went to the IHC. No?

7 MR. HOYER: So, I will try to keep it

8 quick. I wouldn't say that we are necessarily

9 taking a position. The IHC, obviously, is --

10 MR. DELFIN: It is not the --

11 MR. HOYER: Oh, I'm sorry. 

12 International Holding Company world. Sorry. 

13 That is the Federal Reserve's regulation, so I

14 don't want to get into that.

15 But, as far as the FDIC's position

16 when we are thinking about resolution standpoint,

17 we are not prescribing one way or the other, but

18 we are asking them, as the firms, the FBOs, are

19 working through the Intermediate Holding Company

20 rule, which has implications on their structure,

21 which has implications on their MIS, management

22 information systems, which has implications on

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1 their financials. They are also bearing in mind

2 what Rick is going to walk through relative to

3 legal entity rationalization to ensure that any

4 obstacles created, whether it be a subsidiary or

5 a branch, that they have dealt with that and

6 thought about that and aligned itself

7 accordingly.

8 MR. WALL: With respect to domestic

9 institutions' presence overseas, I think that

10 Brent's right. I mean, we are not prescribing

11 one thing, one way or another, but firms need to

12 take into account the potentiality for ring13 fencing and how that is affected by whether you

14 use a branch structure or a subsidiary.

15 MR. DELFIN: So, going to the LER, or

16 the legal entity rationalization and separability

17 -- (laughter) -- that was a great segue. In the

18 guidance we also talk about this element. And

19 the agencies assessed the degree to which the

20 firms have tried to structure their corporate

21 structure in order to improve resolvability.

22 What we called the legal entity

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1 criteria is one tool for doing that. So, each

2 firm is different. They have different business

3 lines. They operate in different jurisdictions. 

4 But they each need to have a legal entity

5 criteria that, when implemented, best aligns

6 their structure to their strategy and

7 resolvability. And what we want to see is that

8 they are synced-up and that they are working to

9 overcome the obvious obstacles and ensure the

10 actions that need to be taken.

11 Because, as we have probably pointed

12 to four or five times now, but because there are

13 a number of potential vulnerabilities, actionable

14 objects of sale that can produce real optionality

15 for different circumstances is essential. And

16 so, in the guidance we pointed out -- and I will

17 just skip through a few key areas that firms need

18 to work on. It is, again, part of syncing these

19 things up.

20 First, there is the capital and

21 liquidity methodology Brent pointed out. It

22 needs to be synced-up with the government's

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1 mechanism, the timing.

2 But the legal entity criteria also

3 needs to be synced-up with the strategy. That

4 is, they need to ensure that you can do that

5 recap. Do you have clean lines of ownership? 

6 Are they available? Are you structured to make

7 that happen? Because you can't ignore your

8 structure when you are trying to overcome this

9 obstacle. So, you need to make sure that it

10 facilitates the recap and the finding of those

11 material entities, if that is your strategy.

12 You need to make sure that it

13 facilitates the transfer, sale, wind-down of

14 discrete lines of business. This is the

15 actionable objects of sale and optionality, so

16 that it can work in different circumstances.

17 You need to protect the IDI. That is

18 just set forth. And you need to minimize

19 complexity that might impede resolution because,

20 obviously, simpler, more understandable is

21 better, all else being equal.

22 The criteria should be built into the

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1 ongoing process for creating, maintaining, and

2 optimizing the structure and should be part of

3 the firm's decision. They need to be thinking

4 about this as they change, as they grow over

5 time, as they go into new jurisdictions. That is

6 the quick part there.

7 And now, I think we are going to talk

8 about the unique challenge of derivatives. One

9 way to think about derivatives is what we call

10 the first day motion. That is, what do we do day

11 one to deal with qualified financial contracts,

12 so they don't instantly terminate? And then, we

13 have, what do we have days two through end of

14 resolution with the derivatives book?

15 David is going to quickly talk about

16 the first part, and Brent is going to talk

17 about --

18 MR. HOYER: You have two minutes and

19 I have two minutes.

20 (Laughter.)

21 MR. WALL: Well, we need a timer.

22 So, let me just say that I think that

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1 we all recognize that the legal issues that are

2 associated with putting in place a resolution

3 mechanism under the Bankruptcy Code are key, are

4 fundamental to the success of the whole plan.

5 One of the things that a firm is going

6 to have to do upon filing for bankruptcy is to

7 file a motion with the bankruptcy court that

8 creates an adequate response to the bankruptcy. 

9 In most cases the firms are planning on doing, as

10 we have said, a single point-of-entry approach

11 that envisions the creation of a successor

12 institution. And there are mechanisms which,

13 under the current Bankruptcy Code, may make that

14 possible, but there are issues that need to be

15 addressed in order to ensure that that occurs.

16 As Rick was just saying, one of the

17 key facets that this motion needs to do is to

18 create a structure that triggers the ISDA

19 protocol protections, so that on the first day

20 the protocol protections against immediate

21 closeout and cross-defaults with respect to the

22 institutional subsidiaries do not occur.

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1 So, we have asked the firms to focus

2 very strongly on how they would structure that

3 first day motion and how that motion would be

4 positioned, so that it could survive anticipated

5 objections. And those objections could range

6 from due process concerns, whether or not the

7 authority actually exists under the Bankruptcy

8 Code to create the structures that the firms are

9 asking for, the basis for transferring assets

10 from the debtor to the new institution, and other

11 issues associated with the bankruptcy court's

12 ability to retain jurisdiction and enforce the

13 mechanisms that will promote the orderly

14 continuation of the debtor.

15 These are issues of relative first

16 impression, but they are also very key to the

17 success of the plan. And so, we have made this a

18 particular focus of our discussions with the

19 firms, and it is something that we are going to

20 continue to work on with them. But the key

21 takeaway is that the firms are being asked to do

22 more to ensure that their planning for addressing

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1 the legal issues is robust and will result in

2 effective resolution.

3 MR. HOYER: All right. So, I will

4 wrap up with what are expecting in this

5 particular space. Again, it is laid out in great

6 detail within the guidance, and there are also

7 tables that we have provided to the institutions

8 for them to complete relative to derivatives.

9 Obviously, it is fair to say this is

10 an area of great complexity. It is still an area

11 that needs some work to be done. We are talking

12 about single point-of-entry Title I bankruptcies. 

13 So, these are not broker/dealers. These are not

14 trading entities that are going into a SIPA

15 proceeding. This is about maintaining and

16 continuing.

17 So, the keyword, I think, if anybody

18 walks away with one word we have said today, it

19 is "optionality". When it comes to derivatives,

20 we recognize there is not just one way to be

21 thinking about this. And so, we think about this

22 within a Plan A, Plan B.

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1 Plan A is great if you can recap and

2 you can maintain that. So, demonstrate what it

3 would take financially to recap those particular

4 entities. Banks have derivatives. 

5 Broker/dealers have derivatives, et cetera. So,

6 all the entities engaged in that.

7 Show us what it would take to

8 fundamentally return those entities either to

9 investment grade or to investment-grade-like,

10 depending on what the entity is, and that that

11 stabilization period would be. So, that is Plan

12 A.

13 Plan B is great if you can recap it,

14 but what if the market doesn't get confident with

15 you or what if you do not have those financial

16 resources? And so, Plan B, we really look at two

17 particular components there.

18 One, we will call it a passive wind19 down. Let's assume that, I mean, one of the most

20 challenging aspects within the derivatives

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1 counter types of instruments, the more spoke

2 types of instruments.

3 And so, through the passive wind-down,

4 we place the assumption on the firms that you

5 cannot engage in that activity. No one will deal

6 with you anymore. That is why you couldn't

7 regain market confidence. You could not function

8 under Plan A.

9 So, what is your financial need for

10 that? Both capital and liquidity. At the point

11 that you expire your resources, that residual

12 piece that is left, demonstrate to us any

13 systemic transmission associated with that. So,

14 that gets us back to the point of maybe you have

15 to change a little bit about how you do your

16 business.

17 The second component within Plan B is

18 an active wind-down. So, in an active wind-down,

19 you can assume access to the bilateral markets to

20 some extent, and, obviously, at a cost. What is

21 that cost? That is factored into the liquidity

22 and the capital component as well. You provide a

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1 pathway on how you can segment, package, and

2 wind-down that particular portfolio, again, to

3 the point of you get it all the way. There will

4 always be some residual or rump left, and looking

5 at that residual or rump no different than we did

6 within the earlier option within Plan B to

7 determine the impact on financial stability.

8 So, we are looking at a variety of

9 options. We want to see flexibility across that

10 because we realize that, in dealing with

11 derivatives, this is not going to be one

12 particular outcome.

13 So, that is a real quick and dirty on

14 derivatives. There is a lot of good detail

15 within the public narrative section.

16 With that, I will maybe turn it back

17 over to Art.

18 MEMBER HERRING: Could I just ask a

19 point of information? You focused on day one. 

20 As I understand it, that is all the ISDA protocol

21 gives you to make special provisions. After

22 that, you are back in the normal world. Have I

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1 misunderstood what the protocol is?

2 MR. WALL: With the ISDA protocol, it

3 says that you are prevented from doing early

4 termination or exercising the early termination

5 clause as a result of the bankruptcy because --

6 MEMBER HERRING: But it is a limited

7 thing?

8 MR. WALL: Well, there is a limited

9 stay period. But, if you then transfer to a new

10 institution, just as it works under Title II or

11 the Federal Deposit Insurance Act, those stays

12 become permanent, so long as these certain

13 creditor protections/assurances are in place.

14 MEMBER HERRING: Yes, that is what I

15 was interested. What is the day two?

16 MR. WALL: So, day two, if you have

17 satisfied those criteria under the protocol,

18 early termination events cannot occur. Now

19 normal termination and other business as usual

20 would apply, but that is what we are dealing

21 with.

22 MR. HOYER: At this point, you are

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1 dealing with maturing trades; you are dealing

2 with any kind of novations or sales and, to the

3 extent that they can reach agreement to terminate

4 and they do have the financial capability to do

5 that within their strategy, absolutely, right. 

6 That would be that path of wind-down.

7 MEMBER ADMATI: I have a question that

8 suddenly occurred to me. The bank's subsidiary

9 is bigger than $50 billion, but it is not

10 considered SIFI. So, in other words, you don't

11 have a living will for the bank, or do you?

12 MR. HOYER: Yes, we do.

13 MEMBER ADMATI: If you do, then is it

14 the Deposit Insurance resolution or is it SIF

15 resolution? Which one?

16 MR. DELFIN: So, this process we are

17 engaging in here is a failure under bankruptcy

18 Title I holding company, right, Section 165(d)?

19 MEMBER ADMATI: Right. But what about

20 the bank?

21 MR. DELFIN: If a bank fails, no

22 matter what, it fails under the FDI.

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1 MEMBER ADMATI: Under the FDI?

2 MR. HOYER: Yes.

3 MR. DELFIN: That's correct.

4 MEMBER ADMATI: But it is systemic

5 also. So, in other words, the derivatives and

6 other things make it systemic?

7 MR. DELFIN: They have to provide a

8 plan. They have to provide a separate plan under

9 FDI Act authority dealing with the bank failure.

10 MEMBER ADMATI: Dealing with the bank

11 failure? Still under living will?

12 MR. DELFIN: Correct. The whole code

13 is under the living will.

14 MEMBER ADMATI: Because I know,

15 because I don't work with banks, I understand it. 

16 I am just saying that, within the holding

17 company, that is like the most important

18 subsidiary.

19 MR. WALL: And that is why, when we

20 just talked about legal entity rationalization

21 and stabilization, one of the key components is,

22 obviously, the protection of the IDI has been a

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1 key component of this from the beginning.

2 MEMBER ADMATI: But who is going to

3 take whom down?

4 MEMBER BRADFIELD: Are you satisfied

5 that the protocol can cover all your needs with

6 respect the derivatives and termination?

7 MR. WALL: I think it goes a long way. 

8 It certainly reduces the possibility of systemic

9 contagion to a very large extent. I think that,

10 since the protocol and the rule that will

11 implement it that will be coming out from the

12 Federal Reserve shortly will cover the vast

13 majority of qualified financial contracts -- in

14 fact, it will probably key off of the QFC

15 definition in the statute -- we think that it

16 should address the vast majority of contracts

17 that would be expected to terminate early. There

18 may be other kinds of contracts that don't, but

19 those don't that I am aware of represent the

20 significant risk to the firms.

21 MEMBER JOHNSON: I hope or I suggest

22 that we will go look again at the report produced

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1 by the President's Working Group on Capital

2 Markets, the LTCM. Because the conclusion they

3 drew with regards to this point is the exact

4 opposite, right? They made the recommendation

5 that we create a more comprehensive exemption

6 from bankruptcy for derivatives because they

7 believed that what they had then and what we are

8 getting now in the master agreement would

9 actually create more systemic risk because it

10 would create more run risk ahead of the failure. 

11 So, when you know that it is going down, you know

12 they are running out of liquidity; you want to

13 close out all those positions.

14 MR. WALL: Simon, I mean, I don't mean

15 to be flippant, but that was then; this is now. 

16 I mean, I think it is just clear that thinking

17 has advanced on that. I think if we look at the

18 academic literature, that there have been an

19 increasing number of analysts that have suggested

20 that that is not the case and that we ought to be

21 looking at reducing the exemptions for

22 derivatives portfolios from the automatic stay. 

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1 So, I think there has been a shift.

2 MR. HOYER: To your point on

3 liquidity, we had the conversation earlier out in

4 front. You are absolutely correct. As we talked

5 about the stages of where a firm enters from BAU,

6 business as usual, to stress to recovery mode,

7 runway, counterparties, it is actually one of the

8 things that all the agencies monitor for are

9 counterparty requests. As counterparty requests

10 -- we call them bid-back requests -- come in, the

11 firms have to decide how many of those do they

12 want to execute on. Obviously, if one-by-one you

13 start coming in and asking to bid-back any kind

14 of debt, any kind of instrument, I can just point

15 to my contractual relationship, but that is going

16 to send a signal.

17 That is captured within the liquidity,

18 within the community funding planning, and so on,

19 normal business-as-usual contingency funding

20 planning, as well as the resolution model from a

21 legal default standpoint, obviously. But, from a

22 liquidity standpoint, those sorts of bid-back

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1 requests, once they get past recovery mode, they

2 have to defer to contractual, because at that

3 point they are in wind-down and they are just

4 going to start -- you know, we are hitting the

5 point of non-viability and failure, and they are

6 going to say, "No, no, no," and they are carrying

7 to maturity or if they have the financial

8 capacity. But it a valid point on liquidity. 

9 And so, it has to be captured within that model

10 we have talked about.

11 MEMBER BRADFIELD: Yes. So, if we

12 don't have the liquidity, then, in effect, the

13 right to close out the position comes into

14 effect?

15 MR. DELFIN: I think if you don't meet

16 the protection --

17 MR. WALL: I think it is, yes, you

18 have to look at the protocol and see whether you

19 have satisfied them. I can't say that, from a

20 general point of view, if you don't have the

21 liquidity -- you have to have it and it is a

22 little bit more specific than --

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1 MR. HOYER: I think it is separating

2 the legal protocol from normal counterparty

3 actions, and that is what Simon was talking

4 about, was normal counterparty actions. And to a

5 certain point, firms will continue to work with

6 their counterparties and they will fund those as

7 much as they can for mark of confidence. "I've

8 got that covered" is the way to think about it.

9 But, at a certain point, once they

10 have passed recovery options and they have hit

11 runway, they are going to look to that provision

12 and they are no longer going to have that

13 funding.

14 MR. HOYER: Yes, just to be clear, I

15 mean, the protocol does not prevent a

16 counterparty from closing out if it does not

17 receive its payments on time.

18 MR. WALL: They are two separate

19 aspects.

20 MEMBER COHEN: If I could, this can't

21 be part of the resolution plan itself, but it

22 will be part of the resolution plan's working, if

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1 we ever get to that point. And that is going to

2 be the attitude, to be blunt, of the regulators.

3 Two points of demarcation. One was

4 1987 where the entire brokerage industry was

5 gone. The Feds stepped in and told the banks to

6 keep blending.

7 There have been subsequent times where

8 there has not been that approach. So, there is a

9 responsibility here not just for the

10 institutions, but for the agencies to take the,

11 let's say, systemic interest approach as opposed

12 to just backing off.

13 MEMBER BRADFIELD: In a sense, it

14 would be too late if there isn't illiquidity and,

15 then, you want to do Title II; it is really too

16 late with respect to those derivative

17 transactions, isn't it?

18 MR. HOYER: I want to back up. This

19 goes back to the liquidity methodology we were

20 talking about, that size and minimum operating

21 liquidity need, that size, the peak funding need. 

22 And when they are looking at their derivatives

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1 wind-down under the passive, we cannot do

2 anything which is very financially punitive, as

3 well as the active wind-down. That particular

4 outcome is calculated within that, too, depending

5 on the strategy.

6 So, they know when they are crossing

7 that line of demarcation. As they are engaging

8 through stress and through recovery up to runway,

9 again, they know how much liquidity they have got

10 and they know what they need to execute. Again,

11 it all has to connect together.

12 CHAIRMAN GRUENBERG: We have run over

13 time. This has been extraordinarily helpful to

14 us. And so, I want to begin by thanking you all.

15 We are sort of operating in real-time

16 here. Ideally, we would have done it sooner and

17 we would have gotten these documents earlier, so

18 you would have had an opportunity to review them

19 before the meeting, but it just wasn't possible

20 in this case.

21 So, what I would suggest and refer you

22 to are tabs 8 and 9 in your binders. Tab 8 is

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1 the document that lays out the resolution plan, a

2 system of framework and the basis for firm

3 determinations. So, in a sense, that is a review

4 of what we have done and the basis for it.

5 And then, tab 9 is the guidance we

6 have provided for the next submissions of the

7 plans and the issues that need to be addressed

8 going forward.

9 Both of these documents are public

10 documents. They are on the FDIC's website. They

11 are both less than 25 pages long. So, they are

12 actually relatively-readable and consumable. So,

13 I do recommend them to you.

14 And after reviewing, if you all have

15 any thoughts in regard to them, we will welcome

16 any comments, suggestions, or questions that you

17 might have.

18 And then, let me also thank our staff

19 here. They have really done, I think, a

20 remarkable job, both in the presentation this

21 morning and the work that they have done in

22 review of these plans. I really think this moves

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1 the center of gravity on a very tough set of

2 issues. I just want to really acknowledge them

3 for the work that they have done.

4 And then, if it is okay with

5 everybody, we will move on to the next part of

6 our program relating to the Orderly Liquidation

7 Authority and the work on time, too.

8 Thank you.

9 We will take five minutes.

10 (Whereupon, the foregoing matter went

11 off the record at 11:44 a.m. and resumed at 11:55

12 a.m.)

13 CHAIRMAN GRUENBERG: We are now going

14 to continue the discussion in regard to the work

15 we have been doing on the Orderly Liquidation

16 Authority under Title II of Dodd-Frank. And I

17 think what we may do is run this a little long,

18 and we may reduce our lunch hour to 45 minutes in

19 the interest of trying to take advantage of the

20 opportunity to engage with you all.

21 I know Don Kohn had a question he

22 wanted to raise just to conclude.

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1 MEMBER KOHN: So, I would like to ask

2 Art to sum up where he thinks the FDIC and the

3 Fed has gotten to on Title I. Do you feel like

4 there has been a lot of progress or almost there

5 or there is a huge gap between where you want to

6 go and where you are? I mean, how has this thing

7 been left at the end of really round one of these

8 things? So, is it your expectation on October

9 1st, 2017 that you will have things that work,

10 maybe not under every circumstance, but under a

11 lot of circumstances?

12 CHAIRMAN GRUENBERG: You can answer my

13 question from the earlier round as well.

14 MR. MURTON: On the progress?

15 CHAIRMAN GRUENBERG: Yes.

16 MR. MURTON: Yes. Okay.

17 Well, I think the answer is we have

18 made a lot of progress. We have made very

19 significant progress on this front, moved the

20 center of gravity, as the Chairman said.

21 In 2008, we didn't have any of this. 

22 We didn't have a framework for this. We had

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1 given virtually no thought to this. We didn't

2 have the authorities in place. We had not put in

3 place a framework for thinking about it.

4 Since then, we have done significant

5 work. We have identified the obstacles to

6 resolution under bankruptcy. We have worked with

7 the firms on how we would address those

8 obstacles. We have made some tangible changes. 

9 The ISDA protocol is an example of something that

10 is terribly significant in terms of resolution

11 under bankruptcy and the systemic implications of

12 that. Another long-term debt rule is in process. 

13 That is going to be a really important part of

14 this.

15 And so, it feels to me like the last

16 five years have brought about significant

17 progress in this regard. Are we there yet? I am

18 never going to say we are all the way there.

19 I think a couple of significant dates,

20 looking ahead, are October, when they have to

21 address the deficiencies, but I would also just

22 keep in mind that July of 2017 is when we have

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1 asked them to address these issues

2 comprehensively. That will be another important

3 time to take stock of where we are. But I think

4 the progress thus far has been extremely

5 significant.

6 So, with that, let's turn to Title II. 

7 And so, I turn to my colleagues Herb Held, Ryan

8 Tetrick, Angus Tarpley, and Pen Starke.

9 I think we will start with Herb, who

10 will give an update on our thinking about how we

11 approach Title II resolution strategy.

12 MR. HELD: Okay. This chart here is

13 pretty familiar to everybody. This was our

14 original thinking back in 2012 how single point15 of-entry would work. The first shot at it, it

16 accomplished the major goals that we needed to

17 accomplish: assure financial stability, make

18 sure that the creditors' equity bore the loss,

19 terminate culpable management, and no taxpayer

20 support.

21 It was a very simple chart. A company

22 goes into bankruptcy. Create a bridge holding

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1 company. Virtually all the assets go over to the

2 bridge. You leave the liabilities behind. You

3 do valuation work. Eventually, you exit the

4 bridge by doing a debt-for-equity swap in the new

5 company. The old creditors become the new owners

6 of new co., and it merrily goes along on its way.

7 In all probability, during the period

8 there will be some organic downsizing, customers

9 would leave, but there was no active management

10 of the new co. to reduce its size. So, the

11 resulting entity probably would still be

12 systemic, and we weren't able to solve the

13 problem of the international closeout of

14 derivatives contracts, since our stay under Dodd15 Frank only pertained to the domestic contracts.

16 There we go. Right in December of

17 2013, we published our notice in The Federal

18 Register. And in there, we described in much

19 more detail what our single point-of-entry would

20 be. We did put in there that restructuring might

21 result in one or more smaller companies that

22 would be able to resolve their bankruptcy without

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1 causing serious adverse effect to the U.S.

2 economy. So, our thinking was evolving.

3 During the last year, the Chairman

4 made a number of speeches, and here in November,

5 you know, it was getting pretty explicit. We

6 were pretty explicit that the firm that exits

7 bankruptcy can no longer be a systemically8 important firm.

9 There we go. I have made it a little 

10 more complicated since I added the foreign

11 broker/dealer into it. But you still have the

12 company. The company looks the same because they

13 basically look the same. It enters into the

14 bridge, and all the assets and liabilities -- all

15 the assets transfer to the bridge, leaving the

16 liabilities behind. That part is the same.

17 Now we are looking more at

18 optionality. Our thinking and the firm's

19 thinking are pretty similar, that you want to be

20 able to have a bunch of different tools to deal

21 with the crisis, depending on the shape the firm

22 is in, what the economy is, where the problems

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1 are.

2 The first thing is that the

3 broker/dealers, it is hard to imagine that you

4 can hold together a broker/dealer through a

5 bridge period. Every one of the firms that has a

6 broker/dealer experiences either a complete wind7 down or a wind-down to a very much reduced

8 entity.

9 So, in our planning, broker/dealers

10 will actually fairly quickly wind-down on their

11 own as the repo books and the security lending

12 books roll off based on their maturity. So,

13 within a very short period of time, that part of

14 their broker/dealers will have gone away without

15 disrupting --

16 MEMBER HERRING: Herb, may I ask a

17 point of information? Aren't they usually

18 subject to a separate process that is overseen by

19 the --

20 MR. HELD: Right, if they go into

21 insolvency within both the single point-of22 entry --

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1 MEMBER HERRING: So, as long as they

2 stay in Title II, you are in charge of --

3 MR. HELD: As long as they comply with

4 their SEC requirements, the solvency requirements

5 that they have, they won't be put into the SIPI

6 process.

7 So, if the parent in the Title I world

8 has got the capital to put down there, convert

9 that to maintain the solvency of the

10 broker/dealers and we have liquidity through OLA

11 to maintain the liquidity of the broker/dealers,

12 they can go through a solvent wind-down.

13 MEMBER HERRING: But you would oversee

14 that?

15 MR. HELD: It would be the bridge

16 would oversee it, yes.

17 MR. TETRICK: So, this is not unlike

18 what many of the firms have presented in their

19 Title I claims. They have presented a solvent

20 wind-down of their broker/dealer subsidiaries

21 under their single point-of-entry bankruptcy

22 process. This would be similar, but overseen by

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1 the FDIC.

2 MEMBER HERRING: I guess the echo in

3 my mind that creates this would be Drexel Burnham

4 where they had a very, very well-capitalized

5 brokerage dealer that turned out not to be

6 viable. Of course, they wouldn't have been

7 overseen by you at that time because you didn't

8 have jurisdiction, but I think that was overseen

9 by SIPI, where even it was thought that they

10 wound it down because, according to the notes,

11 the point you make, that even if it is visibly

12 transparently solvent, you just can't keep it

13 going.

14 MR. HELD: Yes, because the way

15 traditionally the big broker/dealers had huge

16 imbalance on their repo book, especially of the

17 maturities, that over a month they were fine; the

18 book was balanced. On day two, they had $100

19 billion deficit of cash. So, they fail almost

20 immediately.

21 The books look a lot different today

22 than they did in 2008, but they are still

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1 imbalanced. And the need for parent support in

2 Title I or, if that is insufficient, we are in

3 Title II, and then, we can provide the repo

4 counterparty to allow that book to roll off

5 naturally.

6 So, in the plans, also, the firms have

7 come up with different strategies for dealing

8 with the size of the bank itself. Some of them

9 have the idea of you break up your bank into

10 three or four different parts, and you can do

11 IPOs, which will return cash and stock to the

12 bridge. You could spin the whole thing off to

13 the creditors. You can do asset sales to reduce

14 the size. That is also in the plan. Oh, I could

15 sell a newly-created bank. You could take

16 portfolios of loans and sell them or you could do

17 a branch-sale-type action.

18 So, all of these would return cash to

19 the bridge and reduce the size of whatever rump

20 bank is left.

21 Simon?

22 MEMBER JOHNSON: Finish your sentence.

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1 MR. HELD: "Left," I guess.

2 (Laughter.)

3 MEMBER JOHNSON: So, these banks or

4 their representatives often claim there are

5 enormous economies of scale and scope in their

6 current operations. I thought under the legal

7 framework which you operate you have to try to

8 recover or come up with a structure that recovers

9 value, right? So, do you see this as destroying

10 value or are those economies of scale and scope

11 somewhat overstated? And that is what you will

12 be showing us here. It is a question. It is a

13 question.

14 MR. MURTON: I think, as was pointed

15 out, the firms themselves in their resolution

16 plans contemplate this transformation taking

17 place as well. And that is, under bankruptcy,

18 consistent with maximizing values. So, I don't

19 think it is inconsistent for us to contemplate

20 this.

21 MEMBER FISHER: I have got a different

22 answer to Simon's question, which is both the

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1 rating agencies and the regulators in their

2 stress tests give diversification benefit, a

3 benefit of the doubt that diversified revenue

4 sources lowers your capital involvement. That is

5 embedded in the system. It is not something the

6 firms do off on their own.

7 MEMBER JOHNSON: Right. But, Peter,

8 my point here is that you are creating, I think,

9 a less-diversified structure --

10 MEMBER FISHER: Yes, it is.

11 MEMBER JOHNSON: -- which is fine with

12 me and fits my view of the world. But I am just

13 suggesting it may sit awkwardly with other parts

14 of what we say now, what is playing. And you are

15 just elaborating on that side of the ledger.

16 MEMBER FISHER: But it raises the

17 capital requirement on the other side, which is a

18 complicated pricing issue, if you will --

19 MEMBER JOHNSON: Right.

20 MEMBER FISHER: -- as we move through

21 the stages of resolution.

22 MEMBER JOHNSON: Yes, but let me try

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1 to --

2 MEMBER ADMATI: God forbid they would

3 have to stand on their own financially.

4 MEMBER COHEN: Actually, I don't think

5 you do have this dilemma. You are entitled to

6 destroy value if it preserves the system. 

7 Without getting into the debate, there is no

8 question, I think, that you can do whatever it

9 takes to make sure the system comes out whole

10 under Title II.

11 MR. STARKE: No, Title II is very

12 clear that preserving financial stability is the

13 priority. In fact, there is a provision

14 regarding the sale of assets that said we should

15 maximize value to the extent practicable. It is

16 not the priority. It is financial stability --

17 MEMBER JOHNSON: Yes, but the

18 question, you saw that on time consistency,

19 right? So, you can say what you want today. The

20 question is, when you get to this moment, what

21 are you actually going to do and what do you

22 believe and what are you persuaded by the

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1 industry to do?

2 So, the question of, you know, it is

3 not clear to me why, from a preservation-of-the4 system point of view that this structure is

5 better than what you had in 2012, for example,

6 unless you talk us through. For example, the

7 standard Fed thinking is that more profitable

8 banks are more stable, right? That is how you

9 generate capital.

10 So, if you are disassembling them in

11 this way, and if those economies of scale, which

12 personally I think are fictitious, but if you

13 believe them -- and I'm pushing you on this

14 because I want to know what you believe -- if you

15 believe that there is a company that is going to

16 disappear because you are disassembling them,

17 then that has implication for financial stability

18 going forward. Now, if the economies of scale

19 are fictitious, disassembling is no problem at

20 all.

21 (Laughter.)

22 MR. HELD: Of course, you are

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1 disassembling a $2 trillion bank into four or

2 five, six parts. You still have very large

3 financial institutions which have economies of

4 scale. I am sure there are enormous economies of

5 scale that have been shown between a $400 or $500

6 billion bank and a trillion dollar bank.

7 MEMBER JOHNSON: That was my question,

8 yes.

9 MR. HELD: And remember, the bank

10 company has failed. And somewhere in there,

11 there is something horribly wrong which is going

12 to have to be excised out of it.

13 And remember, what we are showing here

14 is that you want to set it up so that you have

15 this optionality where you can do a bunch of

16 different things, depending on where the problem

17 is, how much capital you need for the resulting

18 companies to be well-capitalized, what the market

19 appetite is for raising new capital for these

20 companies, and how much you have to reduce them

21 to get rid of the systemic risk.

22 MEMBER JOHNSON: I am fine with that. 

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1 I mean, as you said very clearly, Herb, this is

2 not the plan you had in 2012. I think this plan

3 is better, and I think we pressed its predecessor

4 on exactly this point. So, I think you get

5 credit, in my view, for having listened or having

6 data based on something, anyway.

7 MEMBER FISHER: I think it is more

8 than an intellectual dilemma, but I will just see

9 about my disagreement. Let's just stipulate this

10 is going to work. We are going to get a better,

11 stable state of the world. Your comparison to

12 '98 is a really important one, Simon, you made.

13 If this works, there should be less

14 sales. There should be less emergency

15 liquidation, a longer horizon over which to

16 figure this out, if resolution, quote, "works". 

17 So, you will see less selling-off of assets in a

18 hurried way and more doing it slowly and

19 considered. And then, this judgment process will

20 be more transparent or more of a discernment

21 process. It is very obvious --

22 MEMBER ADMATI: If only this process

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1 does what John Reed was going to do, which is

2 convince them to have enough incentives, because,

3 otherwise, I'm not so sure they do have them. In

4 other words, they would like to pass all your

5 different hurdles, but they obviously don't want

6 to get to this point.

7 MR. HELD: I mean, to do this is not

8 an overnight process. In the plans they talk in

9 periods of 18 months, two years. To do one like

10 this, which is pretty complicated, you are

11 talking about years to actually arrange the

12 sales, to consummate the sales, and actually do

13 the splits, and end up with operating companies

14 going off on their own. So, it is not any kind

15 of fire-sale-type transaction.

16 The nice thing about the

17 broker/dealers is that their wind-down is done by

18 returning collateral to the people who you have

19 borrowed from and lent to. So, kind of a natural

20 wind-down without having to sell hardly any

21 assets. They don't have their own assets that

22 are a huge amount. And an asset management

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1 company way off on the end where everybody has

2 forgotten about it, those actually were fairly

3 salable, and even during the crisis people were

4 able to sell them. And we don't have like a

5 retail broker/dealer on there, but those also

6 were salable during the crisis. So, they could

7 be sold, and quickly, I think, and value retained

8 for the firm.

9 Any other questions?

10 MR. MURTON: You know, your comment

11 about the relation between future earnings and

12 capital reminded me, I think it was one of John

13 Reed's predecessors who was known for making the

14 argument that you didn't need capital in these

15 firms because they had future earnings capacity,

16 but that didn't work out so well.

17 (Laughter.)

18 It didn't work out so well.

19 MEMBER FISHER: Just a thought

20 experiment. Let's assume the decision is taken;

21 we know we are going in, and the existing equity

22 is wiped out. And that is all we know. We are

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1 at stage one.

2 What would you need to know to price

3 options on equity in the future holding company? 

4 That is, we assume this is going to work out, and

5 so, we assume we have a little bridge in time. 

6 But what would an equity options pricing guy or

7 gal want to know?

8 We know we wiped out the current

9 equity. You didn't need to know how many

10 liabilities were getting shed and how many

11 liabilities were getting converted into future

12 equity. And then, we want to have estimates of

13 the future earning capacity of the place.

14 And all I am imagining is a thought

15 experiment where you say, what is it you would

16 want to know to price that option? That is the

17 moment at which you are stabilizing it to a

18 certain proximation. I mean, there are other

19 things that might come up and you might not know

20 future uncertainties.

21 But if you can't price that option,

22 you are still dealing with a lot of uncertainty. 

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1 The question is, what are the uncertainties we

2 are living with? Because if it is all going to

3 work out happily ever after, people should want

4 to hold those options. It is just a thought

5 experiment for you to think about.

6 MR. HELD: Right. So, one of the key

7 parts of the resolution process that all of the

8 regulators, both here in the United States and

9 abroad, have been wrestling with is how do you

10 value the company after it has gone into

11 resolution. Because you need to be able to come

12 up with financial statements for the new company

13 and do the write-downs and valuations, because

14 that is going to be a large exercise for the

15 accountants and investment bankers to be able to

16 do that.

17 And what the value of the company is

18 also will depend on is it the whole company that

19 is going to exit and continue on. Is it this

20 idea that we are going to spin off some, sell

21 some? And that has to be part of that valuation. 

22 Is this a piece of the company that is held for

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1 sale or is this a piece of the company that will

2 be the continuing operations?

3 MEMBER REED: That is going to depend

4 a lot on what caused the problem.

5 MR. HELD: Right.

6 MEMBER REED: Then, you have got new

7 management. People are going to want to know who

8 the new management is. So, all this valuation,

9 but this process is, in fact, how banks generally

10 get restructured today.

11 You have something that caused the

12 difficulty. And then, that sort of gets pushed

13 aside. Think of the Texas banks, and they get

14 sold, and so forth and so on. But the bad thing,

15 if they are sold to something that has

16 management, at least you could evaluate what the

17 buyer might be able to do with that business. 

18 But, if you bring in a totally new management

19 team that no one knows anything about, you are

20 going to have to wait a minute.

21 The point is this is a perfectly22 viable strategy and probably describes what has

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1 happened to bank difficulties in the past which

2 was not under this Title II.

3 MEMBER HERRING: This is one of the

4 virtues of Title II, that it gives you time for

5 the values to be put on --

6 MR. HELD: Well, it gives you time

7 beforehand to plan.

8 MEMBER HERRING: Yes.

9 MR. HELD: So that we know far more

10 about the companies. Their Title I plans mean

11 that they are going to have playbooks for their

12 objective sales on how you would actually go

13 about doing this, and you would have the options

14 and know which ones to pick and choose from,

15 depending on the situation.

16 You know, you wouldn't end up with a

17 thing like the English have where they are taking

18 their banks that they have taken over, and eight

19 years later we are still doing objects of sale

20 and downsizing. Sometime in this next decade

21 maybe they will finish. Or the Japanese that

22 took --

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1 MR. MURTON: We have done a lot of

2 that, too, Herb.

3 (Laughter.)

4 MR. HELD: Yes.

5 MEMBER COHEN: Talking about

6 resolution planning, I would like to come back to

7 something John said, which I think is extremely

8 important. And that is the management on day one

9 after this happens. We have had one example of

10 this where it didn't work out so well in

11 Continental Illinois. And that was nobody's

12 fault. The guy who was supposed to take it left

13 at the last, left everybody waiting at the altar.

14 So, hopefully, you have like, to come

15 back to the word optionality, two or three people

16 who are ready to --

17 CHAIRMAN GRUENBERG: So, thank you for

18 that because that is a nice segue into the

19 operational planning exercise in which your

20 future management becomes one of the really key

21 issues.

22 MR. MURTON: Yes, let me turn it over

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1 to Ryan then.

2 MR. TETRICK: So, turn to the

3 operational planning segment. I summarize some

4 of the work that we have done to build out our

5 preparedness and capabilities to actually execute

6 our systemic resolution authorities. We call

7 this a systemic resolution framework

8 intentionally.

9 The focus will be on our Title II

10 authorities, but the process that we have

11 developed covers the period from which we start

12 contingency planning through exit from

13 resolution. When we start contingency planning,

14 we won't know what the outcome will be. So, we

15 might start planning at a time when recovery is

16 more likely. That is actually one of the

17 principles that we have arrived at in developing

18 this process, that we want to have an appetite

19 for false-positives to start taking the steps to

20 prepare to enter into resolution, even when it is

21 likely that it won't be necessary.

22 And if it is possible that other paths

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1 will -- if the firm is failing it, that there

2 will be other paths to resolve any situation,

3 whether that is a private sector solution,

4 bankruptcy, or depending on the type of

5 institution, you could imagine, I think, and not

6 raise the question about the bank entities. You

7 can imagine just resolving the bank under FDI Act

8 in certain circumstances.

9 So, we have designed a set of

10 processes that is intentionally flexible enough

11 to start down those multiple paths

12 simultaneously. So, we are calling it a systemic

13 resolution framework.

14 The steps I mentioned are that we have

15 identified sort of the core actions that need to

16 happen. We want those to be flexible enough that

17 the facts and circumstances of a particular

18 failure can be kind of modified. We can modify

19 the steps based on the facts and circumstances of

20 a particular failure.

21 If we know that if we design processes

22 and tools that are overly detailed or tailored to

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1 a particular path, just like in the Title I

2 planning, we will necessarily need to adjust. 

3 So, the real challenge for us is to lay out

4 enough structure and framework ex ante, that we

5 have a plan; we have something we can execute

6 upon, but it is adjustable enough to deal with

7 the different types of institutions that might

8 fail. We could apply it to different types of

9 SIFIs, but also different types of failure

10 scenarios.

11 And then, importantly, when we get

12 into resolution, kind of building on the previous

13 segment, that there are processes that can carry

14 out the resolution during our bridge period in

15 different ways. So, there might be different

16 types of restructuring that are needed, dependent

17 on the type of failure. The path to exiting from

18 resolution may be longer or shorter, depending on

19 both the institution and the circumstances in the

20 market at the time.

21 With that background, I will talk

22 about some of the testing that we have done

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1 around this process.

2 Yes?

3 MEMBER HERRING: May I ask a question

4 that has come up in the previous years, which is,

5 there was a capacity constraint on your ability

6 to deal with a number of these. And something

7 that always worries people, I think, is maybe we

8 can deal with one institution, but is it

9 possible, if there are a couple or three in

10 trouble, that we could maybe scale up to manage

11 them?

12 To the extent to which you have

13 thought about it, I mean, surely, there would be

14 no problem just to get this --

15 MR. TETRICK: Sure. It is a

16 significant challenge just to take one.

17 MEMBER HERRING: Yes.

18 MR. TETRICK: I think part of the goal

19 of sort of the explicit objective of a Title II

20 resolution is to try to stop the failures at one.

21 MEMBER HERRING: Sure.

22 MR. TETRICK: But there certainly gets

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1 to be a challenge in executing more at once and

2 sequencing that. So, it is something that we

3 have thought about. We started our testing on

4 executing a resolution for one SIFI, and we have

5 built out a process that we are prepared to

6 execute today, if we needed to, and getting to

7 how we would operate multiple resolutions at the

8 same time is something that we are going to layer

9 into our frame going forward.

10 MR. MURTON: I would just say that,

11 through two crises, the FDIC has demonstrated

12 that it can scale up its operations relatively

13 quickly and, then, bring them back down. So, I

14 know this would be different circumstances, but

15 we have responded quickly to heightened demands.

16 MEMBER BRADFIELD: Herb, do you have

17 access to enough liquidity to hand off --

18 MR. MURTON: Well, the liquidity that

19 we have access to is related to the size of the

20 institutions that we are dealing with.

21 MEMBER ADMATI: To be fair, I mean,

22 WaMu was the biggest. So, we are talking about a

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1 different order of magnitude here for sure.

2 MR. MURTON: Yes. Well, just to be

3 clear, I mean, WaMu actually took far fewer

4 resources --

5 MEMBER ADMATI: No, I understand,

6 but --

7 MR. MURTON: -- to execute the

8 resolution than did a $10 million bank in

9 Pittsburgh at the beginning of the crisis.

10 MR. TETRICK: Also, some of the

11 processes that we would need to execute, to take

12 what might be the most resource-intensive

13 process, the communications to the public and

14 counterparties of the firm, we would necessarily

15 rely on the infrastructure of the institution

16 that we are resolving to conduct much of that.

17 So, there are certain processes that

18 it would certainly be a challenge to do more than

19 one of these at once, but the most intensive

20 resource-constraining functions would leverage

21 the structure of the firm.

22 MEMBER JOHNSON: Ryan, I think in

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1 addition to the more than one problem, which Paul

2 Volcker always raises when he is here, I think

3 there is the firms of contagion. It occurs to

4 me, given some other discussions which are not

5 the primarily line of fire, but this is rather

6 relevant, you know, what if an insurance company,

7 for example, is affected by either what you do or

8 by other things that are happening at the same

9 time, right?

10 We are thinking of that bank holding

11 company, but your responsibility is to everything

12 that is systemically important, including things

13 that haven't been designated as systemically

14 important, right?

15 You know, I am not saying that any

16 District Court would be impressed by this, even

17 though they should, but just in terms of the

18 general discussion of what is a crisis, what is a

19 systemic crisis, what is going to push the FDIC

20 and our broader official capacity to its limit, I

21 think it is bunch of stuff failing, some of which

22 is anticipated, some of which is not anticipated.

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1 I think you can't answer all those

2 questions, and you can't be expected to, but you

3 can show everyone the kinds of things that would

4 be at the limits of your power to deal with.

5 MR. TETRICK: Well, you raised

6 insurance companies, and there we are on a little

7 bit better footing because, at least for the

8 designated insurance companies, we do get Title I

9 plans and that supports our Title II planning for

10 those institutions.

11 For the other types of entities that

12 you mentioned, things that haven't been

13 designated, there is more capacity around how

14 they operate, the types of things that we need to

15 do, and that certainly presents unique challenges

16 for us. That is something that we continue to

17 think about.

18 So, just to talk a little bit about

19 the testing, again, I think we have certainly,

20 for bank holding companies and some other types

21 of institutions, I believe we have established

22 processes that we are ready to execute. To sort

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1 of evaluate and test those processes, we have

2 established an ongoing series of what we call

3 operational exercises.

4 The most recent exercise of this sort

5 we held in December, a full-day exercise that

6 included members of the FDIC Board. That is

7 Chairman Gruenberg, Comptroller Curry, and

8 Division Directors from across the FDIC who

9 represent the range of expertise that we needed

10 to carry out the process.

11 It builds on a lot of interagency work

12 that we have done to design this process. We

13 started by evaluating certain processes that

14 really need intensive interagency collaboration

15 in order to execute. So, the appointment process

16 or through keys process, we have worked with the

17 other key-turning agencies to establish some

18 protocols and expectations around how that would

19 be carried out.

20 Activating the Orderly Liquidation

21 Fund with Treasury and the role that the Federal

22 Reserve might have in terms of delivering funds 

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1 by the wire system, we have worked through the

2 sort of protocols and expectations on how that

3 would work.

4 We have designed a detailed internal

5 process that consists of a series of work

6 streams, I will call them, to carry out different

7 processes that would need to happen

8 simultaneously. So, assessing the condition of

9 the institution, developing our strategy,

10 determining what sort of governance may need to

11 be in place once we get into resolution. And I

12 will talk more about that in a second. And then,

13 actually, once we get into resolution,

14 establishing the bridge and the plan that will be

15 carried out during the bridge period.

16 MEMBER BRADFIELD: Did we learn from

17 the living wills?

18 MR. TETRICK: Immensely, yes. I think

19 there is a lot of learning from the living wills

20 in terms of strategic thinking and options,

21 certainly going back to Herb's segment, the

22 objects of sale that are identified in forms, the

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1 types of options that we would have once we get

2 into resolution, what sorts of marketing and due

3 diligence timelines we can expect around those

4 objects of sale, but also just from an

5 operational standpoint, all the firms are

6 required -- again, I will mention communications

7 -- to develop a global communications plan. That

8 is something that we would leverage directly.

9 There are playbooks for continuity of

10 access to FMUs. Again, that is something that we

11 would leverage directly and kind of activate

12 those playbooks with the personnel that are at

13 the firm even in a Title II scenario.

14 So, the Title I process is extremely

15 helpful in forming how we carry out our Title II

16 authorities.

17 MEMBER KOHN: To expand a little bit

18 on the foreign authorities --

19 MR. TETRICK: Sure.

20 MEMBER KOHN: -- I mean Simon raised 

21 the issue before under Title I --

22 MR. TETRICK: Yes.

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1 MEMBER KOHN: -- the complications of

2 it.

3 MR. TETRICK: So, we have intensive

4 collaboration with foreign authorities. You have

5 a segment on international engagement in a bit

6 where we will go into more of that. But around

7 our Title II authorities now we conduct exercises

8 with foreign authorities. But many of those

9 bilateral relationships have gone through

10 exercises on establishing joint work streams on

11 certain processes to determine what kind of home

12 host coordination might be needed, once you get

13 into resolution.

14 So, we tend to focus on certain

15 processes where there is a clear home host role. 

16 For instance, if you think we have talked about

17 TLAC throughout the day, but that is issued out

18 of the holding company downstream to

19 subsidiaries, in some cases downstream to hosted

20 subsidiaries. What are the timing expectations

21 for when that would be converted to stabilize a

22 hosted subsidiary, once you enter into

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1 resolution? What are the expectations around

2 sort of expediting authorizations to operate in

3 hosted jurisdictions? There are some regulatory

4 and procedural matters that we think could be

5 expedited with close home host cooperation. So,

6 there is a number of sort of specific technical

7 issues that not only do we address exercises with

8 foreign authorities, but actually have kind of

9 regular, ongoing work streams with key

10 jurisdictions.

11 MEMBER KOHN: But protocols, just

12 understandings about the future of a resolution,

13 either what happens to the subsidiaries, and

14 things like that, is that stuff all written down? 

15 Is there something more than just we know these

16 guys and work with you guys?

17 (Laughter.)

18 MR. TETRICK: I think it is fair to

19 say that no jurisdiction is willing to give up

20 options or abilities that it might otherwise have

21 in resolution. But we are able to set some

22 expectations about how we will coordinate, what a

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1 host authority will need to see and hear from us,

2 what we will need to demonstrate so that they

3 don't interfere with hosted operations. But you

4 can't sort of relinquish sovereignty.

5 (Laughter.)

6 MEMBER JOHNSON: But you can

7 relinquish sovereignty.

8 MEMBER ADMATI: Well, nobody wants to.

9 MEMBER JOHNSON: And they haven't.

10 MEMBER ADMATI: Right.

11 MEMBER JOHNSON: You can't have

12 binding obligations. So, you can have a treaty

13 or some other form.

14 MR. TETRICK: Practically, it is very

15 difficult to do.

16 MEMBER JOHNSON: Well, it hasn't

17 happened. I think the supervisors and others

18 don't want to do it. It is an interesting

19 question whether it would be any harder than any

20 of our other international obligations.

21 MEMBER COHEN: I must say I echo that. 

22 I have for some time. I understand how difficult

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1 it is, but we are really talking predominantly

2 about a single treaty, which is the U.S. and the

3 UK. That is 90-something percent of all

4 liabilities of the eight USG sibs outside. 

5 Ideally, we get the European Union on with us,

6 but we are talking two treaties.

7 MEMBER ADMATI: To all of that, I

8 mean, we have discussed this here before, and

9 this is a huge problem. I mean, we know from

10 experience that the cross-border has not worked

11 from Continental Illinois through to Lehman and

12 everything else.

13 So now, the Financial Stability Board

14 had this key attribute report, which I have read,

15 which really is a huge wish list of things that

16 have to happen, some of which legally. And it

17 has come up in this panel before as well.

18 So, when it comes to sort of now the

19 SIFIs assumptions in the living wills, now it

20 comes to your assumptions over here and just

21 being honest with where we are, because of the

22 ring-fencing that we can logically anticipate.

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1 Are we kind of confronting that? 

2 Because in the last crisis, a lot of MOIs were

3 just out the window in the event. So, we just

4 have to realize that, it seems to me, as opposed

5 to just live in hope somehow that some of these

6 things -- because they are not in treaty. So,

7 unless we really come out of here saying there

8 must be a treaty or something to do these things,

9 otherwise, cross-border is a big, huge problem.

10 MR. TETRICK: So, some sort of

11 international arrangement or treaty would, of

12 course, provide more certainty. I am not so sure

13 that we are expecting ring-fencing anymore. It

14 is one of those situations where we are in a very

15 different place than we were pre-crisis. And it

16 is not just the key attributes, but working

17 towards internal TLAC. A bit part of that is

18 where you have material operations, it provides

19 the host authority in-hand resources that they

20 can be assured would otherwise be lost, if we

21 don't support those operations.

22 MEMBER ADMATI: Legally?

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1 MR. TETRICK: We have resolution

2 authorities with substantial funding capacities

3 that we can ensure obligations are met as they

4 come due. We have worked through CMGs and other

5 fora to develop plans.

6 So, I think we are in a different

7 state. Nobody can guarantee, say with a treaty,

8 that actions wouldn't be -- well, that certain

9 actions are guaranteed or non-actions are

10 guaranteed. But we work very closely with the

11 host authorities, and we are all trying to solve

12 the same problems of note, certainly between us

13 and the UK.

14 The operations that are hosted in each

15 jurisdiction are critical to the SIFIs in the

16 home country. So, we have worked very closely

17 with them to come to some understanding of how

18 that would work.

19 MEMBER COHEN: Could I just go back

20 quickly to one other thing, one other point Simon

21 made? It touched on something that began with

22 Dick. That is a contagion and how difficult that

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1 makes everything.

2 There are two types of contagion. One

3 is that there are a lot of problems at a lot of

4 institutions. I have no clue what you are going

5 to do there.

6 But the other is an idiosyncratic

7 event at one institution and the market panics

8 because they can't tell whether it is happening

9 in other institutions. There I would hope part

10 of the operational exercise would be to think

11 through with you and the Fed and the OCC and the

12 foreign regulators what they are willing to say

13 about the health of the remaining institutions.

14 CHAIRMAN GRUENBERG: We are already

15 over time. I am figuring we will sacrifice part

16 of our lunch hour to try to continue the

17 conversation here.

18 If we can, I would like to get through

19 the description of the internal operation of what

20 you have done, just so we could at least put that

21 on the table for everyone. And then, we will

22 conclude with a brief overview of the

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1 international work.

2 We also wanted to get to the work on

3 central counterparties that we have been doing,

4 which is quite important and very much helped us

5 here and internationally. But my guess is we may

6 not have enough time for that today, but you do

7 have a slide back in your book, and certainly,

8 any questions or follow-up. Why don't we just

9 try to proceed for another 10 minutes or so and

10 see how far you can go?

11 MR. TETRICK: So, the operational

12 exercises we have been conducting, that is an

13 ongoing program. We expect to have another

14 exercise like we held in December sometime this

15 summer.

16 If you turn to slide 4 in this

17 segment, that begins with an overview of the

18 phases in the process that we have established. 

19 There are five phases described here.

20 The first is somewhat out of scope of

21 the direct execution of our Title II authorities. 

22 That is the planning phase. We are in the

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1 planning phase now. It is peacetime when we are

2 doing advanced resolution planning, both through

3 Title I and Title II. So, I won't spend much

4 time on that.

5 Where our exercises began this

6 December was in this determination phase. We

7 have just provided a summary of some of the

8 things that happened there. It was actually more

9 sort of primary actions or core steps that we

10 have laid out.

11 But it begins with really sort of

12 activating our planning process. That is both

13 internally, getting our sort of executive group

14 established that will project manage the

15 execution of the resolution planning and entering

16 the resolution, if it is needed.

17 But, then, also, establishing a

18 similar group with domestic authorities and

19 activating at probably a very senior level the

20 Crisis Management Group, or at least bilateral

21 engagement with host authorities.

22 And then, at the same time,

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1 establishing a targeted list of information that

2 may need to be updated to build out the

3 executable plan relative to a failing

4 institution, delivering that with other

5 supervisory authorities to the institution during

6 this period, not just to assess its condition,

7 but also to determine the actions that we need to

8 take upon entry.

9 Using that to develop our strategy,

10 particularly what the day one actions might be

11 needed to stabilize the institution from a

12 capital and liquidity perspective. So, not just

13 leaving liabilities behind at the holding company

14 level, but conversion of internal debt or

15 internal TLAC at the operating subsidiaries.

16 And then, the point that was raised

17 earlier about the importance of new management. 

18 So, I think we view this as a lot of attention

19 has been paid in the cross-border space on

20 capital and liquidity, but we view this as sort

21 of a threshold decision to the effectiveness of

22 this strategy.

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1 To your point, having multiple

2 personnel that might be a fit for the institution

3 as we are going through this determination phase,

4 is one of the principles that we have

5 established.

6 Not only that, but I think during the

7 planning phase, establishing relationships with

8 the types of people who have been in this

9 situation or who can connect us to others who

10 might be a good fit.

11 And then, the other thing is

12 establishing what authorities and

13 responsibilities this new management would have

14 upon entering into resolution. So, you know, you

15 think about compensation and other questions, but

16 one of the things that we think is most important

17 is that the person who comes in knows what the

18 FDIC's role is, what powers and limitations they

19 have during this bridge period.

20 In terms of limitations, we would

21 expect to adopt the bylaws of the failing

22 institution, but modify them to lay out certain

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1 limitations on what they could and couldn't do. 

2 And then, we would also enter into what we are

3 calling an operating agreement, which would set

4 out certain requirements that are needed to be

5 completed to get to exit from resolution.

6 So, they would need to develop a new

7 capital and liquidity plan, meet all the

8 regulatory requirements for exit, and develop the

9 sort of restructuring plan that executes on all

10 the options Herb went through earlier, before you

11 could exit. Some of those actions may take a

12 number of years. So, it would be expected that

13 some of those might need to be incorporated into

14 the valuation of this new company and would be

15 carried out after exit from resolution with some

16 sort of binding agreement that is placed on the

17 firm upon exit.

18 MEMBER PETERSON: Do you have explicit

19 triggers as to when you would intervene? I could

20 see you have this tension between management who

21 say, "We can handle it" versus wanting to

22 intervene earlier to preserve value and

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1 stability.

2 MR. TETRICK: Yes, it is a great

3 question. We have looked at, are there ways to

4 develop explicit triggers or quantitative

5 triggers? It is very difficult to do. And I

6 don't think we would want to bind ourselves with

7 a particular sort of quantitative trigger.

8 But we would expect to enter and

9 appoint in terms of the legal authorities at a

10 point when the firm was in danger of default,

11 rather than default, or something before it has

12 exhausted all of its resources.

13 It might be the case that the firm

14 still thinks it can survive. But, importantly,

15 the type of liquidity planning for resolution

16 purposes that is being conducted in the Title I

17 space provides us some guidelines on how to think

18 about when to enter. If they have crossed

19 through that threshold that Brent described

20 earlier where they no longer have enough

21 resources to execute their resolution plan, that

22 is one argument for entering the resolution, but

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1 there are no explicit triggers other than meeting

2 the fact that the firm is either in default or

3 danger of default.

4 So, in moving on to the subsequent

5 phases, we have got what we call the immediate

6 stabilization phase. You can think of this as

7 resolution weekend, although we don't know that

8 we will get to pick the date, so it won't

9 necessarily be on a weekend.

10 (Laughter.)

11 But this is the days immediately upon

12 entering the resolution when we are establishing

13 the bridge company and stabilizing the group. 

14 And that might be a period of one to two days or

15 a couple of weeks following that. There is no

16 sort of liminal event that calls the end of this

17 phase, but this is the period in which we are

18 taking the actions to stabilize the group. And

19 then, importantly, there are a lot of compressed

20 actions here that need to happen simultaneously. 

21 So, communications immediately upon entry, not

22 just to the broad public, but to the personnel

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1 and counterparties and customers of the firm, and

2 having a plan to provide all of that

3 communication in a simultaneous, coordinated way

4 is one of the things that we really focus on in

5 this phase.

6 And then, we transition into the

7 orderly liquidation phase, which is the period

8 during which the institution will be operating as

9 a bridge financial company. We would be

10 overseeing all those requirements that I

11 described. That would be laid out in the

12 operating agreement.

13 One of those would be to conduct a new

14 valuation of the firm. The bridge would be

15 responsible for doing one valuation. We would do

16 a simultaneous valuation with an outside advisor

17 to develop a fairness opinion as to the valuation

18 that the firm produced, of course, incorporating

19 all the restructuring actions that would take

20 place during this period.

21 And then, depending on the exit,

22 completing a claims process and a securings for

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1 claims exchange to deliver equity and debt in a

2 new company to the claimants of the failed firm

3 or returning cash for parts of the firm that are

4 sold or liquidated during this period.

5 Then, the final phase, we can

6 anticipate there will be ongoing work after we

7 exit from resolution. Most likely, after the

8 bridge is terminated, the receivership entity

9 actually would go on and handle both offensive

10 and defensive litigation that would remain with

11 that entity.

12 There would be completion of the

13 restructuring plan that we laid out during the

14 bridge period. And then, we anticipate some

15 communication upon exit. And then, we have

16 reporting potentially. You know, we would expect

17 both during the bridge period and after, there

18 might be calls for congressional reporting. So,

19 planning for that during this period.

20 CHAIRMAN GRUENBERG: Statutory

21 requirements.

22 MR. TETRICK: Yes, there are certain

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1 statutory requirements, as the Chairman noted. 

2 And then, there might be some other ad-hoc

3 reporting that would be asked for.

4 MEMBER FISHER: Could I offer an

5 impression, if I could? And you can tell us next

6 we come back in a year or so.

7 (Laughter.)

8 I am still nervous you are trying to

9 hold too many options. The reason I asked the

10 question about the imagined equity option on

11 future equity is not because I am trying to do

12 this in a hurry, but I am wondering whether the

13 debt of the company is going to stabilize as we

14 approach this moment or after you make this

15 announcement or whatever continues to trade down,

16 and whether the market is going to expect it to

17 keep trading down. I think that is going to be

18 an unfortunate judgment on your process.

19 And then, I see that you want to have,

20 the whole process imagines we want to have the

21 benefit of a long time to resolve this. We also

22 want a lot of optionality on the judgment of the

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1 agencies in charge that first weekend to see how

2 we are going to work things out.

3 I know we can describe it, but it

4 sounds like we can have the best of both worlds. 

5 I am just not sure we can. And I think I

6 mentioned this before perhaps. The difference

7 between banking and insurance, classically

8 defined, in banking we thought of ring-fencing as

9 the problem and resolution takes a weekend. And

10 in insurance, ring-fencing has been the answer

11 and resolution takes a decade.

12 (Laughter.)

13 Right? They are very different

14 beasts.

15 When I look at what you are imagining,

16 it is a kind of a merger of the two. I am still

17 not sure I see how it is going to work out. You

18 are trying to hold a lot of options, and we are

19 hoping to give everyone certainty. And you can

20 say that you are going to do this, but it is

21 still making me nervous.

22 And you don't have to answer now, but

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1 maybe over the coming year, the next time; it is

2 something to think about.

3 MR. TETRICK: Sure. So, I think it is

4 something to think about. We have a lot of

5 discussion with others, with foreign authorities,

6 about what is the balance between flexibility and

7 certainty. To some degree, you know, we need a

8 process that can adapt to different scenarios and

9 facts and circumstances. So, there needs to be

10 some flexibility.

11 But I think we can maybe work on the

12 places where we can provide more certainty, and

13 maybe certainty with respect to different types

14 of institutions. Because, right now, what we

15 have established is a framework that I think the

16 steps and the core actions can apply to different

17 types of institutions that we resolve under Title

18 II, but the way in which it would be carried out,

19 we could probably provide more certainty on an

20 institution-by-institution basis or different

21 types of institutions at the very least.

22 I would say, just to jump into the

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1 international segment a little bit, one of the

2 things that we have done in Crisis Management

3 Groups in the past year is start talking about

4 what the specific options are and how our process

5 would be carried out on an institution-specific

6 basis with foreign authorities, so that they can

7 understand how that might affect hosted

8 operations and what options are actually in scope

9 for a particular entity.

10 CHAIRMAN GRUENBERG: So, why don't we

11 take five minutes, and then, we will break for

12 lunch?

13 MR. TARPLEY: Five minutes? Great. 

14 Okay.

15 (Laughter.)

16 And please don't think that is all it

17 takes to do international work. This is a full18 time job for us, as I think we have heard from

19 the discussion today.

20 We kind of think of international in

21 three key ways, bilateral, multilateral, and

22 institution-specific. What does that mean? 

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1 Bilateral is the work that the Chairman

2 mentioned; for instance, our great involvement

3 with the Single Resolution Board. That also

4 extends to the ECB, the European Central Bank. 

5 Our close involvement with the UK, the Banking

6 Union member states such as France and Germany,

7 Switzerland, and Japan. We have regular

8 engagement with them.

9 The multilateral work, that includes

10 our work with the Financial Stability Board, or

11 FSB, which is doing important work on developing

12 guidance for banks, insurance companies, Central

13 Counterparties, or CCPs, or in this case the

14 resolution planning which we are quite involved

15 with. And, of course, Elke Konig wears two hats,

16 is head of the SRB, but also is head of the

17 Resolution Steering Group of the FSB. 

18 And then, on the institution-specific

19 side, this has been alluded to just by Ryan just

20 now, but these Crisis Management Groups which

21 play a pivotal role in our communication among

22 home authorities as well as with key host

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1 authorities for really drilling down into those

2 resolution actions and starting to build out how

3 we would transpire in terms of implementing the

4 resolution plan, trying to avoid the reflexive

5 ring-fencing actions.

6 Just to give a couple of examples on

7 the bilateral engagement side -- I won't get into

8 all of it -- but earlier this week we had a

9 number of members. Ryan was there in Switzerland

10 to engage in a tabletop exercise hosted by the

11 Swiss authorities. Last month with Germany,

12 again, another tabletop exercise with large

13 involvement among the German authorities and here

14 at the FDIC. With our European counterparts, we

15 have both informal and formal working groups;

16 with the European Commission and the Single

17 Resolution Board, as well as staffs and all

18 levels of engagement.

19 Turning to the UK, the FDIC has really

20 build upon the principal-level exercise held in

21 2014 to continue working closely in building out

22 that work with monthly, if not weekly, calls to

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1 engage and implement on cross-border resolution

2 planning.

3 And lastly, with Japan, last year the

4 FDIC hosted a bilateral exercise with Japanese

5 authorities to discuss cross-border resolution

6 issues, including funding and liquidity,

7 continuity of access to FMIs, the ISDA protocol,

8 and other important matters.

9 I am going to hit just one thing on

10 the information-sharing agreements. That is, as

11 was alluded to earlier, we do have a joint

12 process with our colleagues at the Fed for

13 outreach on Title I to make sure that we are

14 being responsive to our colleagues at other

15 agencies, to provide them with feedback and

16 analysis on the plans, to provide them with

17 access where they have a bona fide interest for a

18 particular firm as a home or host authority. And

19 so, we do engage readily with our foreign

20 colleagues on those issues.

21 Again, just to jump into the

22 multilateral outreach, I won't go into each of

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1 these issues, but just to hit -- maybe there are

2 two kind of key things we can talk about real

3 quick that the FSB is involved with. One is

4 maintenance of critical functions in resolution. 

5 So, a couple of work streams there.

6 The Central Counterparties' work

7 stream, which we are not going to get into,

8 unfortunately, today. But the FDIC is a Co-Chair

9 of the FSB's Cross-Border Crisis Management Group

10 for Financial Market Infrastructures. And that

11 is starting to do some very important work in

12 terms of looking at guidance for an actual

13 Central Counterparty, or CCP, could be resolved

14 if it were to undergo distress or failure.

15 Another related issue looks at

16 continuity of access to financial market

17 infrastructures. So, this is looking at the bank

18 is undergoing distress or failure. How can we

19 maintain those critical services in resolution by

20 having it be able to continue to access those

21 all-important clearing and settlement services?

22 Another issue that Ryan and others

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1 here are deeply involved in, we co-chair, the

2 FDIC co-chairs the Bail and Execution Working

3 Group, which is looking at implementing the bail4 in execution and looking at all these issues that

5 we have been discussing about valuation issues,

6 registration issues, et cetera; getting into the

7 nitty-gritty of how that works.

8 And then, of course, the internal TLAC

9 Working Group, which is looking at taking the FSB

10 term sheet that was issued late last year and

11 looking at developing guidance, which, of course,

12 dovetails with the federal.

13 And then, on the last issue, Crisis

14 Management Groups, I will turn it over to Ryan,

15 if he has anything to say. All I will say is

16 that we have established Crisis Management Groups 

17 for our seven globally-active banks where we have

18 identified key host jurisdictions. That is Bank

19 of America, Bank of New York Mellon, Citigroup,

20 Goldman Sachs, JPMorgan Chase, Morgan Stanley,

21 and State Street. We do have a domestic CMG as

22 well for Wells Fargo. We have CMGs in place for

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1 our two insurance companies, AIG and Prudential. 

2 We are also looking at the possibility of

3 establishing CMGs for one or more systemic cross4 border Central Counterparties, or CCPs.

5 MR. TETRICK: The only thing I will

6 add is that in recent years the firms are

7 participating for a half-day in the CMGs. They

8 will send senior personnel to talk about a range

9 of issues or processes that are relevant to both

10 Title I and Title II resolution plan. So, they

11 will talk about their global funding model or

12 their global communications plan upon entering

13 the resolution and engaged with the suite of host

14 authorities who are in the room. So, that has

15 been an extremely helpful development.

16 CHAIRMAN GRUENBERG: Thank you.

17 Why don't we close this part of the

18 discussion?

19 We will extend the lunch hour to 1:40. 

20 We can still maybe eat a little bit fast and,

21 then, we will come back.

22 I see Elke Konig is here, will join us

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1 for lunch. And then, we will listen to her

2 presentation afterwards.

3 Thank you.

4 (Whereupon, the foregoing matter went

5 off the at 12:54 p.m. and resumed at 1:53 p.m.)

6 CHAIRMAN GRUENBERG: If I can call the

7 meeting back to order. I want to continue the

8 meeting and introduce our special guest Elke

9 Konig, who's the chair of the Single Resolution

10 Board for the European Banking Union. 

11 If I may say Elke is an old friend. 

12 We've worked together for a number of years, both

13 in her current capacity and prior to her

14 appointment as chair of the Single Resolution

15 Board she was the president of BaFin, which is

16 the German Federal Financial Supervisory

17 Authority.

18 So she was, if I may say, a well19 recognized leader internationally in the area of

20 financial regulation, and while she was president

21 of BaFin, also served as the chair of the

22 Resolution Steering Group of the Financial

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1 Stability Board. 

2 So that even before becoming chair of

3 the SRB, she had extensive experience and

4 provided very significant leadership in the area

5 of resolution, particularly relating to the

6 resolution of systemic financial institutions.

7 So it was with, frankly great pleasure

8 and satisfaction, when the announcement was made

9 that Elke was going to be the chair of the SRB. 

10 I think she was well-known frankly to the leaders

11 of the financial regulatory authorities in all of

12 the major jurisdictions, commanded great

13 confidence, which I think was of great value in

14 the establishment of a new institution such as

15 the SRB. It's a very challenging assignment. 

16 I candidly couldn't think of a better

17 person to be asked to take on this really very

18 important role. I will say I believe the FDIC

19 and the SRB have established a very close working

20 relationship, which we value very much and look

21 forward to continuing to develop and deepen as we

22 go forward.

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1 If I may just introduce Elke and thank

2 her for taking the time to be with us today.

3 MS. KONIG: Well, I'm a bit speechless

4 now. Thank you, Marty, for your really kind

5 introduction. In Germany you would probably have

6 said my father would have been very proud and my

7 mother might have even believed all of this.

8 (Laughter.)

9 MS. KONIG: Totally politically

10 incorrect. So but with that said, let me try to

11 be mindful of your time, but perhaps also to

12 start with really thanking the FDIC for inviting

13 me here, to give me a chance to explain something

14 which is not always very easy to understand, and

15 that is call it the European -- or rather, Euro

16 area arrangements around bank recovery and

17 resolution.

18 Secondly, and that I checked, and I

19 think my number is correct. At a given point in

20 time, FDIC staff made up more than ten percent of

21 the SRB's entire staff. That was when, at the

22 very early point, you seconded one of your staff

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1 members to help us get up and running because --

2 and with that I will stop the initial -- I still

3 feel a bit like chair of a startup because I've

4 moved out of an organization that at least in

5 insurancy provision had more than 100 years of

6 experience, and we had a template for everything.

7 And then when I came to the SRB, we

8 were at that point six board members with six

9 PAs, good to start, and we had in total 20

10 people. You can imagine how many staff we had,

11 and we started near everything from scratch. So

12 by now it's changed, and I will try to give you a

13 bit of an introduction about what is the Single

14 Resolution Board or the single resolution

15 mechanism, what are our objectives in resolution

16 or by far more in the focus on resolution

17 planning -- and I heard a lot of very familiar

18 words here -- and then perhaps touch on some of

19 the obstacles to resolution, which I fear are

20 also familiar, and give you a bit of an outlook

21 on where we are, the Single Resolution Fund, our

22 backstop and our work program.

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1 With that, just to see some faces the

2 -- oh, no? Not yet the faces. To start with, we

3 are part of the banking union. The banking union

4 was introduced in 2013 at -- for the European

5 standards, but I think for any standards -- light

6 speed as a consequence and a reaction to what had

7 started as a banking crisis and moved into a

8 sovereign crisis, and then a banking crisis. 

9 Kind of a vicious circle.

10 It started out with the single

11 supervisory mechanism, which is now the single

12 supervisor. It's headed under the roof of the

13 ECB in Frankfurt, and they are supervising the

14 largest banks in Europe, which the basic number

15 is 30 billion upwards in total assets, or in any

16 case, the three largest banks in any country

17 because, as you all know, Europe is beautifully

18 diverse, and that means we have also countries

19 where the largest bank has about the size of a

20 mid-size cooperative German institution. So we

21 have quite a spread there. 

22 The second leg to the banking union is

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1 the single resolution mechanism, where the Single

2 Resolution Board in Brussels is call it the

3 center of this organization. We have been put in

4 place -- while the SSM, the supervisors started

5 end 2014 after quite an extensive asset quality

6 review was done, we started officially January

7 1st last year. Board members, me including, came

8 on board on the 1st of March. 

9 And since then, we had been focusing

10 on establishing the institution, really building

11 it from scratch, and at the same time starting to

12 get active in resolution planning, because as of

13 January 1st this year, if a bank in the Euro area

14 that is under our remit -- I'll come to that

15 later on again -- has to go into resolution, it

16 will be asked to decide upon the resolution plan. 

17 So we have to be up and running as of

18 now. I always find the question from mainly

19 journalists interesting to say. Do you think

20 you're already up and running? My normal answer

21 is then, well there's no alternative to that. We

22 are responsible, so we have to be. I would hope

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1 not too soon nevertheless.

2 The third block here is the one when

3 you follow European press, where you read the

4 most about for the moment, and you read about it

5 under the nice word of EDIS, E-D-I-S, and that is

6 the deposit guarantee scheme. There is a

7 regulation -- there is a directive, there is a

8 clear set of harmonizing deposit guarantee within

9 the Europe and not just within the Eurozone. 

10 But there's also start of the

11 discussion whether we don't need -- like we have

12 the single supervisory mechanism, single

13 resolution mechanism -- a harmonized

14 Euro/European or at least Euro area deposit

15 guarantee scheme. There's a draft out that the

16 European Commission prepared and that will -- is

17 for the time being debated between the member

18 states and the headline mutualized deposit

19 guarantee and risk reduction.

20 So what is the other element that

21 needs to be put in place? It's a fairly

22 complicated discussion, now for the time being

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1 very much pushed by mainly the Dutch presidency

2 of the European Union. And on top of that clear

3 -- that's why we put it underneath and all the

4 nice acronyms -- a single rule book, which is CRD

5 IV/CRR is the European translation of Basel III,

6 basically the single supervisory rule book.

7 BRRD is Bank Recovery and Resolution

8 Directive is our main toolbox, and DGSD stands

9 for Deposit Guarantee System Directive. So what

10 is the basic structure that we have organized -- 

11 and I think with that we could move to the next

12 page. 

13 Someone seemed to be -- I could try;

14 it works, and we have basically organized us

15 internally in saying let's organize by countries,

16 and why so? And that's probably one thing first

17 of all where I'm always envying the U.S., because

18 you're in a better position than we are there. 

19 We have organized ourselves by

20 countries because we have to consider that a lot

21 of underlying law, all kind of insolvency law,

22 all kind of corporate law, is national law. 

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1 So we are basically all on Roman law,

2 but since the last 1,800 years a lot has changed. 

3 So you have to know the legal system within the

4 individual country, and that for us weighted

5 higher than to say shouldn't we somehow make sure

6 that people get exposed to more than one country

7 to see different topics. If you want to resolve

8 a bank, you need to do at least a counterfactual

9 insolvency consideration, and that means you'd

10 rather know the legal rules of this country.

11 So we are basically organized by that,

12 and the board members responsible are Antonio

13 Carrascosa, who was formerly the head of FROB,

14 the Spanish Resolution Authority; Joanne

15 Kellermann, who was formerly with the Dutch

16 Central Bank; and Dominique Laboureix, who was

17 running the French Resolution Authority.

18 Mauro Grande, who was with the ECB, is

19 responsible for cross-cutting issues, and Timo

20 Loyttyniemi, he normally says if you can

21 pronounce his last name you've already done a

22 large step. Timo is the one who is responsible

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1 for internal issues but his main job for the time

2 being, he is the one is responsible for the

3 Single Resolution Fund for all kinds of

4 contributions, all of that.

5 So with that, what's our job? When I

6 moved to Brussels, my children got fairly nervous

7 and got the feeling: what is mom doing when she's

8 not resolving a bank? And that, hopefully, she

9 isn't doing it every day. So I said well, I see

10 the SRB by far more focused on resolution

11 planning, on setting up credible resolution

12 plans, on -- with that setting MREL, which is the

13 European equivalent to TLAC, removing the

14 obstacles to resolution that we can see, and try

15 really to make sure that we have a credible plan

16 for the banks under our remit.

17 And with that being forward-looking

18 and hopefully avoiding the one or the other

19 resolution because the consequences are that it's

20 spelled out all in totality, institutions are in

21 a better condition because we've solved a number

22 of problems. So we are not waiting for customers

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1 just to organize the funerals.

2 Difference to the U.S.: you've talked

3 about Title I versus Title II. In Europe, we

4 differentiate between recovery plans. Those

5 recovery plans have to have been drawn up by the

6 banks themselves. 

7 They get assessed by the single

8 supervisory mechanism, so the supervisors and by

9 us, whether they are credible. Otherwise,

10 there's not more work needed, and these recovery

11 are for us the basis for our resolution planning

12 drafting, but resolution plans are drafted by us,

13 by the authority, and clearly you need input from

14 the banks. You need input from the supervisor,

15 but it is basically our plan and as of now, we

16 would not foresee that resolution plans are

17 public documents. 

18 They are a private document, and we're

19 even saying we have worked hard and your staff

20 has very gratefully also supported us on first

21 version of our Resolution Planning Manual. This

22 manual is our private cooking book. It's not

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1 published. We share with the national

2 authorities, but it stays within the authorities. 

3 It is only a short version that we

4 want to publish over the summer for the industry,

5 but also for the general public to understand how

6 we look at various tools, how we see whether

7 there is public interest in resolution or not. 

8 So it is basically -- 

9 CHAIRMAN GRUENBERG: Elke, can we ask

10 questions along the way or would you want to

11 wait?

12 MS. KONIG: Yes, sure. Sorry. Yeah

13 sure. I think it's easier.

14 CHAIRMAN GRUENBERG: I think so too. 

15 So in the U.S., we have this view that the more

16 transparency around this sort of thing brings

17 more certainty, particularly in times of stress

18 and time of fear, and it sounds like you don't

19 share that philosophy in the general terms or

20 even specifically here.

21 MS. KONIG: I wouldn't say that I

22 don't share the philosophy. I have to work with

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1 my own legal framework, and for us resolution

2 plans are a very discrete document, where I --

3 where we have been very outspoken as to say what

4 we need to get across is definitely that there by

5 far more transparency about banks' balance sheets

6 when it comes to the liability side. So my

7 version of saying that is what's the pecking

8 order of liabilities banks have? 

9 You can see that in the past that

10 people got the feeling buying a bank bond was

11 minimum as safe as having a guaranteed deposit. 

12 For me, a very important part is make sure that

13 investors know it's equity that it's

14 subordinated, what counts for MREL, and what is

15 the pecking order of that?

16 Now always please keep in mind I'm

17 coming from Europe, where most of the banks have

18 an operating holding and not have -- don't have a

19 holding company structure. The operating company

20 is the head of this. So transparency on the

21 liability side and with that also predictability,

22 what we will be doing and what investors might

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1 also have to face, I think is important.

2 CHAIRMAN GRUENBERG: So I was in

3 Portugal in January, and I was told that people

4 involved in the resolution of BES, for example --

5 and as you know, there's several layers of that,

6 and this was before your organization was

7 operating -- but at least the Bank of Portugal

8 says that they were understanding in interpreting

9 and applying. Yes, right, absolutely.

10 MS. KONIG: I've always tried to stay

11 out of a case that was not our case. 

12 CHAIRMAN GRUENBERG: Yes. No, no, I'm

13 not asking you --

14 MS. KONIG: But I also understand

15 people that say 18 months after the resolution is

16 a long time.

17 CHAIRMAN GRUENBERG: I think but the

18 only point I was going to make, not to ask you to

19 judge at all, but the level of uncertainty in

20 Portugal about the pecking order is quite

21 substantial today, 18 months after, because they

22 don't know what the rules are and the rule book

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1 is not transparent.

2 MS. KONIG: We are now jumping into a

3 very detailed topic. As I said in the beginning

4 in Europe, insolvency law is not harmonized. 

5 That also entails that though the principles are

6 fairly aligned. That also entails that when we

7 talk about bail-in of writing off liability that

8 the rules in the various member states are

9 different.

10 And clearly when you talk about senior

11 debt, you talk in most cases about a class where

12 you come to pari passu all, you know, creditor

13 worthiness issues because there are certain

14 liabilities you don't want to bail in or you

15 can't bail in.

16 So this is a problem we are addressing

17 internally in Europe or with the Commission in

18 saying from a Single Resolution Board or

19 resolution mechanism perspective, there is a huge

20 interest to make sure that we harmonize

21 unrealistic -- not the entire insolvency law, but

22 that we focus on trying to come to a European

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1 uniform set of rules on creditor hierarchy, so

2 that there's more transparency.

3 What we have for the moment is a

4 German version of that. Germany has basically

5 juniorized part of senior debt. France does

6 something similar, but it will only yield the

7 same result in about ten years' time, because

8 they don't do it retroactively. Italy did

9 something slightly different.

10 So life is beautiful and unfortunately

11 a bit less harmonized, but I'm not seeing -- I

12 think there is an interest. There is appetite. 

13 It's a question of how far it -- how fast it

14 goes, or as someone from the Commission said when

15 I said this is a low-hanging fruit. He said

16 that's all relative.

17 MEMBER ADMATI: Can I ask a question?

18 MS. KONIG: It is relative, but

19 clearly for us to -- now to deviate a bit from

20 the presentation -- for us it is utmost important

21 that we have, on the one hand, the deposit

22 guarantee directive implemented and really fit

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1 for purpose in the member states. And on the

2 other hand have a solid foundation in insolvency

3 law because clearly bank resolution, bank

4 insolvency supported by the deposit guarantee

5 fund have to work together.

6 Otherwise, bank resolution becomes

7 kind of a default option because the other ones

8 are just not really functioning and that can't

9 be. And that could get me a bit back to what I

10 actually wanted to address here, and that is

11 which banks are we really responsible for?

12 Like for the supervisory side, the

13 Single Resolution Board in Brussels is actually

14 responsible for the large banks, which is defined

15 not G6 only, it is the 100 -- roughly 120 banks

16 that are under the ECBC provision. Plus any bank

17 that is cross-border within the Eurozone. 

18 That can be a fairly small bank,

19 because just an Austrian bank has a small

20 operation in Germany. So I'm normally saying

21 those are definitely on average by far smaller. 

22 But we are also, similar to the ECB, the ones

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1 that have to guarantee the functioning of the

2 entire mechanism, and by that have to set the

3 standards.

4 So our Resolution Planning Manual is

5 also the manual that the national authorities in

6 principle have to use for their own work. If

7 national resolution authorities for a smaller

8 bank want to resolve the bank and potentially

9 even at some point want to use the Single

10 Resolution Fund -- which I think is hard to

11 imagine -- then it would be something which

12 always would need our approval. We are the

13 guardian of that fund.

14 So what is therefore for us key, and

15 I was -- as I listened into part of the final

16 debate is clearly -- we need first of all a very

17 good cooperation with the national authorities,

18 because clearly we have to work together there. 

19 We need also good cooperation with the

20 supervisor, being the ECB. They are the source

21 of a lot of information for us, and it doesn't

22 always come natural to them to share information. 

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1 It's always a "we need to get that working," but

2 I think we have a good cooperation now. The

3 European Commission, clearly because they would

4 be kind of the regulator, and -- and that is even

5 more important, institutions outside the Euro

6 area. 

7 And when I'm saying outside the Euro

8 area in European jargon, that normally means out

9 in the sense of EU members not part of the Euro

10 area. So mainly Bank of England, our partner,

11 but also really outside Europe and there, as I

12 said already, we have a good cooperation with you

13 but also with the Fed and others, and we have to

14 build on that because the largest banks are

15 international by nature. It doesn't help that we

16 have a good framework now for Europe.

17 What we have by the way for Europe is

18 within Europe, we have basically solved the

19 cross-border issues because we have stay orders

20 and we have mutual recognition of resolution

21 decision. But unfortunately, it's a bit of a

22 reflection to the discussion you had beforehand

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1 that's Europe entirely.

2 So what are the resolution objectives

3 and I think not 100 percent of Europe would agree

4 with me putting the two first ones in bold, but

5 they are the most important ones. When you look

6 into the regulation, the regulation says that

7 resolution is in the public interest and can be

8 executed to safeguard critical functions and to

9 guarantee financial stability of the member state

10 or the union as a whole.

11 So there is quite a hurdle to get into

12 resolution because the normal solution would

13 always be, like everywhere, if a bank gets into a

14 problem and you don't find a private solution,

15 well then insolvency is the logical consequence 

16 -- and by the way the reason why you need a good

17 DGS because it's mainly then deposit-taking

18 institutions. Resolution only comes into play

19 when the objectives here are met. 

20 So for the bigger, more complex

21 institution, protection of public funds,

22 depositors and client funds and assets is also

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1 mentioned, and I could now spend a long time on

2 why it is secondary in order here, because there

3 are other mechanisms that would also take care of

4 that. 

5 What's -- just to give you a bit of

6 colorful picture -- I've asked my people how do

7 we define critical functions? That was the end

8 of the story. No, I think we are working on the

9 international field. We are internally now very

10 much working out how do we want to define

11 critical functions? Is deposit-taking in itself

12 a critical function? Payment system, is it a

13 substitutable critical function? 

14 So that's a lot of work that we have

15 just started, and we'll definitely have to expand

16 on over the coming year. Well, as those -- and

17 I'm sure you know this for the entire resolution

18 planning process -- it is, I said, an ongoing

19 process where the starting point for us is

20 normally the bank's structure, the bank data that

21 we get to a large extent from the ECB, but we

22 have just started in March a huge exercise in

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1 asking for bank's liability data because

2 supervisory data is mainly asset-focused data. 

3 So to set MREL, we need a clear

4 understanding of the bank's liability structures

5 and perhaps also to give credit, the positive

6 part here is it's a giant exercise also for the

7 banks, but I have not heard anyone putting into

8 question that it needs to be done. So it is

9 ongoing, and we will most likely this year really

10 focus on setting MREL. So minimum required

11 eligible liabilities, the European TLAC version,

12 and to assess obstacles to resolution.

13 When talking to banks, I'm always

14 saying just the fact that we have a fairly

15 cumbersome process before we have finally an

16 agreed-upon resolution plan, doesn't mean that

17 the banks shouldn't get started because -- and

18 that would be the next slide -- what are we

19 seeing?

20 There are some obstacles to resolution

21 that, probably behind closed doors, each and

22 every banker would already agree to. 

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1 Interdependencies within the institution,

2 partially antiquated or inadequate IT and

3 reporting systems. 

4 So a lot of the information we need

5 for this liability -- liability information will

6 probably come out of more than one system and

7 will be put together on Excel spreadsheets and

8 not come as the push of a button out of a

9 machine, though it's needed information. There's

10 never been the time to work on that. 

11 There is clearly the question in some

12 of those institutions -- I'm not saying anything

13 that you don't know -- that critical support

14 functions seem to be everywhere except where you

15 think they would logically be. So that we have

16 the idea of can you really make sure that if

17 something happens, you can isolate a support

18 function and transfer it. So there's a lot of

19 structure work to be done.

20 Capital structure in general. So the

21 question, do you have really sufficient bail-in22 able capital and debt? Do you have it issued out

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1 of institutions or entities that you can be sure

2 that you can bail it in? That's --- one small

3 word for that is special purpose vehicles, and

4 I've always said there's hundreds of good reasons

5 to use them, but you then need to make sure can

6 you -- if need be, really get hold of it, or do

7 you find out it's basically a rich organization. 

8 Just the part where you need money, it's

9 difficult to get to.

10 And that will be a huge debate when we

11 set really MREL for those institutions, and then

12 I've put a bit of line in between because I'm

13 always trying to be fair, and there are also

14 issues we need to deal with; the cooperation

15 between the authorities, cross-border recognition

16 -- and you've talked about that beforehand -- are

17 clearly topics where we need to do our homework

18 and a bit like what I heard earlier here, I think

19 we've gone a long way. 

20 Do we have legal systems in place? 

21 No. Even if we have an MOU, an MOU is an

22 intention, but I think we've all gone one major

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1 step. We all know it's not a zero sum game. You

2 understand that it is better for the entire

3 system if you cooperate and not try to ring fence

4 and then see, well, I've got my part; lets the

5 others see how they get -- so I think this is a

6 long list and we don't have the time to get into

7 it. 

8 I will try to confuse you with one

9 slide entirely; we shall see. This one is the

10 easier one. The second one is a bit complicated. 

11 Europe had already introduced the BRRD while on

12 the international level we were heavily

13 negotiating TLAC.

14 CHAIRMAN GRUENBERG: Elke, if you

15 might just explain the --

16 MS. KONIG: Huh?

17 CHAIRMAN GRUENBERG: You might explain

18 BRRD just a bit.

19 MS. KONIG: Yes. BRRD is the Bank

20 Recovery and Resolution Directive. So our legal

21 framework, which includes for us, inter alia, the

22 minimum requirements for eligible liabilities and

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1 in addition for the banking union, when the SRM

2 was put in place and when the fund was created,

3 politicians decided that there needs to be a

4 safeguard to protect the fund.

5 The fund is funded by the industry,

6 but it is money that we could handle, and

7 therefore they require that before you can use

8 the fund, you have to bail in de minimis eight

9 percent total liability based on a prudent

10 valuation form. So first prior losses and then

11 eight percent. 

12 And to define these minimum required

13 eligible liabilities is our job, and is something

14 which, in its basic thinking, is actually the

15 same as TLAC. It just comes more from this idea

16 how much liabilities do you need to have to

17 really unwind an institution -- always

18 considering that the fund is the last resort --

19 compared to the -- I've always said TLAC thinking

20 of how can you make sure that on Monday morning

21 you have clarity and can stabilize the

22 institution.

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1 Basically you want to achieve the

2 same. Unfortunately now in Europe we are in a

3 situation that we have a legal requirement called

4 MREL and an international commitment called TLAC. 

5 They are two sides of the same coin. The

6 Commission has just started to come -- to discuss

7 a proposal how to implement TLAC within European

8 legislation.

9 In the UK, you've seen the -- some of

10 you have definitely seen the consultative paper

11 the UK has brought out on how to implement it --

12 and we used a third way to go because within the

13 SRB, and our more diverse universe, we've said in

14 January, let's set out a guidance on where are we

15 moving.

16 I am firmly convinced that you can

17 really match or can cover both requirements, TLAC

18 requirements and MREL requirements within one set

19 of -- in one go. We have only so far said one

20 thing is pretty clear for the banks under our

21 remit -- so the 120-ish largest banks. It's

22 highly likely that if something goes totally

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1 wrong that resolution is the avenue to go. 

2 To go that avenue, we would always

3 require that we keep all options up, and that

4 includes that we need to make sure that we have

5 the famous eight percent bail-in-able capital

6 unless the fund is just not available. The fund

7 is only available after.

8 MEMBER JOHNSON: Is there any systemic

9 exception to that? So if you felt or somebody

10 else felt that the situation was bad enough and

11 the contagion was spreading fast enough, can you

12 waive the bail-in requirement?

13 MS. KONIG: Yes. The BRRD contains

14 rules for exceptional circumstances, but our

15 working for the time being is to say we are

16 sunshine and we have to do a plan. So we are

17 assuming that the bank has eight percent -- has

18 to have the famous eight percent, and it needs to

19 resolvable basically without access to the fund.

20 If the unthinkable happens and we come

21 to a very difficult situation and it's systemic,

22 and you're not talking about idiosyncratic crisis

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1 -- dream up whatever, then the BRRD would give us

2 some leeway, but it's really exceptional clauses.

3 MEMBER JOHNSON: Who would provide the

4 liquidity? If you had the eight percent, you

5 write that out who then provides --

6 MS. KONIG: You're by far too fast for

7 me. So I have not mentioned -- because I thought

8 it's not good to start with what doesn't work --

9 we don't have a solution yet for who provides

10 liquidity. 

11 Now, we have a formal solution for

12 that. Formally or by formal solution, the fund

13 can be used for capital providing or for

14 liquidity providing. 

15 Now let's be realistic. The fund --

16 and I think we have a slide to that too -- the

17 fund has in the -- will ultimately have the size

18 of one percent of covered deposits, which is

19 somewhere between 50-ish and probably at that

20 time, then in the 70 billion. That fund, to be

21 used for liquidity, doesn't get you very far. 

22 So that we are -- I'm always saying

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1 let's assume the fund is the last resort for

2 capital, and we still have to undergo the entire

3 debate mainly with the central bank, to say if

4 need be, who would be the one providing

5 liquidity?

6 That for the time being is for some

7 kind of a religious war, but for me, I would

8 always say -- I'm fairly simple there. If the

9 bank on Friday goes into resolution and we

10 recapitalize it with bail-in or even with the

11 need -- use of the fund, then at least the bank

12 on Monday seems to me better capitalized than on

13 Friday, and a solvent -- basically solvent

14 institution.

15 That institution will be unfortunately

16 not able to go to the market, and just

17 realistically I don't see how they can easily go

18 to the market. So that we need kind of a

19 liquidity line, and that's something that we

20 still need to sort out. 

21 I know that our British friends are

22 also still a bit dancing around this topic. I

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1 hope that the paper that the FSB is now

2 finalizing gives us a trigger to say let's now

3 not -- let's now think about how do we find a

4 solution there because clearly the fund, to my

5 understanding, would be the most inefficient way

6 if --

7 MEMBER ADMATI: Can I ask a question?

8 MS. KONIG: Sorry, yes.

9 MEMBER ADMATI: You probably -- I need

10 to ask this question because you're sort of

11 glossing over the deposit part. So I wonder sort

12 of where deposits fit, because of the lack -- so

13 I mean it's very -- it was very strange to me to

14 realize that you had an up and going resolution

15 plan but you sort of -- you know, the starting

16 point usually of banking is deposits, and your

17 deposits are -- you know, all your banks have

18 deposits.

19 Now the religious war seems to be on

20 the deposit insurance amazingly right now,

21 because you know, it's essentially saying it's a

22 trading problem, which means that's kind of the

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1 end of that. So what's the plan? 

2 I mean obviously that's not in the

3 eight percent of your -- because you can't bail

4 in deposits, and the question also is how much

5 deposits? What is -- are you assuming -- you

6 don't even have FDIC. So it's like, is the

7 100,000 -- what is it? In other words, what's

8 the treatment of deposits in all of this?

9 MS. KONIG: It's always -- trying to

10 get all this into a short presentation will never

11 work probably. 

12 When I look at our European universe,

13 I would say most of the banks are deposit-taking,

14 also most of these banks. I would nevertheless

15 somehow slice the universe in the sense that out

16 of roughly 4,000 banks, probably 3,500 are not

17 systemic. They are, even within their member

18 state, not systemic.

19 For those banks therefore, if they get

20 into trouble -- now forget all the various

21 different solutions -- basically you would go

22 into insolvency and the deposit guarantee scheme

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1 would make sure that depositors --

2 MEMBER ADMATI: It's up and running. 

3 You mean the EU?

4 MS. KONIG: No, no. I'm talking about

5 national deposit guarantees.

6 MEMBER ADMATI: National, national.

7 MS. KONIG: We have national deposit

8 guarantee.

9 MEMBER JOHNSON: Every country has --

10 MEMBER ADMATI: The governments, yes.

11 MS. KONIG: Each and every country has

12 a national system. They are not all exactly the

13 same, and we are pushing hard and saying some of

14 them are just mere paybox systems, which I think

15 is inefficient because we all look at what the

16 FDIC does -- which I think is a by far more

17 efficient process in safeguarding depositors in

18 transferring the business. So that is an area to

19 be discussed.

20 The second part, and that's what you

21 see a lot of about in the press right now is that

22 the Commission has started to say well national

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1 deposit guarantee schemes are potentially as good

2 as the sovereign in the end might be. Now it's a

3 far reach to immediately jump to that conclusion,

4 but therefore the idea shouldn't we have -- and

5 that's what they call EDIS.

6 Insurance came behind where the Euro

7 area then gradually takes over, and after a

8 number of years you come to a European deposit

9 insurance system. For me, the national system,

10 if it's fit for purpose, all this -- it's not so

11 much important whether it's a European system or

12 whether it's a fit for purpose national system. 

13 You just need a good system. So that could cover

14 basically for most of the smaller banks. 

15 For the larger banks, if you're just

16 very bold, you would say well, if we assume that

17 we have sufficient capital and sufficient MREL in

18 place, then we should in nine out of ten cases be

19 able to resolve the bank without eating into

20 depositors, because they are at the very end of

21 the waterfall. 100,000 is secured and those

22 above are still protected compared to normal,

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1 regular creditors, but if need be, then the

2 deposit guarantee scheme naturally steps in and

3 becomes the preferred creditor in unwinding this. 

4 This is all -- this is a bit the

5 reason why I'm saying always there is a triangle

6 of our resolution directive and our functioning. 

7 Solid functioning of the deposit guarantee

8 scheme, which by the way they plan to give to us

9 if it becomes a European scheme, but I've always

10 said I'm not moving on that side before it's not

11 there. 

12 I think it would make sense, but

13 that's something else, and to make sure that we

14 then have a harmonized system of insolvency rules

15 for these institutions. That together could make

16 a system.

17 Now just a very short word to the

18 Single Resolution Fund. The fund has to be built

19 up since January 1st this year, or we said if you

20 want to see a calculation for a fund that's

21 complicated, come to visit us. 

22 It's not complicated because the

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1 Commission dreamt up a complicated system. This

2 is member states. Each and every one wanted to

3 make sure that it's risk-sensitive, that this is

4 considered, that that is considered. So we have

5 a fairly complicated system.

6 Over a period of eight years, we will

7 build up a fund that has roughly one percent of

8 covered deposits in -- or has one percent of

9 covered deposits in the Euro area as its basis. 

10 It starts with national compartments. Keep in

11 mind we are independent member states, and it

12 starts with national compartments and it will

13 gradually be a European fund.

14 It's important to know that the use of

15 the fund, if we use it for a resolution decision,

16 will always entail Commission procedure on state

17 aid. That's difficult for the banks to swallow. 

18 It's their money. The banks have to pay it into

19 the fund. So it's private money that goes into

20 the fund, but as we are a public authority that

21 can -- that is the only one that can decide upon

22 this money, it is still a state aid procedure

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1 under DG Comp. 

2 Which makes then the process of how to

3 come to a resolution decision over a weekend one

4 step more challenging, because we need the

5 approval of the Competition Directorate of the

6 Commission before we can proceed, but at that

7 point, I'm always taking Chair Gruenberg's

8 comment, if you need to come to a decision,

9 people will hopefully get fast, because a weekend

10 has an end. So but --

11 MEMBER JOHNSON: Well but in Europe,

12 you've had some mixed experiences with that. 

13 MS. KONIG: True, we have some mixed

14 experiences, but I think the major challenge here

15 is -- and I'm very hopeful that cooperation with

16 DG Comp will not be -- the Competition

17 Directorate -- will not be a major issue. 

18 In the past, they were de facto the

19 resolution authority, not -- no one else, and we

20 need to come to -- I've talked about it

21 beforehand. We have done a dry run or table

22 exercise for the European institutions that all

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1 need to work together to come to a conclusion. I

2 was a bit flat out in the evening, but it worked

3 well and I think we all understand where our role

4 within this is.

5 But nevertheless, our work program --

6 that's perhaps just for your reading pleasure --

7 for 2016 is all about being ready and improving

8 things there and resolution planning, and clearly

9 I think we should not underestimate the work that

10 goes into the Single Resolution Fund in

11 collecting, building up all this system. 

12 Always please keep in mind we are, for

13 the time being, entirely an organization with

14 roughly 150 people building up to 300 next year,

15 and working together with national authorities

16 that partially are very young too. So there is

17 still a lot of work to be done, but I think when

18 we compare it with Europe in 2008, when we look

19 at what happened on the supervisory side, what

20 happened in capital requirements, all of that --

21 and this side -- I'm on the other side, fairly

22 confident that we are in a by far better shape

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1 than we've been before and can react to crisis. 

2 So hopefully it doesn't come.

3 MEMBER KOHN: Now in the next few

4 years before the Resolution Fund builds up, it's

5 still a national -- you haven't broken that link

6 between the bank and the sovereign.

7 MS. KONIG: No, sure. We have in

8 place -- and that was the agreement with the

9 member states and it's always difficult to get

10 other people's money. 

11 They have in place credit lines with

12 the member states for their compartments. Not

13 with -- we are still negotiating with some

14 because they need parliamentary approval and

15 things like that. So the basic idea for the time

16 being until the fund is built up is that if

17 something happens, the member state needs to

18 provide a credit line, which we have to repay

19 with future contributions to the fund. 

20 What they want to discuss once this is

21 settled is a permanent backstop to the fund. Now

22 we can borrow from the market. I don't find that

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1 the most efficient way to go forward -- and

2 everyone in Europe knows that I don't think it's

3 the most efficient way. The alternative is to

4 get a backstop from an organization like the ESM,

5 so that we get a European backstop.

6 But again, also that backstop will

7 have to be construed that's clear political will

8 in a way, that we can and will have to repay any

9 public money out of future contributions of the

10 banks. Basically, there should be no public

11 money involved.

12 MEMBER BRADFIELD: How big will the

13 fund eventually become? What's your target?

14 MS. KONIG: When you look -- when you

15 listen to people, they will always immediately

16 tell you 55 billion. That was the number that

17 the Commission calculated as being one percent of

18 covered deposits in 2024. 

19 Now our now numbers, with even a bit

20 of growth also in Europe, is -- I would say it is

21 more than 55 billion most likely, but basically

22 it is one percent of the covered deposits and

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1 covered deposits are all deposits up to 100,000

2 Euro. 

3 One of the challenges is we have to

4 build up a fund to reach a number that we can't

5 precisely calculate for now. I had a hard time

6 to explain it to some people how we tried to

7 move.

8 MEMBER ADMATI: I have a question on

9 that. So why is your benchmark deposits because

10 the liabilities that you're actually dealing with

11 are actually in other kinds of liabilities, not

12 in deposits? You're not in a deposit insurance

13 fund, so --

14 MS. KONIG: I can't give you an

15 answer. It was the political compromise and it's

16 part of the parcel that someone felt obviously

17 sounded right. No -- I think there is no large

18 logic behind -- because otherwise I agree with

19 you. 

20 Deposit guarantee fund you would build

21 as a percentage of deposits, not this. The only

22 area where there was a bit of calculation, though

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1 in the end it was probably also pick a number,

2 was on the eight percent bail-in before. That

3 was a bit done backwards calculating and saying

4 so what were the amounts at risk and that needed

5 to be used in most recent failures? 

6 And they wanted to pick a number that

7 was substantially high enough to only use the

8 fund in rare cases, but again, this is not rocket

9 science. It's in the end political compromise. 

10 I will leave it there.

11 CHAIRMAN GRUENBERG: Anyone else? I

12 think they're going to let you off the hook here.

13 (Laughter.)

14 CHAIRMAN GRUENBERG: I spoke too soon. 

15 I spoke too soon. We're almost out of time.

16 MEMBER JOHNSON: I understand. So one

17 question that comes up in the discussion of the

18 Bank of England is a point that was raised this

19 morning, which is if the U.S. is proceeding under

20 Title I to a bankruptcy of a G-SIFI -- which is

21 by law what we're supposed to do and it's also

22 what these people work on very hard -- how would

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1 that be viewed in the Euro area?

2 I think the view from the Bank of

3 England from what -- I mean not from the simple

4 view but a very well-informed view from the Bank

5 of England is they would not be comfortable with

6 a bankruptcy of the UK counterpart. They would

7 much prefer resolution, and they would be

8 extremely tempted and maybe even forced by their

9 statutes to initiate a resolution process. 

10 Now in Europe, how would you -- Euro

11 area, how would you view that?

12 MS. KONIG: Basically the same. I

13 think I find an exercise like Title I helpful to

14 understand and to see how resolvable and how far

15 can you get? 

16 But the basic -- we have the same

17 basic legal system as the Bank of England, which

18 would say for a bank under -- and now we're

19 talking G6 resolution is probably considered the

20 more efficient and the better option, and then

21 you have to go for resolution of this bank.

22 I would have a hard time to foresee

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1 that insolvency -- normally insolvency procedure

2 is really the most efficient way forward, but

3 again, that doesn't say that Title I exercise

4 doesn't make perfect sense. The question is just

5 for us, we are fund enough -- and more fighting

6 the other way around, where we get the feeling

7 for smaller banks.

8 I'm always saying resolution is a very

9 tricky word. I can have a New Year's resolution,

10 and resolution is not for everyone. Resolution

11 only comes into play if we think it provides a

12 better result than insolvency, because it helps

13 me to keep together critical functions and it

14 helps me to preserve financial stability.

15 We are rather under pressure that if

16 you have a small bank somewhere on an island and

17 you get the question -- the answer, the bank is

18 so systemic for the island. Yes, even my home

19 country has a number of very small islands. I'm

20 not sure whether I would consider those banks

21 systemic for the country. That's why I said it

22 has to be country or union as a whole.

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1 MEMBER JOHNSON: Those are all very

2 important points. I think the concern of this

3 committee has for some time been about whether a

4 global systemically important institution --

5 subject to the jurisdiction of the FDIC in this

6 matter -- whether they can present a credible

7 living will or a plan to go bankrupt for this

8 reason, that it would trigger consequences and

9 actions by different regulators, different groups

10 of supervisors, different resolution mechanisms,

11 all of whom are following their own rules, but

12 that would actually make -- maybe we could say at

13 least that should be reflected in the living

14 wills, the G-SIFIs filed in the United States.

15 MS. KONIG: I would stay out of

16 probably answering that question, but I would

17 disagree with saying that if something goes

18 wrong, we all follow our own rules. 

19 I hope that with the CMGs in place and

20 with the understanding that the sum of the parts

21 will probably not get you anywhere, that we

22 follow a very clear understanding, be it a single

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1 point or be it a multiple point of entry, or what

2 I would assume in most cases, a combination of

3 multiple single points of entry within a group.

4 So that I would hope for a more

5 concerted action. That's at least what we are

6 all striving for.

7 CHAIRMAN GRUENBERG: I know Elke has

8 another engagement, so I want to be respectful of

9 her time.

10 MS. KONIG: Yeah, but I have to be

11 there.

12 CHAIRMAN GRUENBERG: First, let me

13 thank you, Elke, for a wonderful presentation and

14 really a great opportunity for all of us to hear

15 directly the work she's doing, which I think is

16 exceptional and -- exceptionally important and

17 exceptionally challenging as well. I look

18 forward to our continued mutual cooperation

19 together. 

20 I want to thank all of you. These

21 meetings are always extremely helpful to us. 

22 Nobody would ever accuse this committee of being

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1 a cheerleader, and that's sort of the way we want

2 it, and we really appreciate the contributions

3 that you make. 

4 As you do review the materials that

5 we've shared with you, if you have any thoughts

6 or questions, I really do invite your input on

7 them. They're exceptionally valuable to us.

8 And I'll conclude by saying, when I

9 think -- I was chatting with Don about what we

10 were dealing with in 2008, when these

11 institutions were getting into difficulty, and

12 essentially the utter lack of options to deal

13 with the failure of these firms. 

14 When I think about where we were then

15 and where we are now, while we still have

16 significant work to do, I do think it's a

17 transformed situation and very much in our

18 interest that we have shifted the center of

19 gravity in this important area. 

20 So I want to thank all of you for your

21 contributions to that, and I look forward to our

22 continuing work with you as well. Thank you.

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1 MS. KONIG: And if there are any

2 questions to my presentation, feel free to call.

3 CHAIRMAN GRUENBERG: Thank you.

4 (Whereupon, the above-entitled matter

5 was adjourned at 2:50 p.m.) 

6

7

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A

a.m 1:18 4:2 169:11,12

abilities 204:20

ability 11:9 28:16 69:16

97:13 101:12 106:4

124:3 143:22 153:12

195:5

able 18:21 25:4 26:4,4

37:16 45:13 61:17

74:4 100:17 112:10

114:2 117:17 135:13

135:21 137:9,11

155:21 173:12,22

174:20 186:4 188:11

188:15 189:17 204:21

226:20 251:22 258:16

262:19

above-entitled 276:4

abroad 26:1,1 188:9

absolute 109:10

absolutely 28:14 36:8

56:9 58:13 71:13,18

71:19 73:8,10 78:1,17

93:11 99:4 105:20

123:10 125:3,13

131:5 132:6 159:5

163:4 242:9

academic 162:18

access 16:1 42:13

96:11,17 97:13 98:17

109:6,9 126:20

145:11 146:13 156:19

196:17,19 202:10

225:7,17 226:16,20

256:19

accomplish 29:10

172:17

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account 7:19 74:12

148:12

accountable 134:4

accountants 188:15

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130:17,20 143:12

255:1

acknowledge 169:2

acronyms 236:4

act 5:19 7:21,22 11:3

158:11 160:9 193:7

action 11:3 93:15 126:4

178:17 274:5

actionable 79:22 115:6

149:13 150:15

actions 8:17 10:6 62:6

62:9 76:14 86:17

117:21,22 123:1

126:8 130:3,14

138:21 139:2,3,5,17

142:20 149:10 165:3

165:4 193:15 208:8,9

211:9 212:7,10

214:11 216:18,20

217:19 221:16 224:2

224:5 273:9

activate 202:11

activating 200:20

211:12,19

active 14:4 50:18

156:18,18 167:3

173:9 234:12

actively 14:12 49:18

activities 8:19

activity 156:5

actual 55:4 86:3 226:12

ad-hoc 219:2

adapt 221:8

add 16:5 51:13 120:12

136:14 228:6

added 174:10

adding 18:19

addition 40:17 42:14

87:19 88:16 89:15

99:12 121:21 198:1

254:1

additional 68:19 70:7

137:22 145:3

additive 99:3

address 10:10 22:22

23:1 31:20 43:21

44:16 46:3 69:14,17

73:10,16 74:1,4 78:2

78:5 83:3,21 86:12

95:6 104:9 141:21

143:11 161:16 171:7

171:21 172:1 204:7

245:10

addressed 52:15 61:10

70:18 91:2,4,7 92:19

94:2,3 104:8 141:8

152:15 168:7

addresses 90:14

addressing 78:21 85:16

90:12 153:22 243:16

adequacy 137:1

adequate 54:9 152:8

adequately 94:3 141:8

Adjourn 3:15

adjourned 276:5

adjust 194:2

adjustable 194:6

adjustment 28:8

ADMATI 2:2 24:11

25:14 54:1 64:13 65:8

67:21 95:1 96:2,7,12

97:7,15,21 98:2,6,9

98:11 111:7 132:12

146:14 159:7,13,19

160:1,4,10,14 161:2

181:2 184:22 196:21

197:5 205:8,10 206:7

207:22 244:17 259:7

259:9 261:2,6,10

269:8

admitting 25:12

adopt 213:21

advanced 162:17 211:2

advantage 169:19

adverse 74:1 174:1

advisor 217:16

Advisory 1:5,18 4:7

affect 222:7

affiliate 121:16

affiliates 121:19

afraid 103:13

afternoon 6:19 42:19

agencies 8:6,9,16,22

9:8,17,22 10:2,17

12:16 14:5 19:14 20:1

20:15,16 22:3,8 23:20

24:6 28:20 30:11 33:9

34:6 45:11 48:3 51:8

56:6 63:6 77:6 83:8

86:17,17,21 87:6,19

88:2,16,18 89:3,7,12

89:17,21 90:11 92:3

92:21 93:16,16 94:11

106:1 112:1 115:15

117:4 118:15 130:5

148:19 163:8 166:10

180:1 200:17 220:1

225:15

agencies' 83:13 94:19

agency 31:12 84:1 87:5

87:5 88:13 100:18

agenda 4:19 99:1

137:17

aggregate 136:13

agree 69:2 92:3,22 93:1

248:3 250:22 269:18

agreeable 98:22

agreed-upon 250:16

agreement 159:3 162:8

214:3,16 217:12

267:8

agreements 225:10

ahead 41:18 49:6,7

162:10 171:20

aid 264:17,22

AIG 228:1

ALAC 100:19

alia 253:21

aligned 18:4 148:6

243:6

aligning 11:4

aligns 149:5

all-important 226:21

allow 46:8 100:11 178:4

allowed 12:22 74:13

allows 46:17

alluded 223:19 225:11

altar 191:13

alternative 99:15,16,21

234:21 268:3

Alvarez 103:21

amazing 53:16 135:7

amazingly 259:20

amend 107:4

amending 11:7

America 87:15 227:19

amount 102:13 135:7

138:11,16,18 185:22

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analysis 29:22 119:16

127:14 225:16

analysts 162:19

analytical 38:4

analyze 29:15

Anat 2:2 103:1 105:19

119:18

angles 107:18

Angus 172:8

annexes 84:16,19

announced 4:22

announcement 219:15

230:8

annual 22:7

answer 25:6,18 47:22

54:7 144:22 170:12

170:17 179:22 199:1

220:10,22 234:20

269:15 272:17

answering 273:16

ante 194:4

anticipate 206:22 218:6

218:14

anticipated 153:4

198:22,22

antiquated 251:2

Antonio 237:12

anxious 32:21 57:2

anybody 34:1 66:1

143:20 144:7 154:17

anymore 156:6 207:13

anyway 64:18 184:6

apparent 5:6 50:8 86:4

appear 77:14

appears 128:14

appetite 183:19 192:18

244:12

applicability 89:4

applicable 53:7 89:14

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application 41:3 59:15

apply 41:14 104:6

158:20 194:8 221:16

applying 40:2,6 45:15

242:9

appoint 215:9

appointment 200:15

229:14

appreciate 275:2

approach 39:3,4,5 52:7

64:9 68:2,3 72:16,19

72:21 85:7 112:15

142:9 144:10 152:10

166:8,11 172:11

219:14

approaches 77:7

appropriate 24:1

104:20 114:9,10

approval 53:14 246:12

265:5 267:14

approved 79:4

APRIL 1:14

area 32:7 34:8,13 39:18

49:5 52:2 57:6 142:15

143:20 144:21 154:10

154:10 229:19 230:4

231:16 234:13 235:14

247:6,8,10 261:18

262:7 264:9 269:22

271:1,11 275:19

areas 11:3 24:3 49:10

49:20 57:8 100:6

145:1 149:17

argument 186:14

215:22

arguments 110:2

arisen 22:13

arrange 185:11

arrangement 207:11

arrangements 231:16

array 27:2

arrived 5:9 192:17

Art 7:9 13:20 32:3 33:4

35:3 59:7 61:9 86:19

157:17 170:2

Art's 14:9 39:17

article 30:6 95:8

aside 48:15,17 56:13

137:15 189:13

asked 9:10 10:9 11:14

11:17 13:7,14 21:3

29:12 50:2 66:1 69:10

131:19 132:18 143:2

143:10 153:1,21

172:1 219:3,9 230:17

234:16 249:6

asking 25:6 83:22

147:3,18 153:9

163:13 242:13 250:1

asks 145:2

aspect 40:4 44:19

72:10 73:13 91:22

92:1,4,14 108:6 111:5

116:20 118:1 120:14

127:12

aspects 33:19 49:15

71:11 72:8 80:8

120:13 155:20 165:19

assess 39:10 212:6

250:12

assessed 148:19 239:7

assessing 60:10 201:8

assessment 36:1,2,9

37:2 60:13,13,20

61:21 94:13 105:5

136:6 146:10

asset 74:15 178:13

185:22 234:5

asset-focused 250:2

assets 9:1 37:9 153:9

173:1 174:14,15

181:14 184:17 185:21

185:21 233:15 248:22

assignment 45:10

230:15

assist 89:5

Assistant 32:15

associated 37:20,21

38:8 43:18 44:16,17

51:20 100:1 112:12

114:17 115:14 117:22

127:22 140:10 142:13

152:2 153:11 156:13

assume 58:14 74:7

98:4 99:5 113:3

125:15,17 155:19

156:19 186:20 187:4

187:5 258:1 262:16

274:2

assumed 95:20 105:2

assuming 67:4 97:19

256:17 260:5

assumption 64:20 65:1

108:18 111:13,17

156:4

assumptions 10:19

24:17 25:4,19 26:21

27:22 28:6 61:6 66:21

67:1,1 97:8,11,12

126:21 206:19,20

assure 43:3 172:17

assured 207:20

asteroid 127:8

attempted 15:12

attempting 85:11

attention 106:20,20

212:18

attitude 166:2

attribute 206:14

attributes 207:16

audit 76:10 77:10,11,13

77:18,21 78:6,11,18

79:1

August 10:12 11:2 12:3

12:15 24:14 33:7

50:15,17 67:9

Austrian 245:19

authorities 5:22 6:6

29:19 97:3 131:8

171:2 192:6,10

202:16,18 203:4,7,8

204:8 208:2,11

210:21 211:18,21

212:5 213:12 215:9

221:5 222:6 223:22

224:1,11,13 225:5

228:14 230:11 240:2

240:2 246:5,7,17

252:15 266:15

authority 4:11,13 5:18

6:6 8:4 69:16 128:19

153:7 160:9 169:7,16

205:1 207:19 225:18

229:17 237:14,17

239:13 264:20 265:19

authorizations 204:2

automatic 162:22

available 9:15 20:4 70:5

100:20 102:13 122:14

131:19 150:6 256:6,7

avenue 256:1,2

average 146:12 245:21

avoid 11:7 31:18 117:8

224:4

avoiding 238:18

aware 23:6,11 42:12

95:4 161:19

awkward 48:5

awkwardly 180:13

B

B 154:22 155:13,16

156:17 157:6

baby 83:18

back 9:6 12:2 21:2

45:19 54:4 56:17,22

57:5,19 60:7 65:13,17

66:10 75:20 80:10

101:2 103:1 117:12

122:22 124:11 126:16

128:4 129:13 145:6

156:14 157:16,22

166:18,19 172:14

191:6,15 196:13

201:21 208:19 210:7

219:6 228:21 229:7

245:9

background 77:10

194:21

backing 166:12

backstop 70:2,17

128:13 232:22 267:21

268:4,5,6

backwards 270:3

bad 24:17 131:22 139:7

189:14 256:10

BaFin 229:15,21

bail 100:12 227:2

243:14,15 252:2

254:8 260:3

bail- 227:3

bail-in 103:8 109:16

243:7 256:12 258:10

270:2

bail-in- 251:21

bail-in-able 256:5

bailable 106:5

bailed 109:15

bailed-in 110:7

balance 117:13 120:17

221:6 241:5

balanced 72:16 117:2,5

120:14 177:18

ball 4:15 110:8

balloon 106:11

bank 18:14 77:15 87:11

87:15,15 100:15

122:2 135:1 143:7

145:9 159:11,20,21

160:9,10 178:8,9,15

178:20 183:1,6,6,9

190:1 193:6,7 197:8

198:10 199:20 223:4

226:17 227:18,19

231:16 233:19 234:13

236:7 237:8,16 238:8

241:10 242:7 245:3,3

245:6,16,18,19 246:8

246:8 247:10 248:13

249:20 253:19 256:17

258:3,9,11 262:19

267:6 270:18 271:2,4

271:17,18,21 272:16

272:17

bank's 111:12,14,18

159:8 249:20 250:1,4

banker 250:22

bankers 188:15

banking 6:11 76:5

220:7,8 223:5 229:10

233:3,3,7,8,22 254:1

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bankrupt 273:7

bankruptcies 154:12

bankruptcy 8:4,9 10:4

10:22 15:13,17 43:2,4

43:8,12,19 48:18

60:19 61:4 66:9 69:22

72:7 87:8,19 88:6,9

95:18 96:5,18 97:12

101:12 103:20 104:2

106:12,16 108:17

110:18 112:9,15

113:5,7,12,13,16,19

114:3,10,16 116:19

127:18 128:13,14,18

131:2,20 132:8,13,16

133:11,19 135:14

139:14,18 140:6

143:5,22 145:16,18

152:3,6,7,8,13 153:7

153:11 158:5 159:17

162:6 171:6,11

172:22 173:22 174:7

176:21 179:17 193:4

270:20 271:6

banks 16:8 20:1 22:19

34:8 39:12 53:18

54:15 77:12 135:2

136:3,8 147:3 155:4

160:15 166:5 179:3

182:8 189:9,13

190:18 223:12 227:17

233:14,16 238:16

239:6,14 241:8,17

245:11,14,15 247:14

250:7,13,17 255:20

255:21 259:17 260:13

260:14,16,19 262:14

262:15 264:17,18

268:10 272:7,20

banks' 241:5

based 42:21 105:8

114:8 119:17 123:2

124:19,21 126:3

175:12 184:6 193:19

254:9

Basel 236:5

basic 132:15 233:14

236:10 254:14 267:15

271:16,17

basically 9:19 100:20

108:10 174:13 236:6

236:14 237:1,11

239:15 240:8 244:4

247:18 252:7 255:1

256:19 258:13 260:21

262:14 268:10,21

271:12

basis 5:9 12:10 56:20

59:10 93:15 122:21

153:9 168:2,4 221:20

222:6 239:11 264:9

BAU 163:5

bear 80:7,7 103:5

124:12 125:14 133:4

bearing 148:1

beasts 220:14

beautiful 244:10

beautifully 233:17

becoming 230:2

bedrock 109:10

began 133:5 208:21

211:5

beginning 161:1 197:9

243:3

begins 63:11 210:17

211:11

behavior 24:17

believe 20:3 55:22

66:10 94:20 129:12

132:19 181:22 182:13

182:14,15 199:21

230:18

believed 162:7 231:7

benchmark 269:9

bend 130:4

benefit 180:2,3 219:21

BES 242:4

best 18:8 75:2 149:5

220:4

best- 127:14

best-possible 127:4

131:18 132:1

better 16:15 17:4 19:1

64:21,22 106:7 112:4

123:11 143:19 150:21

182:5 184:3,10 199:7

230:16 236:18 238:21

253:2 258:12 266:22

271:20 272:12

beyond 51:3 78:14

120:1

bid-back 163:10,13,22

big 42:19 47:15 48:1

77:15 84:3 85:2 94:21

103:15 133:9 177:15

207:9 268:12

big- 113:19

big-picture 45:19

113:18,21

big-ticket 73:9 112:3

bigger 73:6 103:1

110:13,14,14 159:9

248:20

biggest 196:22

bilateral 155:21,22

156:19 203:9 211:20

222:21 223:1 224:7

225:4

billion 103:22 159:9

177:19 183:6 233:15

257:20 268:16,21

bind 215:6

binder 76:21 77:1 94:11

binders 20:13 167:22

binding 205:12 214:16

bit 28:12 36:11 49:7

52:4 89:10 102:6

129:14 156:15 164:22

199:7,18 202:17

203:5 207:17 222:1

228:20 231:3 232:3

232:13,20 244:11,19

245:9 247:21 249:5

252:12,18 253:10,18

258:22 263:4 266:2

268:19 269:22 270:3

blending 166:6

block 235:2

blunt 166:2

board 1:20 2:6,16 3:12

6:11,20 12:3,6,8

31:11 34:2,3,14 47:10

47:12 48:5,9,14 53:15

55:19 62:6 76:14 79:4

79:9,11 82:1,14,21

83:2,14 84:4 85:18

87:12 117:22 120:8

126:8 139:6 141:15

142:20 200:6 206:13

223:3,10 224:17

229:10,15 230:1

232:8,14 234:2,7,8

237:12 243:18 245:13

Board's 52:21 141:13

boards 14:10 21:22

76:1 77:11,19

body 39:21

bold 248:4 262:16

bona 225:17

bond 241:10

bond-holders 110:3

bonds 100:10 110:5

book 115:15 151:14

177:16,18 178:4

210:7 236:4,6 239:22

242:22

books 175:11,12

177:21

border 228:4

bore 172:18

borrow 267:22

borrowed 185:19

bottom 123:12

BOWSHER 2:4 30:4,17

30:20 31:3 76:16,22

77:3,8

BRADFIELD 2:5 54:5

84:12 93:9 107:13

144:15 161:4 164:11

166:13 196:16 201:16

268:12

branch 148:5,14

branch-sale-type

178:17

branches 147:4

breach 142:2

break 3:4 34:18 42:4

43:17 46:17 75:8,15

98:20 102:7 119:21

178:9 222:11

break-even 28:2

breaking 111:1

Brent 7:15 31:22 32:8

45:18 46:19 68:1

114:4 115:18 130:21

138:8 149:21 151:16

215:19

Brent's 32:17 148:10

bridge 143:7 172:22

173:2,4 174:14,15

175:5 176:15 178:12

178:19 187:5 194:14

201:14,15 213:19

216:13 217:9,14

218:8,14,17

brief 4:18 45:7 91:7

209:22

briefly 20:11 26:12 35:5

86:16,20 116:11

bright 104:19

bring 34:13 39:15

189:18 196:13

bringing 53:5 54:4

brings 240:16

British 258:21

broad 4:15 26:9 216:22

broader 84:6 198:20

broken 267:5

broker/dealer 122:2

145:12 174:11 175:4

175:6 176:20 186:5

broker/dealers 154:13

155:5 175:3,9,14

176:10,11 177:15

185:17

brokerage 166:4 177:5

Brookings 2:18

Brothers 46:12,15

104:6

brought 22:12 26:14

171:16 255:11

BRRD 236:7 253:11,18

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280

253:19 256:13 257:1

Brussels 234:2 238:6

245:13

BSA/AML 78:22

buffer 118:5,6 126:5

build 121:10 192:4

212:2 224:2,20

247:14 264:7 269:4

269:20

building 37:22 139:20

194:12 224:21 234:10

266:11,14

builds 200:11 267:4

built 104:8 115:5

150:22 196:5 263:18

267:16

bumped 119:1

bumping 120:7 122:20

bunch 107:6 174:20

183:15 198:21

Burnham 177:3

business 2:3,10,10,14

6:17 11:5 18:5 19:2

37:1,10 72:5 122:12

129:16 134:12 136:9

149:2 150:14 156:16

158:19 163:6 189:17

261:18

business-as-usual

26:19 163:19

businesses 41:1

134:17 135:4

button 251:8

buyer 38:3 189:17

buying 107:7 110:6

241:10

bylaws 213:21

C

C-O-N-T-E-N-T-S 3:1

calculate 269:5

calculated 167:4

268:17

calculating 270:3

calculation 122:10

263:20 269:22

calculations 123:3

call 3:2 15:11 35:17

40:21 46:2 52:4 60:12

73:22 82:6,10 100:19

114:12 138:18 151:9

155:18 163:10 192:6

200:2 201:6 216:5

229:6 231:15 234:2

262:5 276:2

called 6:12 42:6 134:14

148:22 255:3,4

calling 41:6 193:12

214:3

calls 216:16 218:18

224:22

CAMELS 35:14

candidly 230:16

capabilities 28:15,21

29:2,4 192:5

capability 5:22 105:7

118:16 131:8 159:4

capacities 208:2

capacity 48:6 100:20

133:13 164:8 186:15

187:13 195:5 198:20

199:13 229:13

capital 8:18 10:5 27:15

44:6,17 85:4 100:12

104:9,15 105:9

107:18 113:8 114:1

115:21 116:15,21

117:6 118:8,13,18

120:18 121:13 122:18

123:14 125:21 133:21

134:6,19 135:7

139:10 146:15 149:20

156:10,22 162:1

176:8 180:4,17 182:9

183:17,19 186:12,14

212:12,20 214:7

251:20,22 256:5

257:13 258:2 262:17

266:20

capitalized 258:12

capture 35:18 38:15

72:20,22 125:19

captured 163:17 164:9

care 112:19 249:3

career 35:10

careful 48:12

Carrascosa 237:13

carried 200:19 201:15

214:15 221:18 222:5

carry 194:13 200:10

201:6 202:15

carrying 164:6

case 98:7 105:2 106:2

162:20 167:20 215:13

223:13 233:16 242:11

242:11

cases 12:21 14:2 50:19

59:19 88:10 120:16

152:9 203:19 243:11

262:18 270:8 274:2

cash 177:19 178:11,18

218:3

cashflows 122:8

catch 75:8

categories 18:17 26:10

57:10

cause 28:9

caused 11:9 189:4,11

causing 174:1

CCP 95:11 97:11,13,16

98:7 99:14,18,19

100:2 226:13

CCPs 95:9,13 97:8

98:16 126:20 223:13

228:4

center 2:9,11 17:20

18:8 169:1 170:20

234:3 275:18

central 24:18 73:17

95:6,8 210:3 223:4,12

226:6,13 228:4

237:16 258:3

CEO 2:19 77:16

certain 27:6 33:19

34:13 37:4 55:9 101:9

117:8 119:16 120:13

130:14 144:11 158:12

165:5,9 187:18 193:8

197:17 200:13 203:11

203:14 208:8 213:22

214:4 218:22 243:13

certainly 16:18 84:22

95:18 101:18 109:21

142:22 144:6 145:6

161:8 195:22 197:18

199:15,19 201:21

208:12 210:7

certainty 27:7 126:22

127:11 207:12 220:19

221:7,12,13,19

240:17

cetera 26:17 37:21

39:14 57:13,14 59:16

66:4,19 67:4 76:2,14

155:5 227:6

CFDC 95:14

chain 47:11 78:9

chair 3:11 6:10 229:9

229:14,21 230:2,9

232:3 265:7

chairman 1:21 2:2,6,8

2:16,19,20 4:3 30:15

30:18 77:10,13 83:20

84:10 86:2,8 98:18

128:6 137:14 138:7

167:12 169:13 170:12

170:15,20 174:3

191:17 200:7 209:14

218:20 219:1 222:10

223:1 228:16 229:6

240:9,14 242:2,12,17

253:14,17 270:11,14

274:7,12 276:3

Chairman's 85:9

challenge 103:17

115:14 124:4 140:10

143:5 144:7 151:8

194:3 195:16 196:1

197:18 265:14

challenges 29:8 43:18

114:17,19,20 139:21

139:22 141:9,21

142:2,14 199:15

269:3

challenging 22:8

155:20 230:15 265:4

274:17

chance 21:1 24:12 35:2

231:13

change 19:5 81:1,4

129:3 151:4 156:15

changed 81:6 132:13

232:12 237:2

changes 10:20 23:7

38:16 122:12 171:8

changing 136:8,8

characterize 81:14

charge 176:2 220:1

charged 142:5

CHARLES 2:4

chart 172:12,21

Chase 17:16 227:20

chatting 275:9

check 69:7

checked 231:18

checking 68:8

checklist 36:8

checks 29:2

cheerleader 275:1

Chief 2:18

children 238:6

choose 72:12,15,16

190:14

chose 15:10 72:6 105:7

circle 233:9

circumstance 170:10

circumstances 119:20

122:19 123:20 127:16

149:15 150:16 170:11

193:8,17,19 194:19

196:14 221:9 256:14

Citi 66:4

Citigroup 2:20 88:13

227:19

claim 179:4

claimants 218:2

claims 176:19 217:22

218:1

clarify 55:4

clarity 19:11 254:21

class 243:11

classically 220:7

UNOFFICIAL/UNREVIEWED
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281

clause 158:5

clauses 257:2

clean 107:22 150:5

clear 17:3,15 23:22

33:8,9 55:16 72:1

92:11 135:6 136:12

139:4,8,10 144:2

162:16 165:14 181:12

182:3 197:3 203:15

235:8 236:2 250:3

255:20 268:7 273:22

clearance 96:14

clearest 143:20

clearing 24:19 95:6,8

226:21

clearly 5:8 113:5 184:1

239:13 243:10 244:19

245:3 246:16,18

247:3 251:11 252:17

259:4 266:8

client 248:22

clients 26:22

close 6:16 24:2 28:8

50:10 78:5 111:4

162:13 164:13 204:5

223:5 228:17 230:19

closed 105:14 250:21

closely 208:10,16

224:21

closeout 152:21 173:13

closer 21:7

closes 114:11

closing 3:15 78:21

165:16

clue 209:4

CMG 227:21

CMGs 42:6 208:4

227:22 228:3,7

273:19

co-chair 226:8 227:1

co-chairs 227:2

Co-Director 2:11

code 8:4,9 10:4 44:14

131:20 132:8,13

152:3,13 153:8

160:12

codified 144:3

COHEN 2:6 55:17 56:16

105:16 106:22 108:7

108:12,14 130:21

132:6 140:20 143:15

143:17 144:12 165:20

181:4 191:5 205:21

208:19

coin 255:5

collaborating 40:7

collaboration 200:14

203:4

collaborative 14:22

40:14

collapse 124:7

collapsed 124:18,19

collapsing 124:13

collateral 26:16 143:4

185:18

colleagues 21:12 172:7

225:12,14,20

collecting 266:11

colorful 249:6

combination 62:5

128:15 143:1 274:2

combinations 66:8

112:17

combined 128:12

come 23:2 45:5 48:13

51:18 56:17 71:1

75:20 78:16 86:3,13

105:10 131:3 136:5

142:1 145:6 163:10

178:7 179:8 187:19

188:11 191:6,14

195:4 206:17 207:7

208:4,17 219:6

228:21 234:14 243:12

243:22 246:22 251:6

251:8 255:6 256:20

262:8 263:21 265:3,8

265:20 266:1 267:2

comes 31:20 45:21

101:15 154:19 164:13

181:9 206:18,20

213:17 241:6 248:18

254:15 270:17 272:11

comfort 33:19 44:8

comfortable 26:5 271:5

coming 15:15 34:12

41:12 48:3 93:13

100:18 161:11 163:13

221:1 241:17 249:16

command 63:16,18

commanded 230:12

commendable 19:16

comment 106:9 186:10

265:8

commentary 22:18

comments 7:7 101:8

168:16

Commission 2:9

224:16 235:16 243:17

244:14 247:3 255:6

261:22 264:1,16

265:6 268:17

commitment 255:4

committed 12:17

committee 1:5,18 4:8

10:13 13:9,10 31:15

32:4 63:22 65:14,20

66:1 77:13,21 273:3

274:22

committees 77:11,18

common 14:16 40:22

41:1 61:4 71:8

communicated 14:11

60:14

communicating 40:6

communication 14:10

29:18 33:14,15 59:1

62:14 64:2,11 92:14

99:15 105:13 217:3

218:15 223:21

communications 35:20

197:13 202:6,7

216:21 228:12

community 163:18

Comp 265:1,16

companies 19:5 25:5

87:11 100:16 101:19

144:17 173:21 183:18

183:20 185:13 190:10

199:6,8,20 223:12

228:1

company 11:6 48:1

84:1 108:1,18 109:1

111:9 127:19 128:20

142:19 147:12,19

159:18 160:17 172:21

173:1,5 174:12,12

182:15 183:10 186:1

187:3 188:10,12,17

188:18,22 189:1

198:6,11 203:18

212:13 214:14 216:13

217:9 218:2 219:13

241:19,19

comparative 57:22

compare 46:21 266:18

compared 119:13

254:19 262:22

comparison 184:11

compartments 264:10

264:12 267:12

compensation 213:15

competing 10:7 44:1

Competition 265:5,16

complete 11:20 154:8

175:6

completed 214:5

completely 73:4

completing 217:22

completion 218:12

complex 7:10 29:8

32:10,13,16 39:8

248:20

complexities 112:12

complexity 150:19

154:10

compliance 51:15

complicated 174:10

180:18 185:10 235:22

253:10 263:21,22

264:1,5

complications 203:1

complicit 83:8 84:9

complicity 83:13

comply 176:3

component 28:11 41:2

41:16,17 42:5 43:17

46:17,18 47:1 59:20

61:7,19 75:16 96:10

102:2 103:10 139:11

156:17,22 161:1

components 26:11

29:4,5 34:18 35:16,17

35:21,22 40:21 46:7

49:20 59:4 60:21 62:1

62:2 64:9 71:1 92:20

101:9 102:8,11

104:10 126:7 155:17

160:21

comprehensive 31:9

81:10 127:14 136:11

162:5

comprehensively

172:2

compressed 216:19

compromise 269:15

270:9

Comptroller 2:4,7 7:4

38:9 56:11,19 200:7

concern 43:15 109:22

110:11 273:2

concerned 73:14 77:20

110:2 141:12

concerns 42:20 153:6

concerted 274:5

conclude 58:3 169:22

209:22 275:8

conclusion 111:5 162:2

262:3 266:1

conclusions 55:1,3,4

condensed 81:18

condition 120:15 201:8

212:6 238:21

conditions 27:13 61:14

100:11 119:11 120:7

127:6

conduct 197:16 203:7

217:13

conducted 215:16

conducting 210:12

confidence 18:20 139:1

143:13 156:7 165:7

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230:13

confident 118:20,20

155:14 266:22

confront 134:13

confronting 207:1

confuse 253:8

Congress 77:15 128:1

144:12

congressional 218:18

conjunction 136:17

137:13

connect 167:11 213:9

connected 68:4 71:7

connection 45:16

consequence 233:6

248:15

consequences 93:10

238:19 273:8

consider 56:2 236:20

272:20

consideration 27:4

73:4 107:15 141:6

237:9

considerations 63:20

considered 159:10

184:19 264:4,4

271:19

considering 254:18

consistency 36:3 41:3

41:3 46:22 65:5 68:20

72:19,21 73:8 181:18

consistent 110:19

179:18

consists 201:5

constant 59:1

constantly 38:15

125:11

constituted 88:21

constraint 195:5

constructive 124:11

construed 268:7

consultative 255:10

consumable 168:12

consumed 106:19

consummate 185:12

contact 77:17

contagion 103:12 104:3

109:20 161:9 198:3

208:22 209:2 256:11

contain 39:11

contained 89:22

containing 89:13

contains 90:16 256:13

contemplate 179:16,19

context 47:9 130:21

Continental 191:11

206:11

contingency 27:17

125:7 163:19 192:12

192:13

continuation 153:14

continue 11:10 24:2,4

31:22 80:15 96:9

98:17 107:1 113:11

121:15 153:20 165:5

169:14 188:19 199:16

209:16 224:21 226:20

229:7

continued 23:16,18

274:18

continues 219:15

continuing 99:14

154:16 189:2 230:21

275:22

continuity 10:6 202:9

225:7 226:16

continuous 15:2

contracts 11:7,8 133:15

151:11 161:13,16,18

173:14,15

contractual 163:15

164:2

contractually-binding

142:10

Contrast 92:16

contributions 238:4

267:19 268:9 275:2

275:21

convened 1:18

conversation 26:13

43:14 63:12 85:17,22

96:19 98:20 118:12

163:3 209:17

conversations 41:22

45:2 59:12 63:13 99:7

conversion 212:14

convert 176:8

converted 187:11

203:21

conveyance 117:10

140:17 142:14

convince 185:2

convinced 255:16

cooking 239:22

cooperate 253:3

cooperation 10:5 204:5

246:17,19 247:2,12

252:14 265:15 274:18

cooperative 233:20

coordinate 49:9 204:22

coordinated 57:19

217:3

coordinating 41:13

64:1

coordination 145:14

203:12

copy 76:19 94:10

core 34:12 35:16 38:18

39:20 58:2 62:2 71:11

81:4,15,15 86:10

193:15 211:9 221:16

corporate 34:8 52:3

75:22 76:6 78:4,10

148:20 236:22

corporation 1:1,19 2:20

115:4

correct 99:4 105:20

108:11,15 125:13

131:5 160:3,12 163:4

231:19

corrective 129:7

corresponding 62:9

cost 156:20,21

Counsel 2:5 32:15

counter 156:1

counterfactual 237:8

counterpart 271:6

counterpart's 35:5

counterparties 24:18

24:21,21 25:17,18,22

26:14,15,22 98:16

118:20 133:5 140:11

163:7 165:6 197:14

210:3 217:1 223:13

228:4

counterparties' 25:17

121:2 226:6

counterparts 15:3 40:8

40:14 50:2 63:14 64:1

116:5 224:14

counterparty 10:6 29:6

65:9 106:3,7 163:9,9

165:2,4,16 178:4

226:13

counterpoints 119:3

countries 16:12 29:17

233:18 236:15,20

country 208:16 233:16

237:4,6,10 261:9,11

272:19,21,22

counts 241:14

couple 21:18 44:18

77:11 86:18 107:17

137:2 171:19 195:9

216:15 224:6 226:5

course 7:2 23:9 30:5

53:12 60:15 75:10

95:10 118:15 119:1

132:7 141:20 146:22

177:6 182:22 207:12

217:18 223:15 227:8

227:11

court 84:12 106:16

152:7 198:16

court's 153:11

courts 134:5

cover 32:22 161:5,12

255:17 262:13

covered 165:8 257:18

264:8,9 268:18,22

269:1

covers 26:10 192:11

CRD 236:4

create 45:22 106:16

117:17 152:18 153:8

162:5,9,10 172:22

created 128:1 144:17

148:4 254:2

creates 152:8 177:3

creating 109:16 151:1

180:8

creation 6:12 142:18

143:3 152:11

credible 8:7 12:5 60:18

61:3 87:7,17 88:4,7

88:14 89:19 238:11

238:15 239:9 273:6

credit 106:3,7 108:8,22

184:5 250:5 267:11

267:18

creditor 158:13 243:12

244:1 263:3

creditors 173:5 178:13

263:1

creditors' 172:18

crises 196:11

crisis 42:6 56:15 69:19

124:14 125:12 174:21

186:3,6 197:9 198:18

198:19 207:2 211:20

222:2 223:20 226:9

227:13,16 233:7,8,8

256:22 267:1

criteria 36:3,7 37:3 52:8

52:8,10,12,16 53:9

124:20 149:1,5 150:2

150:22 158:17

critical 80:17 81:3

82:16 117:15 208:15

226:4,19 248:8 249:7

249:11,12,13 251:13

272:13

critically 126:13

Cromwell 2:7

cross 123:2 130:12

cross- 228:3

cross-border 6:2 25:21

29:12 206:10 207:9

212:19 225:1,5 226:9

245:17 247:19 252:15

cross-coordination

59:15

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cross-cutting 237:19

cross-defaults 152:21

crossed 215:18

crossing 167:6

crux 81:15,15

culminated 59:17

culpable 172:19

cumbersome 250:15

curious 16:4

Currency 2:8

current 22:15,16

131:20 152:13 179:6

187:8 229:13

Curry 2:7 7:5 56:11,19

200:7

curve 130:4

customers 24:18 173:8

217:1 238:22

cut 20:20

cycle 15:4 22:6,7,12,22

34:10

D

D.C 1:21

daily 121:13 122:8

dancing 258:22

danger 215:10 216:3

Dartmouth 2:10

data 18:8,9 20:5 28:17

135:18,21 136:1,11

136:18 184:6 249:20

250:1,2,2

date 90:5 216:8

dates 171:19

David 7:16 31:22 32:14

59:8 75:7 140:19

143:15 151:15

day 7:1 51:5 65:17 66:2

81:12 122:5,5,5,12,12

122:14,15 124:1

126:2,2,2 151:10,10

152:19 153:3 157:19

158:15,16 177:18

191:8 203:17 212:10

238:9

day-to-day 63:8

days 49:18 86:18

151:13 216:11,14

de 254:8 265:18

deadline 94:6

deal 26:22 27:1 28:4

31:13 38:1 72:9 84:1

85:13 97:3 115:10

116:4 127:3 140:6

151:11 156:5 174:20

194:6 195:6,8 199:4

252:14 275:12

dealer 145:13 177:5

dealing 42:20 53:11

81:17 157:10 158:20

159:1,1 160:9,10

178:7 187:22 196:20

269:10 275:10

dealt 148:5

dear 36:16

debate 181:7 246:16

252:10 258:3

debated 79:14 235:17

debt 100:14 101:17

103:11 104:14 105:3

106:6 107:7,13,14,20

108:3,10,19 111:15

118:12 119:4 163:14

171:12 212:14 218:1

219:13 243:11 244:5

251:22

debt-for-equity 173:4

debt-holders 110:4

debtor 153:10,14

decade 190:20 220:11

December 10:14

173:16 200:5 210:14

211:6

decide 163:11 234:16

264:21

decided 254:3

deciding 101:8

decision 44:12,13

116:20 117:20 141:14

151:3 186:20 212:21

247:21 264:15 265:3

265:8

decisions 85:6 114:7

114:13

dedicated 116:9

deep 40:20

deepen 230:21

deeply 227:1

default 98:7 163:21

215:10,11 216:2,3

245:7

defaulted 108:19

defaulting 95:11

defenses 106:8

defensive 218:10

defer 67:6,14 164:2

deference 48:2

deferred 105:2

deferring 102:21,22

deficiencies 8:11,14

69:4 87:20 88:11,21

90:2,17 91:2,19 94:4

171:21

deficiency 87:22 89:13

89:22 90:22 91:11

92:1,15 93:14,22

deficient 97:9

deficit 177:19

define 100:10 101:9

249:7,10 254:12

defined 101:16 102:12

119:6 135:2 220:8

245:14

defining 100:19

definitely 86:1 144:10

241:4 245:21 249:15

255:10

definition 19:4 91:17

100:19 161:15

definitions 93:8

degree 26:21 104:11

139:1 148:19 221:7

delay 110:12,13

Delfin 7:16 20:11,18

21:8 32:11,11 42:4

43:16 44:15 45:17

47:5 51:13 67:20,22

69:13 75:15 76:20

77:2,4 84:21 95:22

96:3,8,13 97:10,18,22

98:3,8,10,12 101:4

103:17 110:21 111:4

111:19 126:11 127:20

132:22 133:3,12

138:8 146:18,22

147:5,10 148:15

159:16,21 160:3,7,12

164:15

deliver 218:1

deliverables 58:2

delivering 200:22 212:4

delve 44:20

delving 31:18

demands 196:15

demarcation 166:3

167:7

demonstrable 11:16

92:12

demonstrate 105:7,11

105:14 155:2 156:12

205:2

demonstrated 63:4

196:11

depend 188:18 189:3

dependent 134:17

194:16

depending 101:22

155:10 167:4 174:21

183:16 190:15 193:4

194:18 217:21

deposit 1:1,19 158:11

159:14 235:6,8,14,18

236:9 241:11 244:21

245:4 259:11,20

260:22 261:5,7 262:1

262:8 263:2,7 269:12

269:20

deposit-taking 248:17

249:11 260:13

depositors 248:22

261:1,17 262:20

deposits 257:18 259:12

259:16,17,18 260:4,5

260:8 264:8,9 268:18

268:22 269:1,1,9,12

269:21

Deputy 32:8,12

derivative 109:21

166:16

derivatives 111:15

115:15 151:8,9,14

154:8,19 155:4,5,20

157:11,14 160:5

161:6 162:6,22

166:22 173:14

describe 9:11,13 54:2

220:3

described 68:1 173:18

210:19 215:19 217:11

describes 89:7 189:22

describing 53:17

description 17:5 20:19

209:19

descriptive 94:14

design 35:11 193:21

200:12

designated 198:13

199:8,13

designed 46:3,8 94:14

193:9 201:4

destabilization 118:21

destroy 181:6

destroying 179:9

detail 14:7 28:12 45:7,8

51:2 74:18,21 114:4

120:13 154:6 157:14

173:19

detailed 45:15 48:2,7

50:20 77:5 193:22

201:4 243:3

details 17:7 48:17

49:14 86:10 116:12

135:22

detective 47:15

determination 8:10

12:3 88:3,13 211:6

213:3

determinations 23:3

75:8 86:4 88:10 89:11

94:13 168:3

determine 8:6,16 44:11

93:17 157:7 203:11

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212:7

determined 87:14 88:4

88:7,19

determining 60:17

99:12 201:10

develop 5:21 24:4

202:7 208:5 212:9

214:6,8 215:4 217:17

230:21

developed 6:15 12:11

105:4 192:11

developing 54:17 89:6

192:17 201:9 223:11

227:11

development 6:4

228:15

Developments 3:10

deviate 244:19

DG 265:1,16

DGS 248:17

DGSD 236:8

dialog 19:21 51:5

Dick 13:10,13 15:8,19

20:11 80:22 208:22

Dick's 118:3 122:22

diet 83:16,19

difference 30:12 37:14

49:3 90:22 103:6

123:5 220:6 239:2

differences 133:9

different 9:5 11:3 15:16

18:17 22:20 27:12

43:16 46:5,6,7 47:4

69:14 70:17 73:3 76:9

76:12 78:22 82:11

83:1 93:10 100:10,22

110:8 119:10 126:19

128:17 133:1 142:3

149:2,2,3,15 150:16

157:5 174:20 177:21

178:7,10 179:21

183:16 185:5 194:7,8

194:9,15,15 196:14

197:1 201:6 207:15

208:6 220:13 221:8

221:13,16,20 237:7

243:9 244:9 260:21

273:9,9,10

differentiate 239:4

differently 73:12 80:13

difficult 20:4 25:12 26:6

29:7,8 83:10 107:11

132:4 141:15 205:15

205:22 208:22 215:5

252:9 256:21 264:17

267:9

difficulties 134:13

190:1

difficulty 189:12 275:11

dilemma 181:5 184:8

diligence 202:3

dimensions 53:19

direct 55:21 210:21

directed 89:17

directing 86:12

direction 33:18 45:1

directive 235:7 236:8,9

244:22 253:20 263:6

directly 42:18 79:9

202:8,11 274:15

Director 7:9 32:9,12

Directorate 265:5,17

directors 55:22 56:2,7

56:13,17 79:5 200:8

dirty 82:10 157:13

disagree 144:6 273:17

disagreement 184:9

disappear 182:16

disassembling 182:10

182:16,19 183:1

discernment 184:20

disciplines 135:9

disclosure 16:21

disclosures 17:1

disconnect 40:12

131:14,21 132:5

discount 145:11

discrete 150:14 241:2

discuss 6:1 28:11 36:4

42:8 55:5 64:2 97:2

102:5 114:21 225:5

255:6 267:20

discussed 13:10 35:6

119:17 206:8 261:19

discusses 55:8

discussing 34:16 70:2

107:18,19,20 227:5

discussion 28:13 31:17

42:10 50:21 51:11

59:18 73:19 77:5 86:3

89:3 115:22 137:16

137:19 169:14 198:18

221:5 222:19 228:18

235:11,22 247:22

270:17

discussions 50:5 53:6

59:4 107:21 110:17

111:5 153:18 198:4

disposal 81:12

disrupting 175:15

disruption 11:9 108:3

distance 142:20

distillation 69:7

distilled 68:12

distills 69:3

Distinguished 2:13

distress 112:18 116:14

120:20 141:19 226:14

226:18

distributed 135:8

distribution 143:6

District 198:16

diverse 233:18 255:13

diversification 180:2

diversified 180:3

divestiture 9:1

Division 32:15 200:8

doctrine 144:3

document 18:7 38:14

38:22 65:19 79:21

89:4,5,16 94:16

136:19 168:1 239:18

241:2

documents 31:10 35:1

91:14 95:2 167:17

168:9,10 239:17

Dodd- 4:13 173:14

Dodd-Frank 4:12 5:19

7:21,22 54:11 107:3

169:16

dodge 85:11

doing 4:10,10 6:2 19:17

21:17 54:1 65:18 68:8

70:1 82:21 128:22

132:8 135:5 149:1

152:9 158:3 169:15

173:4 184:18 190:13

190:19 210:3 211:2

217:15 223:11 238:7

238:9 241:22 274:15

dollar 183:6

domestic 87:11 148:8

173:15 211:18 227:21

Dominique 237:16

Don 169:21 275:9

DONALD 2:16

DONALDSON 2:8 74:17

74:21 75:4

doors 6:17 250:21

doubt 180:3

DOUGLAS 2:18

dovetails 227:12

downsizing 173:8

190:20

downstream 72:14 73:5

113:8 203:18,19

downstreaming 72:10

114:9 139:9 140:11

dozens 12:20,21

draft 235:15

drafted 239:12

drafting 239:12

dramatically 16:15

drawn 239:5

dream 257:1

dreamt 264:1

drew 162:3

Drexel 177:3

drilling 47:16 224:1

drive 48:11

driven 47:14 48:20

drives 48:8

dry 265:21

due 89:9 153:6 202:2

208:4

duration 23:10

Dutch 236:1 237:15

duty 142:2

dynamics 60:1

E

E-D-I-S 235:5

earlier 21:13 47:11 81:1

82:20 85:12 89:2 91:4

94:10 108:9 119:17

157:6 163:3 167:17

170:13 212:17 214:10

214:22 215:20 224:8

225:11 252:18

early 11:8 37:6 103:6

133:15 158:3,4,18

161:17 231:22

early-warning 146:7

earning 187:13

earnings 186:11,15

earth 127:9

easier 70:9 240:13

253:10

easily 43:10 135:14

142:17 258:17

easy 83:9 231:14

eat 228:20

eating 262:19

ECB 223:4 233:13

237:18 245:22 246:20

249:21

ECBC 245:16

echo 177:2 205:21

Economic 2:17

Economics 2:3

economies 179:5,10

182:11,18 183:3,4

economy 98:5 174:2,22

EDIS 235:5 262:5

effect 103:16 109:20

134:21 135:12 164:12

164:14 174:1

effective 107:12 154:2

effectiveness 212:21

effectuate 100:3

efficient 261:17 268:1,3

271:20 272:2

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effort 5:5,7 6:14 143:19

efforts 81:13 107:9

eight 54:8 55:5 87:10

87:13 88:17 90:10

116:9 129:17 190:18

206:4 254:8,11 256:5

256:17,18 257:4

260:3 264:6 270:2

either 44:4 87:5 95:16

109:8 155:8 175:6

198:7 204:13 216:2

either/or 131:1

elaborating 180:15

element 61:20 148:18

235:20

elements 61:5 63:5

81:4,16 116:18 140:7

eligible 250:11 253:22

254:13

Elke 3:11 6:9,19 223:15

228:22 229:8,11

230:9 231:1 240:9

253:14 274:7,13

embarrassing 54:6

embedded 180:5

emergency 184:14

Emeritus 2:13

emphasis 73:20

enable 17:7

enacted 9:8

encounter 129:18

encourage 24:6 116:6

136:16 137:12

enforce 153:12

enforces 141:13

engage 14:12 33:10,11

51:16 57:8 85:17 86:1

99:14,18 155:21

156:5 169:20 224:10

225:1,19

engaged 5:17 33:16

49:18 50:17 53:21

56:6 155:6 228:13

engagement 12:14,16

12:18 13:4 14:4 23:5

23:13 33:15 50:19

51:17 203:5 211:21

223:8 224:7,18 274:8

engagements 57:7

engaging 40:7 50:1

159:17 167:7

England 247:10 270:18

271:3,5,17

English 190:17

enhance 19:20

enormous 19:22 179:5

183:4

ensue 50:5

ensure 14:16 41:14

44:5 46:22 59:14

62:11 68:19 113:10

114:1,6 118:2 133:18

138:17 139:2 148:3

149:9 150:4 152:15

153:22 208:3

ensuring 41:2 96:17

114:13 120:21 121:1

entail 264:16

entails 243:5,6

enter 129:22 133:19

192:20 203:22 214:2

215:8,18

entered 15:16

entering 130:13 141:18

211:15 213:14 215:22

216:12 228:12

enters 163:5 174:13

entertain 142:22

entire 15:4 166:4

231:21 243:21 246:2

249:17 253:2 258:2

entirely 128:15 248:1

253:9 266:13

entities 11:5 17:20,22

18:2,12,14 19:9 21:4

22:17 37:1 39:13 43:8

80:22 82:15 96:9 97:4

101:14 113:9,10,14

115:2,7 118:19

125:18 150:11 154:14

155:4,6,8 193:6

199:11 252:1

entitled 94:12 181:5

entity 11:4 19:4,6 52:5

53:8 57:12 61:15,16

116:22 117:20 118:17

120:3 121:11,12

122:1 147:2 148:3,16

148:22 149:4 150:2

155:10 160:20 173:11

175:8 218:8,11 222:9

Entrepreneurship 2:15

entry 72:7 175:22 212:8

216:21 274:1,3

enumerated 101:16

envision 80:6

envisions 152:11

envying 236:17

equal 150:21

equity 37:10 172:18

186:21 187:3,6,9,12

218:1 219:10,11

241:13

equivalent 238:13

error 140:3

escalate 51:2 53:14

ESM 268:4

especially 24:20 177:16

essential 149:15

essentially 259:21

275:12

establish 200:17

established 199:21

200:2 210:18 211:14

213:5 221:15 227:16

230:19

establishing 201:14

203:10 211:17 212:1

213:7,12 216:12

228:3 234:10

establishment 230:14

estimates 121:13

187:12

et 26:17 37:21 39:13

57:13,13 59:15 66:4

66:19 67:4 76:1,14

155:5 227:6

EU 247:9 261:3

Euro 231:15 234:13

235:14 247:5,7,9

262:6 264:9 269:2

271:1,10

Euro/European 235:14

Europe 233:14,17

235:9 239:3 241:17

243:4,17 247:11,16

247:17,18 248:1,3

253:11 255:2 265:11

266:18 268:2,20

271:10

European 3:10,13 6:11

6:13 45:4 206:5 223:4

224:14,16 229:10

231:15 233:4 235:3

235:16 236:2,5

238:13 243:22 247:3

247:8 250:11 255:7

260:12 262:8,11

263:9 264:13 265:22

268:5

Europeans 42:1,18

43:9

Eurozone 235:9 245:17

evaluate 64:21,22

189:16 200:1

evaluated 128:4

evaluating 66:20

200:13

evening 266:2

event 128:13 207:3

209:7 216:16

events 158:18

eventually 173:3

268:13

everybody 4:4 15:22

57:1 67:2 72:2 73:11

98:21 169:5 172:13

186:1 191:13

everybody's 144:4

evolving 174:2

ex 194:4

exact 162:3

exactly 58:19,19 65:7

69:12 76:4 133:9

135:22 136:12 184:4

261:12

examination 56:14

examiners 39:14

example 17:12 22:20

24:17 26:13 36:10

41:5 50:16 72:4 91:8

99:19 103:19 125:15

171:9 182:5,6 191:9

198:7 242:4

examples 125:9,9

224:6

exams 25:11

exceed 119:14

Excel 251:7

excellent 20:17 106:19

131:6

exception 88:18 256:9

exceptional 4:14

256:14 257:2 274:16

exceptionally 137:20

274:16,17 275:7

exceptionally- 4:8

exchange 2:9 218:1

excised 183:12

executable 212:3

execute 5:22 37:13

52:17 61:22 62:3

120:22 121:7 124:3

130:11 137:10 138:22

163:12 167:10 192:5

194:5 196:6 197:7,11

199:22 200:15 215:21

executed 248:8

executes 214:9

executing 37:2 38:2

53:7 196:1,4

execution 62:15 210:21

211:15 227:2,4

executive 2:19 34:7

82:7 211:13

executives 50:21

exemption 162:5

exemptions 162:21

exercise 51:15,17 53:1

65:3 125:3 188:14

191:19 200:4,5

209:10 210:14 224:10

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249:22 250:6 265:22

271:13 272:3

exercises 5:20 126:10

200:3 203:7,10 204:7

210:12 211:5

exercising 158:4

exhausted 215:12

exist 40:11 43:19 53:2

70:15

existed 69:18

existing 26:19 186:21

exists 46:13 70:3 153:7

exit 173:3 188:19

192:12 214:5,8,11,15

214:17 217:21 218:7

218:15

exited 13:19

exiting 194:17

exits 174:6

expand 202:17 249:15

expect 23:20 24:8

33:18 58:20 71:9 81:9

81:22 89:8 140:11

202:3 210:13 213:21

215:8 218:16 219:16

expectation 133:6

170:8

expectations 116:10

118:14 136:18 200:18

201:2 203:20 204:1

204:22

expected 161:17 199:2

214:12

expecting 154:4 207:13

expedite 115:19

expedited 64:6 120:5

204:5

expediting 204:2

expenses 121:15

125:21

experience 120:18

206:10 230:3 232:6

experiences 175:6

265:12,14

experiment 186:20

187:15 188:5

expertise 39:16,19,20

200:9

experts 39:21

expire 156:11

explain 5:8 30:11 49:8

49:9 231:13 253:15

253:17 269:6

explicit 133:5 174:5,6

195:19 214:18 215:4

216:1

exposed 134:1 237:6

extend 228:19

extends 223:4

extensive 230:3 234:5

extent 35:13 36:21

62:11 101:18 103:18

124:14 127:15 144:8

156:20 159:3 161:9

181:15 195:12 249:21

external 121:18 137:7

extra 90:6

extraordinarily 167:13

extraordinary 5:12

extremely 33:16 172:4

191:7 202:14 228:15

271:8 274:21

eyes 68:7

F

F's 40:6

face 242:1

faces 233:1,2

facets 152:17

facilitate 8:8 10:21

11:12 12:5 38:21 39:1

60:2,19 62:14 71:20

76:14 87:7,18 88:5,8

88:15 89:20 115:6

facilitates 11:6 150:10

150:13

facilities 24:19

fact 40:13 55:6 116:3

161:14 181:13 189:9

216:2 250:14

fact-based 83:9

facto 265:18

factor 107:15

factored 156:21

factors 36:1,7,10 37:3

facts 47:14 63:16,17,18

69:2 84:1 132:15

193:17,19 221:9

fail 61:16 69:22 129:4

138:14,17 177:19

194:8

failed 10:20 53:18 54:9

99:19 103:20 133:22

183:10 218:2

failing 97:16,17 129:8

193:1 198:21 212:3

213:21

fails 61:16 72:14 108:18

159:21,22

failure 27:5,11 28:9

42:21 61:13 70:17

95:10 96:5 97:11

103:21 112:20 118:22

119:9 120:20 128:1

129:2 145:10 159:17

160:9,11 162:10

164:5 193:18,20

194:9,17 226:14,18

275:13

failures 97:4,5 145:9

195:20 270:5

fair 12:15,18 14:3 23:4

44:20 125:3 126:9

154:9 196:21 204:18

252:13

fairly 52:6 175:10 186:2

235:21 238:6 243:6

245:18 250:14 258:8

264:5 266:21

fairly-detailed 143:9

fairness 217:17

fall 11:22,22 12:8 18:17

falling 76:6

false-positives 192:19

familiar 35:14 39:12

172:13 232:17,20

famous 256:5,18

fantastic 85:13

far 19:3 21:3 33:3 44:20

51:8 54:13 59:20

116:10 117:21 136:10

147:15 172:4 190:9

197:3 210:10 232:16

238:10 241:5 244:13

245:21 255:19 257:6

257:21 261:16 262:3

266:22 271:14

Fargo 12:1,9 87:17

88:18 227:22

farther 21:4

fashion 41:22

fast 146:19 228:20

244:13 256:11 257:6

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gratefully 239:20

gravity 169:1 170:20

275:19

great 7:12 21:5,10 23:8

26:8,21 28:4 30:1

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I

I/Title 100:2

idea 23:22 24:3 56:5,12

178:9 188:20 251:16

254:15 262:4 267:15

ideal 12:17

Ideally 167:16 206:5

identification 18:20

identified 10:3 37:4

62:18 87:20,20 110:5

112:2 115:16 145:1,4

171:5 193:15 201:22

227:18

identify 10:20 75:5 83:9

104:10 105:13

identifying 37:14 89:14

90:9 142:6

IDI 150:17 160:22

idiosyncratic 74:3

209:6 256:22

ignorance 90:19

ignore 150:7

IHC 147:6,9

II 3:6 4:13 5:19 6:1,7

43:10,20 64:18 66:5,8

66:11,14 69:11 70:3,5

70:9,13,16,20 71:10

71:13 72:8 95:19 97:2

100:2 109:9 123:6,8

128:22 131:1,4,9,16

133:15 145:16 158:10

166:15 169:16 172:6

172:11 176:2 178:3

181:10,11 190:2,4

192:9 195:19 199:9

202:13,15 203:7

210:21 211:3 221:18

228:10 239:3

III 236:5

ill-suited 106:13

Illinois 191:11 206:11

illiquidity 166:14

imagine 19:18 23:15

35:18 39:7 40:17

41:12 49:22 58:2 59:7

71:6 78:7 122:10

125:5 134:11 175:3

193:5,7 232:10

246:11

imagined 219:10

imagines 219:20

imagining 134:14

187:14 220:15

imbalance 177:16

imbalanced 178:1

immediate 152:20

216:5

immediately 177:20

216:11,21 262:3

268:15

Immensely 201:18

impact 157:7

impacting 86:8

impaired 116:15

impede 150:19

implement 52:12 79:22

161:11 225:1 255:7

255:11

implementations 29:13

implemented 36:16

149:5 244:22

implementing 46:1

224:3 227:3

implicated 29:20

implication 182:17

implications 101:1

108:2 147:20,21,22

171:11

Implicit 133:5

importance 212:17

important 5:5 6:1,20

33:4 45:3 61:12 63:5

64:13 94:9 126:13

160:17 171:13 172:2

174:8 184:12 191:8

198:12,14 210:4

213:16 223:11 225:8

226:11 230:18 241:12

242:1 244:20 247:5

248:5 262:11 264:14

273:2,4 274:16

275:19

importantly 194:11

215:14 216:19

imposition 93:18

impossible 25:7 141:15

impressed 74:14

198:16

impression 153:16

219:5

improve 13:17 24:15

148:21

improved 16:21 31:7

improvements 11:17

20:20

improving 19:15 20:2

266:7

in-depth 36:9 38:3

in-hand 207:19

inadequate 8:15,21

251:2

inadequately-suppor...

24:16

incapacity 101:13,15

101:20 134:2

incarnation 106:13

incentives 185:2

include 81:10

included 20:15,18

200:6

includes 78:11 223:9

253:21 256:4

including 11:3 42:22

97:5 198:12 225:6

234:7

inconsistent 179:19

incorporated 214:13

incorporating 217:18

incorrect 231:10

incorrectly 130:22

increased 5:21

increasing 162:19

incrementally 21:7

independent 56:13

68:7 264:11

indicate 13:16

indicated 11:2,15 12:10

15:14 21:22 141:4

indicates 8:12

indicating 73:16

indicative 27:21 52:6

indirectly 85:8

individual 14:18 25:2

42:8 53:6,13 96:21

105:21 237:4

individually 103:3

individuals 39:10,11

50:8

industry 71:11 125:6

141:1 166:4 182:1

240:4 254:5

inefficient 259:5 261:15

informal 224:15

information 11:12

13:15 17:19 18:8

19:19 22:1 25:5 28:16

38:16 45:18 57:18

60:9,11 63:10 66:20

71:5 94:19 136:10

138:10 140:3 147:22

157:19 175:17 212:1

246:21,22 251:4,5,9

information-sharing

225:10

informative 7:1

informing 139:6

infrastructure 197:15

infrastructures 226:10

226:17

initial 232:2

initiate 271:9

injection 100:12

input 5:14 7:3 33:18

239:13,14 275:6

insolvencies 10:8 44:1

insolvency 25:20 95:9

95:17 175:21 236:21

237:9 243:4,21 245:2

245:4 248:15 260:22

263:14 272:1,1,12

instance 203:16 223:2

instantly 151:12

Institute 2:15,21

institution 2:18 53:13

69:18 78:3 128:20

134:8 152:12 153:10

158:10 193:5 194:19

195:8 197:15 201:9

209:7 212:4,5,11

213:2,22 217:8

230:14 233:20 234:10

248:21 251:1 254:17

254:22 258:14,15

273:4

Institution's 32:10

institution-by-institut...

221:20

institution-specific

222:5,22 223:18

institutional 152:22

institutions 2:11 4:17

7:10 17:8 32:13,16

73:17 105:21 106:5

129:15 132:4,14

154:7 166:10 183:3

194:7 196:20 199:10

199:21 209:4,9,13

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251:12 252:1,11

263:15 265:22 275:11

institutions' 148:9

instrument 163:14

instruments 156:1,2

insufficient 178:2

insurance 1:1,19

158:11 159:14 198:6

199:6,8 220:7,10

223:12 228:1 259:20

262:6,9 269:12

insurancy 232:5

integrate 71:6

integrated 55:11 63:6

76:8

integration 19:1

intellectual 184:8

intended 89:5

intensive 197:19

200:14 203:3

intention 252:22

intentionally 192:8

193:10

inter 253:21

inter- 121:15

inter-affiliate 137:6

interact 48:18

interacting 79:9

interaction 53:17 56:14

83:22

interactions 58:8 65:6

78:13,14 84:22

interagency 56:20

200:11,14

interconnectedness

9:12 26:7 73:17

interconnections 21:9

Interdependencies

251:1

interest 16:3 144:4

166:11 169:19 225:17

240:7 243:20 244:12

248:7 275:18

interested 66:17 100:6

100:21 158:15

interesting 4:9 7:1

205:18 234:19

interests 143:4

interfere 205:3

interim 14:19 142:19

Intermediate 147:19

internal 5:20 68:2

121:19 201:4 207:17

209:19 212:14,15

227:8 238:1

internally 211:13

236:15 243:17 249:9

international 39:19

147:3,12 173:13

203:5 205:20 207:11

210:1 222:1,17,20

247:15 249:9 253:12

255:4

internationally 210:5

229:19

interpreted 55:2

interpreting 242:8

interrupt 98:18

intervene 106:16

214:19,22

interventions 129:7

introduce 32:6 128:9

229:8 231:1

introduced 233:4

253:11

introduction 3:2 231:5

232:13

investment 155:9

188:15

investment-grade-like

155:9

investors 24:18 241:13

241:22

invite 275:6

inviting 231:12

invoked 120:16 132:16

involved 41:21 42:15

43:13,14 223:14

226:3 227:1 242:4

268:11

involvement 14:4 180:4

223:2,5 224:13

IPOs 178:11

irrelevant 18:12 44:7

ISDA 133:14 152:18

157:20 158:2 171:9

225:7

island 272:16,18

islands 272:19

isolate 251:17

issue 4:15 8:10 40:12

46:9 50:22 68:17

73:15 74:11 76:17

77:9,18 98:12 102:22

103:7 105:21 106:11

180:18 202:21 226:15

226:22 227:13 265:17

issued 9:8 13:2 20:16

87:21 88:11 89:3,12

89:15,21 100:15

129:22 203:17 227:10

251:22

issues 25:21 31:19

40:11 46:3 49:12

59:15 68:6,16 69:3,15

71:8 74:5 75:5 83:3,4

85:2,4 86:6 111:20

112:1,11 115:1,18,20

132:20 136:13 137:22

138:9 142:6 143:9

152:1,14 153:11,15

154:1 168:7 169:2

172:1 191:21 204:7

225:6,20 226:1 227:4

227:5,6 228:9 237:19

238:1 243:13 247:19

252:14

Italy 244:8

itching 109:3

item 51:3 59:13 94:9

113:21

items 29:14 73:9 112:3

113:4,20 114:2

iterate 67:17

IV/CRR 236:5

J

J 1:21 2:2,7,11

JACKSON 2:13 90:18

90:21 91:6,10 131:12

132:9 133:8,17

January 6:18 234:6,13

242:3 255:14 263:19

Japan 223:7 225:3

Japanese 190:21 225:4

jargon 247:8

Joanne 237:14

job 168:20 222:18

238:1,5 254:13

John 2:19 55:18 135:16

136:6 185:1 186:12

191:7

JOHNSON 2:15 22:11

41:19 42:17 44:10

53:16 74:13,19 75:2

75:10 102:20 109:14

109:19 124:6,10

127:17 128:21 133:20

135:16 161:21 178:22

179:3 180:7,11,19,22

181:17 183:7,22

197:22 205:6,9,11,16

256:8 257:3 261:9

265:11 270:16 273:1

join 228:22

joined 7:15

joint 8:4 9:8 12:6 13:22

14:15 87:21 88:2,9,11

89:12 92:7,15 93:15

203:10 225:11

jointly 8:16,22 9:22

87:14,20 92:3 93:16

journalists 234:19

JPMorgan 17:16 87:16

227:20

judge 143:22 242:19

judgment 184:19

219:18,22

judgmental 83:10

July 13:5 14:20,20

16:14 23:21 24:9

50:18 87:10 89:9 94:2

94:7 145:6 171:22

jump 49:6 221:22

225:21 262:3

jumped 30:7 31:3

jumping 243:2

juncture 85:20

junior 83:7

juniorized 244:5

jurisdiction 48:19

153:12 177:8 204:19

208:15 273:5

jurisdictions 6:3 29:19

44:13 46:7 149:3

151:5 204:3,10

227:18 230:12

justify 93:18

K

keep 4:18 67:6 98:22

109:1,9 111:8 116:2

117:18 146:18 147:7

166:6 171:22 177:12

219:17 241:16 256:3

264:10 266:12 272:13

Kellermann 237:15

key 6:2 29:9 61:9,19

68:6 75:1,4 96:10

99:10 102:1,8 109:4

112:1 113:9 115:3,8

119:15 121:1,3 123:5

123:14 138:9,15

139:10,21 141:5

146:17 149:17 152:3

152:17 153:16,20

160:21 161:1,14

188:6 191:20 204:9

206:14 207:16 222:21

223:22 226:2 227:18

246:14

key-turning 200:17

keyed 125:9

keys 200:16

keyword 154:17

kind 14:13 25:8 26:6,12

27:2 28:10,18 32:7,21

34:17,19 35:6 37:5

40:5 49:6 51:11 57:7

58:3 59:17 61:15 64:5

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70:22 80:5 92:6 93:6

118:2,21 119:3 120:4

120:12 121:14 146:6

159:2 163:13,14

185:14,19 193:18

194:12 202:11 203:11

204:8 207:1 220:16

222:20 226:2 231:4

233:9 236:21,22

245:7 247:4 258:7,18

259:22

kinds 161:18 199:3

238:3 269:11

knew 57:1 126:3

knock 107:5

know 4:4 6:10 15:20

16:10 19:21 22:18

25:6,8,9,15,16 27:6,7

27:8 32:21 34:22 36:6

36:18,19 37:22 41:6

47:20 63:2 64:15,16

66:11,22 67:3,8,14

80:12 82:15 85:22

86:22 91:13 92:9

94:15 95:14 99:21

100:21 102:10 104:17

113:1 116:1,22 119:6

120:5 122:21 129:1

132:16 134:16 138:10

139:11,13,17 141:7

143:19 146:7 160:14

162:11,11 164:4

167:6,9,10 169:21

174:5 182:2,14

186:10,21,22 187:2,7

187:8,9,16,19 189:7

190:9,14,16 192:14

193:21 196:14 198:6

198:15 204:15 206:9

213:14 216:7 218:16

220:3 221:7 233:17

237:3,10 241:13

242:5,22 243:12

249:17 251:13 253:1

258:21 259:15,17,21

264:14 274:7

knowing 37:15 45:12

83:16 95:14

knowledge 28:5 62:12

knowledgeable 39:12

known 47:14 80:18

186:13

knows 46:20 189:19

213:17 268:2

Kohn 2:16 13:20 58:7

58:10,14,16 79:3,8,11

79:14 82:19 108:22

109:3,6,12,18 123:5,8

145:8,22 146:3,8,13

169:21 170:1 202:17

202:20 203:1 204:11

267:3

Konig 3:11 6:9 223:15

228:22 229:9 231:3,9

240:12,21 242:10,14

243:2 244:18 253:16

253:19 256:13 257:6

259:8 260:9 261:4,7

261:11 265:13 267:7

268:14 269:14 271:12

273:15 274:10 276:1

Kurtz 2:15

L

L 2:18

Laboureix 237:16

lack 69:16 93:17 104:2

104:3 112:4 259:12

275:12

lacking 17:7

lag 23:1

laid 9:3 49:17 57:10,11

69:15 82:16 138:8

139:9 154:5 211:10

217:11 218:13

language 107:3

large 21:16 27:13 39:12

41:9 43:7 69:17 80:19

81:10 115:14 127:18

161:9 183:2 188:14

224:12 237:22 245:14

249:21 269:17

largely 10:18

larger 118:5 262:15

largest 39:7 87:11

233:14,16,19 247:14

255:21

lastly 115:13 225:3

late 53:17 166:14,16

227:10

latest 135:20

laughter 4:5 15:21

20:10 31:1 32:19

46:14 53:22 57:4 71:4

74:22 79:17 80:4

91:15 132:11 135:3

140:22 144:13 146:16

148:17 151:20 179:2

182:21 186:17 191:3

204:17 205:5 216:10

219:7 220:12 222:15

231:8 270:13

laundry-list 48:13

law 9:7 107:6 142:4

143:21 236:21,21,22

236:22 237:1 243:4

243:21 245:3 270:21

laws 25:20 48:18 129:3

lawsuits 101:13

lawyers 80:12

lay 57:8 94:17 137:21

194:3 213:22

layer 196:8

layers 242:5

laying 9:9

laypeople 30:10

lays 69:5 168:1

lead 30:6 46:19

leader 229:19

leaders 230:10

leadership 230:4

leads 40:22 41:2,2 59:3

59:11,22 68:15 69:8

learn 201:16

learned 56:18

learning 201:19

lease 38:1

leave 72:13 143:21

144:12 173:2,9

270:10

leaving 174:15 212:13

led 7:17

ledger 180:15

leeway 257:2

left 108:10 156:12

157:4 170:7 178:20

179:1 191:12,13

leg 233:22

legal 11:4,4 18:4,12

19:2 29:16,16 32:15

39:20 44:14 52:5 53:8

57:12 66:17 75:14

76:3 86:20 93:10,13

102:22 114:19,20

135:9 139:21 140:10

140:16 141:5,9 142:3

143:9 144:16 147:2

148:3,16,22 149:4

150:2 152:1 154:1

160:20 163:21 165:2

179:6 215:9 237:3,10

241:1 252:20 253:20

255:3 271:17

legally 206:16 207:22

legislation 144:5 255:8

legislative 107:11

144:9

Lehman 46:12,15 65:18

66:3 75:3 103:19

104:6 125:14 132:17

132:21 133:1,3,7,9,11

133:19,21 206:11

Lehman's 103:21

lending 175:11

lengthen 22:6

lens 95:22 96:4,18

lent 185:19

LER 148:15

less-diversified 180:9

let's 41:6,11 46:12 72:6

72:9 73:1 95:22 96:9

98:18 103:19 111:3

113:19 114:15 119:2

125:15,17,22 129:15

155:19 166:11 172:6

184:9 186:20 236:15

255:14 257:15 258:1

259:2,3

letter 51:4,10 69:5 90:9

105:12 145:2

letters 11:1 12:13 31:11

33:7,8 35:19 55:8

64:3 69:8 85:1 89:12

89:17,22 92:11 107:1

letting 83:8

level 14:12 22:2 23:13

23:15 33:10,19 34:2,3

40:11,15 41:20 45:15

57:20 63:15,22 64:2

84:4 85:14 88:21

108:15 118:17 121:11

127:10 135:22 143:12

211:19 212:14 242:19

253:12

levels 68:20 120:1

224:18

leverage 26:19 45:13

197:20 202:8,11

liabilities 173:2 174:14

174:16 187:10,11

206:4 212:13 241:8

243:14 250:11 253:22

254:13,16 269:10,11

liability 241:6,21 243:7

250:1,4 251:5,5 254:9

lies 98:12

life 244:10

lifting 38:22

light 233:5

liminal 216:16

limit 106:3,7 198:20

limitation 106:4

limitations 213:18,20

214:1

limited 121:17 158:6,8

limits 84:13,14 199:4

line 123:12 167:7 198:5

252:12 258:19 267:18

lines 11:5 26:15 37:1,11

39:3 136:9 144:9

149:3 150:5,14

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link 267:5

liquidated 218:4

liquidation 3:6 4:13

5:18 6:6 8:3 128:18

133:16 169:6,15

184:15 200:20 217:7

liquidity 8:18 10:5

27:17 44:6,17,19

57:13 70:8 85:5 104:9

104:15 113:8 114:1

116:15,21 117:7

118:8 120:19 121:12

121:21 122:7,13

123:15 124:8,15

125:16 129:5,6,9,10

135:7 138:15,16,18

139:10 141:22 142:21

145:20,21 149:21

156:10,21 162:12

163:3,17,22 164:8,12

164:21 166:19,21

167:9 176:10,11

196:17,18 212:12,20

214:7 215:15 225:6

257:4,10,14,21 258:5

258:19

list 17:18 50:7 63:17

206:15 212:1 253:6

listed 18:14

listen 229:1 268:15

listened 184:5 246:15

listening 134:11

literature 162:18

litigation 218:10

little 14:6,8 16:9 21:4

28:8,12 36:4,11 48:22

49:7 52:4,22 76:15

80:3 83:12 89:10

102:5 110:1,16

120:13 156:15 164:22

169:17 174:9 187:5

199:6,18 202:17

222:1 228:20

live 207:5

living 3:3 4:11,21 16:11

16:13 18:1,10 19:15

22:14 38:14 43:3,12

53:18 54:17 64:17

65:10,11 66:11 96:20

103:2,3,14 104:7

107:16 124:16 131:15

133:16,17 159:11

160:11,13 188:2

201:17,19 206:19

273:7,13

LLP 2:7

loans 178:16

location 116:22 117:20

locked 126:21

logic 269:18

logical 248:15

logically 206:22 251:15

long 10:14 16:19 71:2

83:15 146:14 158:12

161:7 168:11 169:17

176:1,3 219:21

242:16 249:1 252:19

253:6

long-term 101:17

104:14 105:3 107:20

118:12 119:4 171:12

longer 46:13 106:10

110:13 123:3 130:9

165:12 174:7 184:15

194:18 215:20

look 17:9,16,21,22

24:12 27:8 29:16

31:14 36:18 52:16

66:15 68:2 73:8 81:5

84:6 103:20 119:2

124:11,14 125:18

127:7 134:7 135:18

135:21 136:1,4 139:4

140:2 143:3 155:16

161:22 162:17 164:18

165:11 174:13 177:21

220:15 230:20 240:6

248:5 260:12 261:15

266:18 268:14 274:17

275:21

looked 15:15 17:13,18

17:18 215:3

looking 9:9 13:18 27:1

27:3 36:22 39:7 40:22

46:5 57:16,20 60:8

61:4,19 65:4 68:7

71:19,20 72:1,17

73:11 75:13 83:11

92:13 96:1,4,4 103:3

105:20 117:5 125:11

127:1,13 132:15

136:17 157:4,8

162:21 166:22 171:20

174:17 226:12,17

227:3,4,9,11 228:2

looks 15:10 68:9,10,10

104:18 139:20 146:11

174:12 226:15

lose 84:3

loss 133:13 134:1

172:18

losses 101:15,19

110:13,14 112:17

254:10

lost 104:1 207:20

lot 18:5,19 19:11 20:3

26:10 30:22 34:22

45:17 56:18 71:7

79:15 81:1 85:2

106:20,20 107:10

115:22 134:6 136:2

138:15 140:1 157:14

170:4,11,18 177:21

187:22 189:4 191:1

200:11 201:19 207:2

209:3,3 212:18

216:19 219:22 220:18

221:4 232:17 236:20

237:2 246:21 249:14

251:4,18 261:21

266:17

lots 48:16 123:12

love 126:14

low-hanging 244:15

lowers 180:4

Loyttyniemi 237:20

LTCM 162:2

lunch 3:8 6:8 169:18

209:16 222:12 228:19

229:1

lying 134:5

M

machine 251:9

magically 129:10

magnitude 28:17 197:1

main 77:11 236:8 238:1

maintain 155:2 176:9

176:11 226:19

maintaining 118:16

151:1 154:15

maintenance 226:4

major 85:4 109:22

143:18 172:16 230:12

252:22 265:14,17

majority 14:15 15:9

161:13,16

making 26:20 54:19

73:22 119:19 122:22

143:18 186:13 220:21

manage 195:10 211:14

management 2:16 32:9

42:7 48:9 49:2 75:12

75:18 76:1,9 78:9

83:7 95:15 147:21

172:19 173:9 185:22

189:7,8,16,18 191:8

191:20 211:20 212:17

213:13 214:20 222:2

223:20 226:9 227:14

227:16

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manner 123:1 142:16

manual 239:21,22

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March 234:8 249:22

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104:1 109:20,21

113:16 116:16 118:19

119:10 120:7 127:6

134:17 155:14 156:7

183:18 194:20 209:7

219:16 226:10,16

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markets 100:6 101:2

156:19 162:2

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master 162:8

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255:17

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21:4 33:16 80:22 96:9

101:14 113:9 114:2

118:17 121:11 125:18

141:18 150:11 207:18

materiality 92:3,22

materials 85:22 275:4

matter 44:14 83:2 92:18

112:12 159:22 169:10

229:4 273:6 276:4

matters 103:4,14 204:4

225:8

maturing 159:1

maturities 177:17

maturity 164:7 175:12

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maximize 181:15

maximizing 179:18

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64:22 74:15 77:21

97:8,17 99:17 109:6

132:22 148:10 155:19

162:14,14,16 165:15

170:6 184:1 185:7

187:18 190:10 195:13

196:21 197:3 202:20

206:8,9 222:22

250:16 259:13 260:2

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122:16 123:17

measurement 119:8

121:4 122:15 136:22

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measuring 121:7

130:11

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mechanism 114:13

119:5 130:20 131:18

132:2 138:19,20

140:18 142:11 150:1

152:3 232:15 233:11

234:1 235:12,13

239:8 243:19 246:2

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62:6 72:20 76:13,13

111:1 118:9 120:9

124:2 138:6 143:13

145:21 146:6 152:12

153:13 249:3 273:10

meet 78:17 81:9 109:12

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meeting 1:9 4:7 7:6

13:9 53:10 65:14

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meetings 12:20 13:22

14:18 15:3 23:16 34:7

50:20 56:7 274:21

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member 13:20 15:22

22:11 24:11 25:14

30:4,17,20 31:3 34:1

41:19 42:17 44:10

47:3,6,10,18 48:5

53:16 54:1,5 55:17

56:16 58:7,10,14,16

64:13 65:8 67:21

74:13,17,19,21 75:2,4

75:10,11,17 76:3,16

76:22 77:3,8 79:3,8

79:11,14,16,18 81:20

82:14,19 83:5 84:8,12

90:18,21 91:6,10 93:9

95:1,11 96:2,7,12

97:7,15,21 98:2,6,9

98:11 100:5,9 102:20

105:16 106:22 107:13

108:7,12,14,22 109:3

109:6,12,14,18,19

110:1 111:7 123:5,8

124:6,10 127:17

128:21 130:21 131:12

132:6,9,12 133:8,17

133:20 134:7 135:16

140:20 143:15,17

144:12,15 145:8,22

146:3,8,13,14,21

147:1 157:18 158:6

158:14 159:7,13,19

160:1,4,10,14 161:2,4

161:21 164:11 165:20

166:13 170:1 175:16

176:1,13 177:2

178:22 179:3,21

180:7,10,11,16,19,20

180:22 181:2,4,17

183:7,22 184:7,22

186:19 189:3,6 190:3

190:8 191:5 195:3,17

195:21 196:16,21

197:5,22 201:16

202:17,20 203:1

204:11 205:6,8,9,10

205:11,16,21 206:7

207:22 208:19 214:18

219:4 223:6 235:17

243:8 244:17 245:1

248:9 256:8 257:3

259:7,9 260:17 261:2

261:6,9,10 264:2,11

265:11 267:3,9,12,17

268:12 269:8 270:16

273:1

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45:4,9 59:8 76:19

78:17 200:6 224:9

232:1,8 234:7 237:12

247:9

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19:14 21:12 25:19

62:5 94:8 202:6

mentioned 25:22 29:5

33:4 35:3,9 36:17

39:15 46:19 50:15

52:2 61:9,11 62:1,17

193:14 199:12 220:6

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merger 220:16

merrily 173:6

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message 14:16 117:16

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208:3 248:19

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method 18:20

methodology 118:16

119:1 120:6,14

125:16,17,19 149:21

166:19

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mid-size 233:20

million 197:8

mind 80:7,8 117:18

148:1 171:22 177:3

241:16 264:11 266:12

mindful 231:11

minimis 254:8

minimize 150:18

minimum 121:11,20

122:7 166:20 241:11

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minute 12:2 98:19

140:12 189:20

minutes 137:15,21

138:2 151:18,19

169:9,18 210:9

222:11,13

miracles 132:19

mirrors 35:15

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122:16 147:21

misinterpreted 71:17

missing 50:4,10

mission 135:1

misunderstood 158:1

mitigants 99:13

mitigate 61:5 72:19

104:5 127:5

mitigated 28:3 61:10

103:18 104:11

mitigating 80:13 126:18

mix 15:1 146:11

mixed 265:12,13

mode 130:13 163:6

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228:11

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modify 134:12 193:18

213:22

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mom 238:7

moment 62:8 181:20

187:17 219:14 235:4

244:3

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254:20 258:12

money 72:13 73:5

140:13,13 252:8

254:6 264:18,19,22

267:10 268:9,11

monitor 163:8

monitoring 81:13 130:6

month 124:19 177:17

224:11

monthly 50:19 224:22

months 24:10 67:13

90:6 185:9 242:15,21

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morning 4:3 30:5 32:4

145:11,13 168:21

254:20 270:19

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mother 231:7

motion 151:10 152:7,17

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102:7 106:2 122:3

129:20 130:8 138:5

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120:11 121:19 122:11

122:14 132:10 146:19

216:4 255:15 263:10

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250:3,10 252:11

255:4,18 262:17

multidisciplined 39:6

multifaceted 71:2

multilateral 222:21

223:9 225:22

multiple 10:7 12:19

26:15 43:22 59:13

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193:11 196:7 213:1

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20:6,17 21:5,10 23:4

30:1,13 31:2,5 60:4

102:3 131:7 170:14

170:16 179:14 186:10

191:1,22 196:10,18

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mutualized 235:18

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name 237:21

narrative 33:13 55:7

57:11 82:6,8,9,12,17

82:17 91:20 107:22

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236:22 240:1 246:5,7

246:17 261:5,6,6,7,12

261:22 262:9,12

264:10,12 266:15

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naturally 178:5 263:2

nature 38:17 247:15

near 36:16 232:11

necessarily 27:21

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194:2 197:14 216:9

necessary 8:17 44:6

192:21

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43:21 44:3 48:4,8

50:10,12 52:8,12

61:15,17,18 62:7,8,13

70:10,16 73:15 91:1,6

91:8 96:15 98:15

102:16 104:5 111:10

114:7,11,21 118:7,9

119:8,13 120:6 121:7

121:10,21,21 122:6,6

122:8,11 125:19,20

125:21 130:11 136:22

137:8,9,10 138:10,16

138:21 143:11 145:5

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252:5,6,8,14,17

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258:11,18,20 259:9

262:13 263:1 265:4,8

265:20 266:1 267:14

needed 11:15 24:15

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200:9 203:12 211:16

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213:13 214:6,14

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nine 116:9 262:18

nitty-gritty 227:7

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122:3 164:5

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122:12 157:22 158:19

163:19 165:2,4

234:20 248:12 262:22

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208:12

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notice 8:11,14 88:11

173:17

Notices 87:21 89:13,21

noting 21:19

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106:15

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November 174:4

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84:13,14 112:7 115:8

142:3 149:13 162:19

174:4 195:6 204:6

214:12 224:9 229:12

231:19 233:14 238:21

262:8 268:16 269:4

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objective 60:15 190:12

195:19

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115:6 149:14 150:15

190:19 201:22 202:4

obligated 86:22

obligation 107:5

obligations 205:12,20

208:3

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observations 15:7

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obstacle 44:16 73:6

117:17 150:9

obstacles 10:3,4,10,18

43:21,22 51:20 52:14

52:15 53:2 61:8 70:7

70:7,14 72:18 86:11

86:13 96:15 102:14

117:19 127:22 128:3

140:16 148:4 149:9

171:5,8 232:19

238:14 250:12,20

obvious 50:4,12 113:21

114:20 149:9 184:21

obviously 14:17 28:19

31:19 33:20 43:18,22

53:2 69:13,20 70:4,14

72:19,21 99:3 101:11

111:10 114:16 115:8

116:3,14 117:8 118:5

119:12 133:3 147:9

150:20 154:9 156:20

160:22 163:12,21

185:5 260:2 269:16

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129:22 209:11

occasions 15:2

occur 45:2 119:11

129:19 141:10 152:22

158:18

occurred 27:20 33:6

125:10 133:4 159:8

occurring 100:3

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198:3

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90:11 93:14 170:8

171:20

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offensive 218:9

offer 46:6 105:17 219:4

office 7:9 32:12 64:18

66:13

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officers 34:7

official 198:20

officially 234:6

officials 85:15

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77:3,8 85:3 104:22

146:22 147:11 178:14

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65:18 77:3 169:4

170:16 172:12 222:14

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old 173:5 229:11

older 100:14

once 110:5 123:2 164:1

165:9 196:1 197:19

201:11,13 202:1

203:12,22 267:20

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200:2 204:9 210:13

218:6 249:18 250:9

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opened 6:17

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73:12 96:10 113:14

114:3 149:3 179:7

196:7 199:14 204:2

operates 122:14

operating 41:1 109:1

113:11 115:11 121:11

121:15,20 122:7

125:20 129:17 166:20

167:15 185:13 212:15

214:3 217:8,12

241:18,19 242:7

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245:20

operational 5:20 36:14

61:21 62:2 114:17

137:6 140:7 191:19

192:3 200:3 202:5

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80:15,17 81:3 85:6

86:9 98:17 126:3

179:6 189:2 196:12

205:3 207:18,21

208:14 222:8

opinion 217:17

opportunity 8:13 54:7

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opposed 104:20 166:11

207:4

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optimizing 151:2

option 128:14 157:6

187:16,21 219:10

245:7 271:20

optionality 36:17 62:17

73:22 99:10 115:9

149:14 150:15 154:19

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165:10 187:3,6 188:4

190:13 201:20 202:1

204:20 214:10 219:9

220:18 222:4,8 256:3

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130:18 137:9 138:21

148:21 152:15 197:1

200:15 229:7 241:8

241:15 242:20 249:2

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6:6 8:3,8 10:3,21

12:11 18:15 60:19

87:7,18 88:5,8,15

89:20 128:18 153:13

169:6,15 200:20

217:7

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36:20 51:21 68:20

76:6 81:2 232:4 234:3

242:6 252:7 266:13

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organizations 41:10

80:20

organize 236:15 239:1

organized 236:10,14,19

237:11

original 172:14

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outcome 55:15 118:7

127:4,15 128:12,17

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outline 6:4 67:22

outlook 232:20

outreach 225:13,22

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206:4 217:16 247:5,7

247:11

outspoken 241:3

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overall 63:7 75:22 84:7

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51:19 70:10 96:15

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127:21 139:22 140:16

142:7 144:18 149:9

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overly 193:22

overnight 146:10 185:8

overseas 148:9

oversee 176:13,16

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176:22 177:7,8

oversight 59:7,9,18

63:11,21 64:10 68:11

82:1

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overview 35:7 209:22

210:17

overwhelming 84:2

owners 173:5

ownership 150:5

owns 46:18

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page 30:6 57:11 85:3

236:12

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80:7 81:19 82:2 83:15

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116:9 137:3 168:11

paid 212:19

panel 7:13 71:3 96:3,22

97:2 99:1,5 206:17

panics 209:7

paper 255:10 259:1

paradigms 69:14

parcel 269:16

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97:12 108:13,14,18

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part 7:5 20:14 28:5

46:20,21,21 51:14

63:8 67:18 70:21

71:15 97:6 136:5

139:16 140:5 141:20

142:17 143:2 149:18

151:2,6,16 165:21,22

169:5 171:13 174:16

175:13 188:21 195:18

207:17 209:9,15

228:17 233:3 241:12

244:5 246:15 247:9

250:6 252:8 253:4

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partially 251:2 266:16

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39:1,18 40:2 41:10

45:11 49:15,20 50:1

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212:10 230:5 240:17

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parts 42:5 43:17 46:18

46:18 47:1 61:7 75:16

117:4 178:10 180:13

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passive 155:18 156:3

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paths 25:1 192:22

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pathway 157:1

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pay 264:18

paybox 261:14

payment 96:13 249:12

payments 165:17

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121:6 122:4 129:18

129:21 155:11 158:9

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212:6 213:19 216:14

216:17 217:7,20

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personnel 38:10 202:12

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perspective 33:22 84:6

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Peter 2:9 55:20 63:9

83:21 85:10 180:7

Peter's 82:19 85:9

PETERSON 2:18 79:18

100:5,9 146:21 147:1

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philosophy 240:19,22

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piece-in 112:11

pieces 84:5 101:5

pillar 40:21 41:2,13

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pillars 35:17 41:17

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234:4 235:21 252:20

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placed 214:16

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plain 61:22

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23:14,20 38:5 42:16

44:9 45:21 46:5,17,20

51:6 60:18 61:15 74:8

75:3 78:8 79:2,3

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105:6 107:16 112:8

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190:7 194:5 201:14

202:7 212:3 214:7,9

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179:16 185:8 190:10

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272:11

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142:16

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106:13 273:6

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176:19

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255:20

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195:4

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51:9

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181:13,16

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248:14 264:19

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173:7

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35:10 91:2 95:17

124:22 143:19 145:14

149:11 161:14 173:11

189:22 211:19 221:19

231:5 236:16 250:21

251:6 257:19 259:9

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271:19 273:16,21

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106:17 110:19 125:1

131:14 173:13 182:19

183:16 189:4 195:14

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220:9 243:16 248:14

259:22

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144:18 174:22 208:12

209:3 238:22

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264:16,22 272:1

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110:18

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154:15 270:19

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14:8,19,21 19:12,21

20:2 21:14,17,21 22:1

22:7,10 23:6,10,12

24:7 26:18 30:19

33:17,20 34:19,21

35:4,5,12,14 36:3

38:4,20 40:15 42:3,16

43:20 44:4 45:1 47:11

47:12,21 49:8,8 50:6

50:15 51:4,6,15 52:7

53:13 54:12,22 55:12

55:13 56:22 58:4,6,22

64:14 67:18,19 68:5

69:6 78:4,10,14,15,20

83:13 94:22 97:6

101:7,12 104:2,8

107:8 110:11 114:3

127:21 128:1 133:18

134:8 135:5,11 136:7

139:20 151:1 153:6

159:16 171:12 175:18

176:6,22 184:19,21

184:22 185:8 188:7

189:9 192:10,18

195:1 196:5 197:13

200:10,12,15,16

201:5 202:14 210:18

211:12 217:22 219:18

219:20 221:8 222:4

225:12 249:18,19

250:15 261:17 265:2

271:9

processes 16:11 37:19

66:18 94:19 193:10

193:21 194:13 197:11

197:17 199:22 200:1

200:13 201:7 203:11

203:15 228:9

produce 28:16,16

129:10 149:14

produced 144:21

161:22 217:18

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Professor 2:2,11,13,15

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38:13 169:6 210:13

232:22 266:5

progress 11:16 20:3

23:18 55:9 57:21 60:2

63:4,19 67:7,8,10,12

67:12,12,15,16 70:13

70:15 90:12,17 92:12

92:13 93:5 130:7

170:4,14,18,19

171:17 172:4

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118:2

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protection 160:22

164:16 248:21

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protections/assuran...

158:13

protocol 104:13 133:14

152:19,20 157:20

158:1,2,17 161:5,10

164:18 165:2,15

171:9 225:7

protocols 200:18 201:2

204:11

proud 231:6

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provide 6:15 11:10

12:11 13:15 19:15

33:18 44:6,7 50:11

54:9 61:2 93:15 94:18

96:16 156:22 160:7,8

178:3 207:12 217:2

221:12,19 225:15,16

257:3 267:18

provided 52:18 93:19

99:6 105:12 115:2

130:2 154:7 168:6

211:7 230:4

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118:14 127:14 207:18

215:17 257:5,9

272:11

providing 59:12 122:8

257:13,14 258:4

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142:21 165:11 181:13

232:5 245:16

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93:19 228:1

public 6:5 9:14,22

10:15 11:18,19 13:8

13:12 15:6,14 16:2,13

18:9 20:14,19 21:1

23:3 31:10 33:13 54:8

55:6 57:11 91:19

94:12,17 99:8 107:22

124:21 128:13 136:1

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216:22 239:17 240:5

240:7 248:7,21

264:20 268:9,10

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publicly-available

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141:16

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252:3 262:10,12

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261:13

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57:16 64:3,3 73:21

78:7 82:6 84:5 85:12

97:1 101:6 112:5,8

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pyramid 59:6 64:9

Q

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qualified 133:14 151:11

161:13

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qualify 108:5

qualitatively 16:22

quality 234:5

quantitative 17:11

215:4,7

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25:3,18 26:3,9,9

30:22 31:19 45:1 47:4

49:4 54:6,21 55:2,19

64:14 65:1,22 66:1

67:7 71:2,16 73:15

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83:16 90:18 95:2

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114:5,6 119:18

124:17 125:3 126:9

126:19 134:1 138:15

140:15 159:7 169:21

170:13 179:12,13,22

181:8,18,20 182:2

183:7 188:1 193:6

195:3 205:19 215:3

219:10 234:18 244:13

244:17 250:8 251:11

251:21 259:7,10

260:4 269:8 270:17

272:4,17 273:16

questions 5:14 7:2,8

18:3 19:7 25:6 33:2

37:4,6 39:22 41:4

47:21 48:7,16 49:21

50:2 51:18 64:7,12

67:5 82:14 93:2 98:13

100:16 115:3 168:16

186:9 199:2 210:8

213:15 240:10 275:6

276:2

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95:1 120:4 147:8

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175:10 186:7 196:13

196:15 208:20

quite 4:14 17:15 19:10

28:22 129:19 130:2

210:4 223:14 233:21

234:5 242:20 248:11

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quoting 24:13

R

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169:22 193:6

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93:2 119:3,18 126:19

199:5 202:20 212:16

270:18

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198:2

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71:19 74:1,7 80:3

127:5,6 153:5 200:9

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52:5 57:12 147:2

148:3,16 160:20

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262:3 269:4

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91:13 95:2 107:1

116:7 136:18 137:13

206:14 235:3,4

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266:7

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54:21 57:5 77:5 91:21

106:16 115:6 120:4

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157:13 194:3 226:2

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259:14

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14:13 16:1,4,10,21

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31:14 33:6 34:11,17

35:17 38:21 39:2 40:3

43:11 46:9 49:1 53:6

57:10,16,20 58:3

59:17,22 60:2,17,20

61:2 62:4 63:6 77:15

78:15 80:11 81:18,22

82:9 83:6,18 93:2

94:9 116:6 119:19,22

121:6 127:13 128:15

132:18,18 144:4

146:19 155:16 166:15

168:19,22 169:2

170:7 171:13 184:12

191:20 200:14 206:1

206:15 207:7 211:11

217:4 224:1,19

230:17 231:4,12

234:10 238:15 244:22

245:8,11 247:11

250:9 251:16,21

252:6,11 254:17

255:17 257:2 272:2

274:14 275:2,6

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248:16 263:5 273:8

reasonable 61:8 101:21

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105:7 119:5 150:5,10

155:1,3,13

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118:18 258:10

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30:21 90:8

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recognition 247:20

252:15

recognize 28:18 116:2

152:1 154:20

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229:19

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recommendation 55:18

56:1 105:18 162:4

recommendations

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169:11

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164:1 165:10 167:8

192:15 231:16 236:7

239:4,5,10 253:20

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178:13,19 183:20

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75:17 76:3 79:16

134:7 185:1 189:3,6

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171:17

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Register 173:18

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263:1

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147:13 229:20 235:7

248:6,6

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213:7

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94:5

remember 65:21 183:9

183:13

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255:21

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repo 175:11 177:16

178:3

report 18:10 21:13 31:9

35:3 49:17 60:14 68:3

76:17 90:11,14,16

94:12 103:21 112:3

136:12 161:22 206:14

reported 30:7 133:22

134:3

reporting 22:14 218:16

218:18 219:3 251:3

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135:19

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161:19 200:9

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164:1

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254:7 256:3

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89:1 90:1 94:1 114:8

202:6 250:10 254:12

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94:18 105:9 121:22

124:17 180:17 255:3

256:12

requirements 7:21 8:18

63:3 93:19 128:8,11

134:3 176:4,4 214:4,8

217:10 218:21 219:1

253:22 255:17,18,18

266:20

requires 96:8 129:1

requiring 29:15 91:3

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13:22 27:16 28:20

29:2 31:11 35:5 40:8

40:13 49:10 55:7

63:13 64:1 69:1 87:3

87:4 88:7 99:11 101:6

101:7 116:5 136:19

161:12 200:22

Reserve's 147:13

residual 156:11 157:4,5

resist 106:10

resolution 1:5 3:12 4:7

4:16 6:3,5,10 7:14 8:8

9:13 10:3,21 11:6,13

12:5,12 13:19 15:15

17:3 18:15 21:15

23:16 29:20 34:10,10

39:17,19 42:8 43:1,11

49:19 56:3 60:18,19

61:1,3 66:5 69:17

76:8 78:8 79:2 87:8

87:18 88:5,8,15 89:6

89:20 94:12,17 97:3

110:17 122:4 130:12

130:18 131:18 132:1

137:2 147:16 150:19

151:14 152:2 154:2

159:14,15 163:20

165:21,22 168:1

171:6,10 172:11

179:15 180:21 184:16

188:7,11 191:6 192:6

192:7,13,20 193:13

194:12,14,18 195:20

196:4 197:8 201:11

201:13 202:2 203:13

204:1,12,21 208:1

211:2,15,16 213:14

214:5,15 215:15,21

215:22 216:7,12

218:7 220:9,11 223:3

223:14,17 224:2,4,17

225:1,5 226:4,19

228:10,13 229:9,14

229:22 230:5,6

231:17 232:14,14,15

232:16,19,21 234:1,2

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236:7 237:14,17

238:3,10,11,14,19

239:11,12,16,21

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243:18,19 245:3,6,13

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248:2,7,12,18 249:17

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263:6,18 264:15

265:3,19 266:8,10

267:4 271:7,9,19,21

272:8,9,10,10 273:10

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resolvability 13:17

86:11 115:5 148:21

149:7

resolvable 256:19

271:14

resolve 173:22 193:2

219:21 221:17 237:7

246:8 262:19

resolved 131:17,19

132:1 226:13

resolving 193:7 197:16

238:8

resort 254:18 258:1

resource 119:6

resource-constraining

197:20

resource-intensive

197:12

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113:22 116:10 155:16

156:11 197:4 207:19

215:12,21

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152:21 161:6 166:16

221:13

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89:10,18 152:8

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142:6 166:9 198:11

responsible 40:1,5

217:15 234:22 237:12

237:19,22 238:2

245:11,14

responsive 16:22

225:14

responsiveness 62:22

rest 51:10

restabilize 121:2

restrain 106:8

restrictions 8:19

restructured 189:10

restructuring 127:18

129:11 173:20 194:16

214:9 217:19 218:13

result 80:18 87:4,13

92:15 108:8 154:1

158:5 173:21 244:7

272:12

resulting 173:11 183:17

results 4:21 5:3,9,10

32:22 55:14 57:2

120:19

resumed 169:11 229:5

retail 41:9 186:5

retain 153:12

retained 186:7

retrained 38:18

retroactively 244:8

return 90:5 146:12

155:8 178:11,18

returning 185:18 218:3

revenue 37:9 180:3

reversed 142:17

review 4:21 5:3 9:7,17

10:15,16 14:8,21 22:6

23:10,12 33:1,18

34:16 38:8,10 40:16

42:3,16 45:1 51:4,6

54:22 55:12,13 56:22

57:2 78:6,13,15 87:5

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167:18 168:3,22

234:6 275:4

reviewed 10:11 87:3

reviewer 46:9

reviewing 94:20 108:9

168:14

reviews 49:16 58:11

revised 90:1

revisit 115:22

Ricardo 32:11

rich 252:7

RICHARD 2:11

Rick 7:15 31:22 36:12

59:8 65:16 99:3

116:18 133:20 141:4

148:2 152:16

Rick's 32:18 53:8

rid 183:21

right 20:8 22:19 26:16

27:16 32:2,20 40:12

44:14 56:21 60:10,17

71:7 74:19,20 75:3

80:11,14 82:4,7,22

83:19 86:7 95:2 96:7

96:12,20 97:10,18,19

97:21 98:2 100:6

103:2,10 109:2,5,11

109:18,20 111:16

116:15 117:11,13

119:14 129:7 131:3

131:13 135:8,8,17

144:14 145:10 146:8

148:10 154:3 159:5

159:18,19 162:4

164:13 173:16 175:20

179:9 180:7,19

181:19 182:8 188:6

189:5 198:9,14

205:10 220:13 221:14

242:9 259:20 261:21

269:17

rights 98:14

ring 253:3

ring- 44:20 148:12

ring-fencing 44:2,5,7

44:11 121:17,18

206:22 207:13 220:8

220:10 224:5

ripple 135:14

rising 88:21

risk 32:9 44:2,16 61:6

76:9 80:14 95:14

103:19 104:5,12

126:18 135:19 143:17

161:20 162:9,10

183:21 235:19 270:4

risk-sensitive 264:3

robust 122:16 125:22

154:1

Rochester 2:14

rocket 270:8

Rodgin 2:6 56:5,12

105:15 106:18 114:18

131:6,12

role 200:21 203:15

213:18 223:21 230:18

266:3

roll 50:14 175:12 178:4

rolled 63:10

rolls 49:9 60:12,20

63:21 68:22

Roman 237:1

Ronald 2:15

roof 233:12

room 1:20,20 228:14

rosy 74:2

roughly 49:17 103:22

245:15 260:16 264:7

266:14

round 22:14 53:18

170:7,13

roundtable 56:2

roundtables 55:22

routine 45:2 56:7 59:10

63:12 122:21

rule 9:8 35:19 79:7

81:10 90:4 101:6,10

101:17 102:22 105:3

108:5 126:17 147:20

161:10 171:12 236:4

236:6 242:22

rule-based 102:10

rulemaking 101:7

rules 100:18 102:18

104:16 128:2 237:10

242:22 243:8 244:1

256:14 263:14 273:11

273:18

rump 157:4,5 178:19

run 27:15 78:6 129:5,5

138:2 162:10 167:12

169:17 265:21

running 71:18 75:6

129:9 135:1 162:12

232:1 234:17,20

237:17 261:2

runs 79:1

runway 121:5 137:12

163:7 165:11 167:8

rushed 104:1

Ryan 172:7 192:1

197:22 223:19 224:9

226:22 227:14

S

S 2:19

Sachs 30:8 88:3 227:20

sacrifice 209:15

safe 241:11

safeguard 248:8 254:4

safeguarding 261:17

salable 186:3,6

sale 37:5,15 62:19

115:6,7 149:14

150:13,15 181:14

189:1 190:19 201:22

202:4

sales 37:2 159:2 178:13

184:14 185:12,12

190:12

salutary 135:12

satisfaction 18:18

230:8

satisfied 124:18,20,22

144:15,18 158:17

161:4 164:19

saw 16:14 33:12 41:14

41:14 59:13 181:18

saying 22:19 104:19

130:19 152:16 160:16

198:15 207:7 236:15

239:19 241:7 243:18

245:20 247:7 250:14

251:12 257:22 259:21

261:13 263:5 270:3

272:8 273:17 275:8

says 17:20 93:20 158:3

237:20 242:8 248:6

scale 179:5,10 182:11

182:18 183:4,5

195:10 196:12

scenario 29:21 66:16

70:17 74:3 97:15,19

111:17 113:2 139:7,8

202:13

scenarios 27:5,11

61:13 74:1,8 95:10

119:9 127:6 139:8

194:10 221:8

scene 97:22

scheduled 98:19

scheme 235:6,15

260:22 263:2,8,9

schemes 262:1

School 2:3,10,12,14,16

science 270:9

scope 179:5,10 210:20

222:8

scoping 33:20

scratch 232:11 234:11

seamless 41:22

SEC 2:9 17:21 176:4

second 28:14 45:20

61:20 71:15 114:5

141:20 156:17 201:12

233:22 253:10 261:20

secondary 249:2

seconded 231:22

Secondly 29:1 92:7

231:18

section 7:22 20:19 21:1

82:7 157:15 159:18

sections 16:13

sector 193:3

secured 262:21

securings 217:22

Securities 2:9

security 143:3 175:11

see 16:7 17:8 18:6 37:2

37:6,12 48:6,14 52:16

52:17 58:11 64:16

66:14 73:18,20 75:19

75:21 76:7,9,11 92:11

99:7 104:10 108:4

112:20 122:9 123:22

128:16 136:7,22

149:7 157:9 164:18

179:9 184:8,17 205:1

210:10 214:20 219:19

220:1,17 228:22

233:1 237:7 238:9,14

240:6 241:9 253:4,5,9

258:17 261:21 263:20

271:14

seeing 36:7 59:2

100:22 244:11 250:19

seen 21:13 75:17 79:10

79:12 110:16 120:2

123:21 124:7 136:9

255:9,10

segment 157:1 192:3

194:13 201:21 203:5

210:17 222:1

segue 58:21 110:22

148:17 191:18

self-funded 127:18

sell 74:15 178:15,16

185:20 186:4 188:20

selling-off 184:17

Senate 71:3 132:10

send 163:16 228:8

senior 2:6,9,17 23:17

34:4 49:1 76:1 78:9

85:15 100:14 211:19

228:8 243:10 244:5

senior-level 50:21

senior-most 23:15 34:7

sense 17:2 22:6,7 44:7

56:19 84:2 128:9

166:13 168:3 247:9

260:15 263:12 272:4

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sensitive 28:1

sensitivities 122:18

123:19

sensitivity 28:7 119:16

sent 14:17 31:12

sentence 144:2 178:22

separability 62:18

115:10 148:16

separate 14:19 160:8

165:18 175:18

separating 37:1 165:1

sequence 32:21 33:5

sequenced 61:15

sequencing 129:14

196:2

series 27:14 36:1,2

37:3,6 112:16 200:2

201:5

serious 91:3 174:1

seriously 55:10

served 77:9 229:21

services 11:10 115:2

226:19,21

serving 133:13

session 59:22

sessions 45:5 56:12

set 8:20 14:14 17:20

42:19 48:15,17 52:9

53:9 80:18 84:14

112:21 128:2,4,8,10

135:4 137:15 141:13

150:18 169:1 183:14

193:9 204:21 214:3

235:8 244:1 246:2

250:3 252:11 255:14

255:18

sets 22:2 58:2 68:7

84:13 130:3

setting 238:11,12

250:10

settled 267:21

settlement 96:14

226:21

setup 6:13

seven 54:9 88:17,19

90:10 122:5 227:17

severe 106:4 116:14

severely-adverse 97:19

shape 97:20 174:21

266:22

share 45:7 240:1,19,22

246:22

shared 11:10 115:2

275:5

shed 187:10

sheet 120:17 227:10

sheets 241:5

shift 143:6 163:1

shifted 275:18

shock 112:16,19

shocks 112:17

short 54:21 80:3 175:13

240:3 260:10 263:17

short-term 107:13,14

108:2,4,10,19 109:7

111:15

shortcoming 91:1,11

92:16,19

shortcomings 69:4

88:22 89:14 90:9,13

90:15 91:19 94:1

shorter 194:18

shortly 161:12

shot 172:15

show 8:2 69:21 136:1

155:7 199:3

showed 15:9

showing 179:12 183:13

shown 19:8 183:5

sibs 206:4

side 51:14 60:5 85:18

180:15,17 223:19

224:7 241:6,21

245:12 263:10 266:19

266:21,21

sides 50:9 255:5

SIF 132:17 159:14

SIFI 47:10 159:10 196:4

SIFIs 194:9 206:19

208:15

signal 163:16

signed 83:4

significant 67:10

109:16 141:9 161:20

170:19 171:4,10,16

171:19 172:5 195:16

230:4 275:16

significantly 15:16

similar 15:10 68:4

85:16 174:19 176:22

211:18 244:6 245:22

similarly-situated

57:18 68:14

Simon 2:13,15 23:9

52:15 105:19 119:2

124:5 136:15 138:14

162:14 165:3 178:21

184:12 202:20 208:20

Simon's 107:14 131:21

179:22

simple 17:14 18:13

61:22 112:14,15

172:21 258:8 271:3

simpler 83:6 150:20

simplify 47:20,22 48:10

simply 18:12,14 81:5

simultaneous 217:3,16

simultaneously 100:3

193:12 201:8 216:20

single 3:12 6:10 72:7

74:2 106:3,6 108:16

112:9 115:12 116:19

117:12 143:22 152:10

154:12 172:14 173:19

175:21 176:21 206:2

223:3 224:16 229:9

229:14 232:13,14,21

233:10,11 234:1,1

235:12,12 236:4,6

238:3 239:7 243:18

245:13 246:9 263:18

266:10 273:22 274:3

single-point-of-entry

15:11 41:11

SIPA 154:14

SIPI 176:5 177:9

sir 47:2

sit 60:4 126:14 127:1

180:13

sites 99:8

sitting 59:5 111:10

134:22

situation 22:16 190:15

193:2 213:9 255:3

256:10,21 275:17

situations 207:14

six 183:2 232:8,8

size 28:17 118:17 121:5

121:10 136:2 137:9

166:20,21 173:10

178:8,14,19 196:19

233:19 257:17

skip 138:5 149:17

slice 40:19 260:15

slide 210:7,16 250:18

253:9 257:16

slight 124:10

slightly 244:9

slippery 102:21

Sloan 2:16

slope 102:21

slowly 184:18

small 245:18,19 252:2

272:16,19

small-time 85:3

smaller 15:17,18 81:18

173:21 245:21 246:7

262:14 272:7

sold 113:15 186:7

189:14,15 218:4

solid 245:2 263:7

solution 107:11 193:3

248:12,14 257:9,11

257:12 259:4

solutions 260:21

solve 98:15 140:20

141:2 173:12 208:11

solved 58:11 68:18

238:21 247:18

solvency 176:4,9

solvent 176:12,19

177:12 258:13,13

solving 51:17 52:22

somebody 64:20

135:13 256:9

someday 135:13

somewhat 179:11

210:20

soon 135:17,20 235:1

270:14,15

sooner 106:6 167:16

sorry 22:11 30:3 55:17

105:1,15 124:5

143:15 147:11,12

240:12 259:8

sort 7:19 20:4 51:1

56:15 66:13,16 72:18

86:19 93:7 102:7

112:16 116:20,22

117:13 120:16,17

126:4 167:15 189:12

193:15 195:19 199:22

200:4 201:2,10 204:2

204:6 205:4 206:18

207:10 211:9,11,13

212:20 214:9,16

215:7 216:16 240:16

258:20 259:10,11,15

275:1

sorts 26:20 36:22

100:10 163:22 202:2

sounded 269:17

sounds 220:4 240:18

source 123:9 144:2

246:20

source-of- 107:4

source-of-strength

107:3

sources 180:4

sovereign 233:8 262:2

267:6

sovereignty 205:4,7

SP 41:11

space 154:5 212:19

215:17

Spanish 237:14

speak 48:6 85:8 100:13

Speaker 3:11

special 157:21 229:8

252:3

specific 20:12 46:11

48:7,17 51:3 53:9

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95:3 115:13 139:5

142:8 145:1 164:22

204:6 222:4

specifically 21:3 22:17

29:3 52:3 139:8

240:20

specificity 48:20

143:12

spectrum 144:21

speeches 174:4

speechless 231:3

speed 56:22 233:6

spelled 143:14 238:20

spend 48:9 211:3 249:1

spending 49:2

spent 6:13 59:19 79:15

115:20 116:4

spillover 109:19

spillovers 110:10,15

spin 178:12 188:20

spinoffs 15:17

splits 185:13

SPOE 105:8 112:15

113:18

spoke 156:1 270:14,15

spread 103:9 233:21

spreading 256:11

spreadsheets 251:7

spring 9:21

squeezed 48:1

SR 29:3

SRB 6:11,16 223:16

230:3,9,15,19 232:7

238:10 255:13

SRB's 231:21

SRM 254:1

SSM 234:4

stability 157:7 172:17

181:12,16 182:17

206:13 215:1 223:10

230:1 248:9 272:14

stabilization 121:14

155:11 160:21 216:6

stabilize 203:21 212:11

216:18 219:13 254:21

stabilizing 187:17

216:13

stable 182:8 184:11

stacks 79:19

staff 5:11 13:2 23:17

34:4,12,14 38:8 47:13

47:21 48:19 49:18

53:7 63:14 83:21 84:4

84:11 168:18 231:20

231:21,22 232:10

239:19

staff-level 60:10 83:22

staffs 224:17

stage 8:21 187:1

stages 129:14 163:5

180:21

stand 181:3

standard 9:18 60:17

182:7

standardized 17:11

19:5

standards 128:10 233:5

233:5 246:3

standpoint 35:8 38:20

45:12 56:8 57:22 59:6

71:12 99:13 118:13

118:18 125:4,6 130:6

147:16 163:21,22

202:5

standpoints 78:2

stands 236:8

Stanford 2:3

Stanley 30:10 88:6

227:20

Starke 172:8 181:11

start 36:6 130:8 134:14

139:18,19,19 163:13

164:4 172:9 192:11

192:13,15,19 193:11

222:3 231:12 232:9

233:2 235:10 257:8

started 32:1 33:6 55:19

110:18 196:3 200:13

232:11 233:7,10

234:4,6 249:15,22

250:17 255:6 261:22

starting 7:20 110:12

224:2 226:11 234:11

249:19 259:15

starts 50:7 264:10,12

startup 232:3

state 87:16 107:6

112:20 142:4 184:11

208:7 227:21 248:9

260:18 264:16,22

267:17

statements 188:12

states 2:5 39:9 43:5

74:4,16 128:7 188:8

223:6 235:18 243:8

245:1 264:2,11 267:9

267:12 273:14

status 59:12

statute 9:3 12:4 35:19

69:21 86:21 93:20

126:17 132:5 161:15

statutes 271:9

statutory 60:16 63:3

218:20 219:1

stay 158:9 162:22

173:14 176:2 242:10

247:19 273:15

stays 158:11 240:2

steal 62:10

Stearns 103:5 124:12

steeped 71:10

Steering 223:17 229:22

step 12:2 37:5,8,13

45:19 69:9,21 94:21

237:22 253:1 265:4

stepped 133:4 166:5

steps 9:20 13:16

192:19 193:14,19

211:9 221:16 263:2

stipulate 184:9

stock 172:3 178:11

stop 23:21 24:7 195:20

232:2

story 47:15 82:18 249:8

Straightforward 60:22

strained 116:16

strange 259:13

strategic 86:5 201:20

strategies 38:17 41:1

42:9 46:6 57:18 62:14

68:15 70:11 89:7

99:15,16 178:7

strategy 9:13 13:16

15:10,11 17:3 27:4

28:9 36:15 37:18 38:6

41:10,12 42:20 51:21

52:14 61:1,2 71:21

72:3 80:10 81:15

82:10 92:5,8 93:3

99:22 101:22 104:4

105:8 112:7,9,10,21

119:21 120:22 123:3

128:3 137:10 138:22

139:15 141:5,7,9

142:18 149:6 150:3

150:11 159:5 167:5

172:11 189:22 201:9

212:9,22

stream 226:7

streams 201:6 203:10

204:9 226:5

Street 1:20 87:16

227:21

strength 107:5

strengths 57:21 60:1

63:19

stress 27:7,14,15,17

36:18 95:15 125:8,8

129:18,18 137:11

139:7 141:18 163:6

167:8 180:2 240:17

stresses 27:19

striving 274:6

strong 29:14

strongly 153:2

structural 114:17

structure 9:11 11:6

13:16 17:4,5 18:4,5

51:21 52:3,10 63:7

68:1 75:13 76:7 85:6

104:8 112:22 115:3

115:11 136:2,3,3

141:13 147:20 148:14

148:20,21 149:6

150:8 151:2 152:18

153:2 179:8 180:9

182:4 194:4 197:21

236:10 241:19 249:20

251:19,20

structured 150:6

structures 19:2 135:9

153:8 250:4

struggling 58:12

Studies 2:17

stuff 116:6 198:21

204:14

subject 83:14 87:1 94:5

102:19 175:18 273:5

submission 14:20,20

50:18 51:7 85:21 89:8

94:2,7

submissions 10:1 13:1

16:18 24:9 168:6

submit 8:2 23:20 90:1

90:10

submitted 9:16 23:14

65:10 87:1,10,15

submitting 79:5 90:14

90:15

subordinated 110:4

241:14

subs 101:20 109:1,9

subsequent 73:19

166:7 216:4

subsidiaries 25:21

111:18 113:9 142:21

147:4 152:22 176:20

203:19,20 204:13

212:15

subsidiary 26:1 97:14

98:11 111:12,14

148:4,14 159:8

160:18 203:22

substance 81:2

substantial 208:2

242:21

substantially 28:2 61:5

61:10 126:18 127:5

270:7

substantive 16:22

substitutable 249:13

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succeeded 94:15

success 141:7 152:4

153:17

successful 56:1 118:6

130:9,15 131:11

successfully 138:22

successor 152:11

suddenly 159:8

sue 140:14 144:7

sufficiency 107:15

sufficient 93:18 101:19

113:8 118:4 120:22

121:1 142:12 251:21

262:17,17

suggest 31:16 49:14

106:12 136:4 145:17

161:21 167:21

suggested 142:9

162:19

suggesting 180:13

suggestion 85:11,13

suggestions 58:18

142:8 168:16

suite 228:13

Sullivan 2:6

sum 170:2 253:1

273:20

summarize 192:3

summary 82:8 83:15

86:16 211:7

summer 210:15 240:4

sunshine 256:16

supervising 233:13

supervision 35:9,9

51:14 56:15 63:1 87:2

Supervision's 32:9

supervision- 35:12

supervisor 233:12

239:14 246:20

supervisors 41:21

43:13 205:17 234:4

239:8 273:10

supervisory 29:19 50:6

56:8 81:12 83:1 130:6

212:5 229:16 233:11

235:12 236:6 239:8

245:12 250:2 266:19

supplemented 39:14

40:17

supplied 38:10

support 6:15 128:20,22

133:5,7 144:9 145:3

172:20 178:1 207:21

251:13,17

support-critical 11:11

supported 61:8 239:20

245:4

supporting 38:10

supports 199:9

supposed 43:3 103:15

114:14 191:12 270:21

sure 18:11 19:10 42:12

47:5 54:3 68:6,17

69:1 72:2 90:20 91:9

110:10 119:19 123:1

138:1 150:9,12

172:18 181:9 183:4

185:3 195:15,21

197:1 202:19 207:12

220:5,17 221:3

225:13 237:5 238:15

240:12,13 241:12

243:20 249:17 251:16

252:1,5 254:20 256:4

261:1 263:13 264:3

267:7 272:20

surely 109:20 195:13

surface 135:15

surprise 35:10 133:7

surprises 40:10

survive 121:15 142:12

143:4 153:4 215:14

suspect 18:5

swallow 264:17

swap 173:4

Swiss 224:11

Switzerland 223:7

224:9

sympathy 25:8

synced-up 149:8,22

150:3

synched-up 52:18

syncing 149:18

system 2:17 25:1 54:16

66:15 74:4 84:9 103:4

103:8,9 110:20

114:12 119:8 121:4

122:15,16 146:7

168:2 180:5 181:6,9

182:4 201:1 236:9

237:3 249:12 251:6

253:3 261:12 262:9,9

262:11,12,13 263:14

263:16 264:1,5

266:11 271:17

systemic 1:5 4:7 61:6

69:17 80:13 97:4

98:14 103:16 104:3

104:11 105:22 108:3

109:4 135:2,18

156:13 160:4,6 161:8

162:9 166:11 171:11

173:12 183:21 192:6

192:7 193:12 198:19

228:3 230:6 256:8,21

260:17,18 272:18,21

systemically 198:12,13

273:4

systemically- 174:7

systemically-important

4:16

systems 11:12 26:20

29:1 37:20 96:14

147:22 251:3 252:20

261:14

systemwide 103:10

T

tab 167:22 168:5

table 50:9 60:5 85:12

209:21 265:21

tables 84:19 154:7

tabletop 224:10,12

tabs 167:22

tactical 57:3

tag-team 32:7

tailored 38:4 52:10

193:22

tailoring 53:6

take 7:5 20:8 30:15 44:5

44:11 67:13 74:9

91:12 97:1 107:2

108:7 113:4 114:20

117:21 118:3 123:1

126:4,8 130:3,14

136:4 137:21 144:1

148:12 155:3,7 161:3

166:10 169:9,19

172:3 178:15 191:12

195:16 197:11 212:8

214:11 217:19 222:11

230:17 249:3

takeaway 153:21

taken 13:17 24:5 55:10

113:3 138:21 139:3

145:4 149:10 186:20

190:18

takes 74:11 181:9 220:9

220:11 222:17 262:7

talk 6:19 9:3 13:6 14:21

30:13 34:2 36:11,13

40:18 42:11 47:6

48:21 52:4 53:10

62:10 70:20 72:10

74:18 75:7 76:15

102:8 110:4,22

111:22 114:4 115:18

117:9 119:15 120:8,9

125:16 147:6 148:18

151:7,15,16 182:6

185:8 194:21 199:18

201:12 226:2 228:8

228:11 243:7,10,11

talked 42:22 92:10

113:20 116:13,18

119:10 121:16 123:21

146:6 160:20 163:4

164:10 203:16 239:2

252:16 265:20

talking 16:1 43:2 67:6

86:14 92:1 111:8

115:21 133:10 154:11

165:3 166:20 185:11

191:5 196:22 206:1,6

222:3 250:13 256:22

261:4 271:19

tangible 171:8

target 268:13

targeted 212:1

Tarpley 172:8 222:13

task 132:2,3

taxpayer 172:19

teacher 25:10

team 38:19 39:6,21

46:11,15 59:20 68:9

68:10 70:20 78:18

189:19

teams 39:10 40:1,4,16

41:12 45:22 46:1

57:15,20 58:22 59:10

59:11,21

technical 204:6

Technology 2:16,21

tell 18:21 19:3 21:2

95:13 124:15 126:15

127:1 209:8 219:5

268:16

telling 67:11 85:9

134:22

tells 82:17

template 232:6

tempted 271:8

ten 231:20 244:7

262:18

tend 81:1 203:14

tends 48:12

tension 214:20

term 76:12 227:10

terminate 151:12 159:3

161:17 172:19

terminated 218:8

termination 11:8 47:7

158:4,4,18,19 161:6

terms 75:3 100:11

134:2,3 146:11 147:1

171:10 198:17 200:22

201:20 213:20 215:9

224:3 226:12 240:19

terribly 171:10

test 52:17 104:20 200:1

testing 95:15 194:22

196:3 199:19

UNOFFICIAL/UNREVIEWED
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305

tests 27:14,15,17 125:8

125:8 180:2

Tetrick 172:8 176:17

192:2 195:15,18,22

197:10 199:5 201:18

202:19,22 203:3

204:18 205:14 207:10

208:1 210:11 215:2

218:22 221:3 228:5

Texas 189:13

thank 7:12 20:6 32:2

54:4 168:18 169:8

191:17 228:16 229:3

231:1,4 274:13,20

275:20,22 276:3

thanking 167:14 231:12

Thanks 20:7

theories 142:3

theory 126:6

thing 19:13 24:13 27:5

27:13 28:14 29:7,12

30:7 32:5 36:5 48:5

65:3 71:22 74:6 80:2

81:8 99:10 110:4

116:1 136:14 148:11

158:7 170:6 175:2

178:12 185:16 189:14

190:17 208:20 213:11

225:9 228:5 236:16

240:16 255:20

things 15:6 19:7 24:8

24:14 38:17 42:6 46:4

47:14,19 49:3 57:12

62:7 70:12 81:10,11

82:3 83:8,9 102:4

115:8 126:16 134:15

141:11 149:19 152:5

160:6 163:8 170:8,9

183:16 187:19 198:8

198:12 199:3,12,14

204:14 206:15 207:6

207:8 211:8 213:16

217:4 220:2 222:2

226:2 266:8 267:15

think 4:8,9 5:4,12 6:22

10:13 11:18 12:15,18

13:3,8,13 14:3 15:1,6

15:9 17:4 19:16,17

20:13 21:9,16,22 22:9

22:10 23:1,4,5,6 24:1

26:14 28:6 30:18 31:6

31:12 32:17 34:5,11

34:17 36:6,7 39:2

40:5 41:7 42:19 43:6

43:10 44:10 45:3 46:4

46:9 49:16 55:20 56:4

56:11 60:22,22 65:22

66:9 70:20 71:15

73:13,16,18,19 74:9

75:15,22 76:5,20 77:4

77:22 80:8 81:21

83:21 84:10,21 85:7

85:12 86:2,15 91:18

91:21 92:20 94:8

95:22 101:4 102:20

103:21 105:19 106:18

110:3,7,9 116:5

117:14,16 126:15

127:20 129:2 131:7

131:12,14,21 132:3

132:20,22 133:8

134:5,7 136:6 137:20

141:4 143:8,18,21

144:4,7,9,22 145:8,14

145:19,20 146:5,19

148:9 151:7,9,22

154:17,21 161:7,9,15

162:16,17 163:1

164:15,17 165:1,8

168:19,22 169:17

170:17 171:19 172:3

172:9 177:8 179:14

179:19 180:8 181:4,8

182:12 184:2,3,4,7

186:7,12 188:5

189:13 191:7 193:5

195:7,18 197:22

198:2,21 199:1,17,19

201:18 203:16 204:4

204:18 205:17 208:6

209:10 212:18 213:6

213:15,16 215:6,17

216:6 219:17 220:5

221:2,3,4,11,15

222:16,18,20 230:10

230:13,16 231:19

233:5 234:19 236:11

240:13,14 242:1,17

244:12 246:10 247:2

248:3 249:8 251:15

252:18,22 253:5

257:16 259:3 261:14

261:16 263:12 265:14

266:3,9,17 268:2

269:17 270:12 271:2

271:13 272:11 273:2

274:15 275:9,14,16

thinking 6:5 33:5 56:17

68:21 102:11,14

146:3 147:16 151:3

154:21 162:16 171:3

172:10,14 174:2,18

174:19 182:7 198:10

201:20 254:14,19

thinks 170:2 215:14

third 49:5 62:21 92:9

235:2 255:12

thirdly 11:7

THOMAS 2:7,13

Thornburg 124:12

thought 37:19 107:2

112:6 125:5 130:22

145:10,12 148:6

171:1 177:9 179:6

186:19 187:14 188:4

195:13 196:3 220:8

257:7

thoughts 168:15 275:5

thousand 82:2

threat 18:15

three 16:19 18:16 34:9

40:5 55:21 60:21 66:2

90:6 122:5 126:3

143:1 178:10 191:15

195:9 222:21 233:16

threshold 122:22

212:21 215:19

throw 111:7

THURSDAY 1:13

tide 48:7

Tier 133:21

time 17:9 18:22 19:6

28:22 32:17,18 40:9

45:6 47:19 48:8,15,17

49:2 52:21 63:15 75:6

79:15 80:21,21 83:14

85:10 91:13 98:20

105:11 114:8,9,10

115:20 116:4 117:12

119:7 122:4 125:10

130:2,5,10 132:16

138:13 141:17 142:12

142:13 146:20 151:5

165:17 167:13 169:7

172:3 175:13 177:7

181:18 187:5 190:4,6

192:15 194:20 196:8

198:9 205:22 209:15

210:6 211:4,22

219:21 221:1 222:18

231:2,11,20 234:11

235:17,22 238:1

240:18 242:16 244:7

249:1 251:10 253:6

256:15 257:20 258:6

266:13 267:15 269:5

270:15 271:22 273:3

274:9

timeframe 37:17

timeline 38:2

timelines 202:3

timely 123:1

timer 151:21

times 14:17 16:19 30:5

50:17 53:21 76:18

149:12 166:7 240:17

timing 4:4 89:11 118:4

140:4 150:1 203:20

Timo 237:19,22

title 3:3,6 4:12,13 5:19

6:1,7 7:22 42:10

43:10,20 52:7 54:19

64:18,19 66:5,6,7,8

66:11,14 69:11,11,20

70:3,5,6,9,13,16,19

70:20 71:5,6,10,10,12

71:13 72:7,8 80:11,11

94:14 95:19 96:4 97:1

97:1,6,7 100:2 101:11

108:17 109:8,9

116:19 123:6,6,8,9

128:22 129:2 130:22

131:1,4,9,10,15,16,17

131:22 133:15 145:16

154:12 158:10 159:18

166:15 169:16 170:3

172:6,11 176:2,7,19

178:2,3 181:10,11

190:2,4,10 192:9

194:1 195:19 199:8,9

202:13,14,15,21

203:7 210:21 211:3,3

215:16 221:17 225:13

228:10,10 239:3,3

270:20 271:13 272:3

TLAC 100:7 101:3

103:5 105:2 106:2,3

107:19 118:12 119:4

126:20 203:17 207:17

212:15 227:8 238:13

250:11 253:13 254:15

254:19 255:4,7,17

today 4:9,19 7:5 26:11

36:11 38:9 65:15 70:1

104:10 125:20 129:16

137:18 146:18 154:18

177:21 181:19 189:10

196:6 210:6 222:19

226:8 231:2 242:21

today's 134:6

toe 83:18

told 63:2 143:11 166:5

242:3

Tom 134:22

tool 46:2 149:1

toolbox 236:8

tools 70:4,5 174:20

193:22 240:6

top 17:18 59:5 72:13

73:3 77:20 109:8

117:2 236:2

top-down 82:21

UNOFFICIAL/UNREVIEWED
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Neal R. Gross and Co., Inc.

306

top-tier 107:22

topic 243:3 258:22

topics 237:7 252:17

total 232:9 233:15

254:9

totality 238:20

totally 131:1 189:18

231:9 255:22

touch 26:10 232:18

touched 106:10 208:21

tough 169:1

track 84:3

trade 219:15

trader 103:8

trades 155:22,22 159:1

trading 154:14 219:17

259:22

traditionally 134:10

177:15

trained 38:7

training 38:12

transaction 100:4

185:15

transactions 166:17

transfer 115:7 142:2

150:13 158:9 174:15

251:18

transferring 153:9

261:18

transformation 179:16

transformed 275:17

transition 19:11 217:6

translation 236:5

transmission 61:6

80:14 98:15 156:13

transmit 98:14

transparency 5:7 19:20

20:2 22:3 31:6,13

94:21 240:16 241:5

241:20 244:2

transparent 16:9 21:21

95:16 184:20 243:1

transparently 177:12

transpire 224:3

Treasury 200:21

treaties 206:6

treatment 260:8

treaty 205:12 206:2

207:6,8,11 208:7

triangle 263:5

tricky 272:9

tried 10:17 84:22 104:9

148:20 242:10 269:6

trigger 37:16 129:6

139:12,16 145:9,9,18

145:19 146:1 215:7

259:2 273:8

triggered 124:8

triggers 62:9 76:14

118:1 119:15 120:8

139:5,6 141:17

152:18 214:19 215:4

215:5 216:1

trillion 183:1,6

trouble 77:16 195:10

260:20

true 44:15 125:19

265:13

try 31:17 51:22 72:14

98:22 128:16 130:4

138:4 140:4,7 147:7

179:7 180:22 195:20

209:16 210:9 231:10

232:12 236:13 238:14

253:3,8

trying 51:16 60:16 68:6

81:9 83:6 85:7 128:9

129:2 130:14 150:8

169:19 208:11 219:8

219:11 220:18 224:4

243:22 252:13 260:9

Tuck 2:10

turn 7:8,18 15:7 21:11

31:21 60:7 115:17

140:19 157:16 172:6

172:7 191:22 192:2

210:16 227:14

turned 177:5

Turning 224:19

tweaking 27:22

two 8:21 15:6,7 28:19

30:11 34:18 37:8 39:3

49:14 51:1 54:12 66:2

68:7 70:12,19,22

75:19 78:2 80:8 81:21

88:1,10 101:4 119:12

122:5 126:2 128:15

133:22 151:13,18,19

155:16 158:15,16

165:18 166:3 177:18

185:9 191:15 196:11

206:6 209:2 216:14

220:16 223:15 226:2

228:1 248:4 255:5

type 39:15 193:4

194:17 215:15

types 36:9 117:9 156:1

156:2 194:7,8,9,16

199:11,14,20 202:1

209:2 213:8 221:13

221:17,21

typical 63:1

typically 34:9 76:5 78:6

U

U.S 2:8 16:8 174:1

206:2 236:17 239:2

240:15 270:19

Uh-hum 47:17 58:9

82:22 91:5 96:2 100:8

109:11

UK 41:22 206:3 208:13

223:5 224:19 255:9

255:11 271:6

ultimate 64:11

ultimately 55:20 69:5,8

120:18,19 132:4

257:17

uncertainties 187:20

188:1

uncertainty 116:16

120:16,17 187:22

242:19

underestimate 266:9

undergo 226:14 258:2

undergoing 226:18

underlying 236:21

undermine 92:5,8 93:4

underneath 35:22 36:2

236:3

underpinnings 141:5

understand 19:14

26:21 28:1 41:20

42:21 45:14 48:4,8

66:17 73:9 85:19

103:14 119:20 122:17

122:17 123:18,19

127:2 128:21 129:4

157:20 160:15 197:5

205:22 222:7 231:14

240:5 242:14 253:2

266:3 270:16 271:14

understandable 150:20

understanding 27:19

28:6 40:3 43:7 83:12

95:7 110:6 208:17

242:8 250:4 259:5

273:20,22

understandings 204:12

undertaking 5:21 6:21

unfortunate 219:18

unfortunately 226:8

244:10 247:21 255:2

258:15

uniform 244:1

union 3:10,13 6:11,13

206:5 223:6 229:10

233:3,3,22 236:2

248:10 254:1 272:22

unique 16:5 151:8

199:15

unit 39:11

United 2:5 39:9 43:4

128:7 188:8 273:14

universal 41:7,8

universe 255:13 260:12

260:15

University 2:4,10,12,13

2:14

unnecessary 18:6

unprecedented 120:1

unrealistic 10:19 24:16

243:21

unremediated 93:22

unthinkable 256:20

unwind 144:1 254:17

unwinding 263:3

unworkable 128:14

update 3:6 172:10

updated 38:15 212:2

updates 3:3 59:12

upwards 80:6 233:15

urgency 138:3

use 26:13 41:5,10 45:14

46:13 50:16 64:8 71:5

75:11 77:6 97:2

100:12,17 101:14,20

101:22 103:19 146:15

148:14 246:6,9 252:5

254:7 258:11 264:14

264:15 270:7

USG 96:5 97:13,22

206:4

usual 129:16 158:19

163:6

usually 24:22 175:17

259:16

utilizing 71:14

utmost 244:20

utter 275:12

V

vague 67:16

valid 28:15 164:8

valuable 275:7

valuation 173:3 188:21

189:8 214:14 217:14

217:15,16,17 227:5

254:10

valuations 188:13

value 179:9,10 181:6,15

186:7 188:10,17

214:22 230:13,20

values 179:18 190:5

Valukas 103:20

variable 138:13

variety 157:8

various 12:21 29:4 45:4

61:7,13,13 66:13

119:10 120:7 240:6

243:8 260:20

vast 161:12,16

UNOFFICIAL/UNREVIEWED
(202) 234-4433 Washington DC www.nealrgross.com

Neal R. Gross and Co., Inc.

307

vastly 133:1

vehicles 252:3

vein 86:14 107:21

venues 51:1

verifying 68:8

versa 30:9

version 239:21 240:3

241:7 244:4 250:11

versus 91:11 102:10

130:18 214:21 239:3

vertical 39:3,5 40:1,4

40:19 41:16 45:22

46:10 57:19 58:1,16

58:22 59:10,21 64:8

68:9

vetting 59:22

viable 129:1 177:6

189:22

vice 2:16 30:9

vicious 233:9

view 9:19 13:14 164:20

180:12 182:4 184:5

212:18,20 240:15

271:2,4,4,11

viewed 10:19 11:19

55:15 271:1

viewing 96:19

viewpoint 93:13

virtually 171:1 173:1

virtues 190:4

visibly 177:11

vision 113:18

visit 263:21

Volcker 65:14 198:2

Volcker's 65:21

voted 14:10

vulnerabilities 29:9

61:9 117:9 123:13,15

127:3,3 149:13

vulnerability 73:10

123:13

vulnerable 28:3 120:3

W

wait 140:12 189:20

240:11

waiting 191:13 238:22

waive 256:12

walk 4:19 5:2,12 49:7

111:19,20 112:6,10

141:16 148:2

walked 92:21

walks 82:9 154:18

Wall 7:16 29:11 32:14

32:14 73:13 84:18

86:14 93:12 106:18

132:20 133:2 141:3

143:16 144:6,14,20

145:17 146:1,5,9

148:8 151:21 158:2,8

158:16 160:19 161:7

162:14 164:17 165:18

Walls 59:8

WaMu 196:22 197:3

want 4:6 7:18 9:6 14:18

25:15 27:10,11 47:3

48:12 50:22 51:12

54:5,6 61:14 62:10

71:22 72:2,12 73:7

75:20 76:7,9 80:12

84:16 85:17 91:16

92:17 101:9 104:18

111:4,7 112:20 116:2

116:6 143:21 147:14

149:7 157:9 162:12

163:12 166:15,18

167:14 169:2 170:5

174:19 181:19 182:14

183:14 185:5 187:7

187:12,16 188:3

189:7 192:18 193:16

205:18 215:6 219:19

219:20,22 229:7

237:7 240:4,10

243:14 246:8,9

249:10 255:1 263:20

267:20 274:8,20

275:1,20

wanted 14:11,12 33:11

57:8 92:11 105:1

111:22 169:22 210:2

245:10 264:2 270:6

wanting 214:21

wants 205:8

war 258:7 259:19

Washington 1:21

wasn't 12:6 167:19

water 135:15

waterfall 262:21

way 16:10 22:4 24:7

30:8 33:16 34:5 40:9

52:12 53:14 55:15

59:14 60:7 63:14 64:7

67:20 68:18,21 83:2

85:20 86:13 91:21

105:10 120:5,12

129:14 130:17 134:18

147:17 148:11 151:9

154:20 157:3 161:7

165:8 171:18 173:6

177:14 182:11 184:18

186:1 217:3 221:18

240:10 247:17 248:16

252:19 255:12 259:5

263:8 268:1,3,8 272:2

272:6 275:1

ways 29:10 99:9 134:9

194:15 215:3 222:21

we'll 249:15

we're 239:18 270:15,21

271:18

we've 229:12 238:21

252:19,22 255:13

267:1 275:5

weakness 78:5,21

145:5

weaknesses 8:12 57:21

60:1 63:17 69:2 88:20

92:18,18

wear 111:11

wears 223:15

website 168:10

weeds 85:14

week 21:14 22:1 124:18

224:8

weekend 216:7,9 220:1

220:9 265:3,9

weekly 15:2 50:20

224:22

weeks 133:22 216:15

weighted 237:4

welcome 3:2 4:6 5:13

7:2 22:9 85:18 168:15

welcomed 38:11

well- 18:3 229:18

well-capitalized 177:4

183:18

well-informed 271:4

well-known 230:10

Wells 12:1,9 87:17

88:18 227:22

went 30:8,9 86:20 147:6

169:10 214:10 229:4

weren't 19:9 134:5

173:12

Wharton 2:11,12

whittled 18:22

wholesale 41:9 109:7

Wiggins' 65:17

WILLIAM 2:8

willing 33:10 142:22

204:19 209:12

willingness 54:15

wills 3:3 16:14 19:16

22:14 43:3,12 53:19

54:17 64:17 66:11

103:3 124:16 133:18

201:17,19 206:19

273:14

wind 80:14

wind- 113:14 155:18

175:6

wind-down 150:13

156:3,18,18 157:2

159:6 164:3 167:1,3

175:7,10 176:12,20

185:17,20

winding 115:14

window 16:5,6 114:11

139:15 145:11 207:3

wiped 186:22 187:8

wire 201:1

wish 16:9 17:6 206:15

wonder 259:11

wondered 58:7

wonderful 274:13

wondering 24:22

219:12

word 30:15 33:1 67:15

75:18 107:10 112:4

154:18 191:15 235:5

252:3 263:17 272:9

word-for-word 93:7

words 65:8 66:12 67:9

67:19 75:12,20

134:12 159:10 160:5

185:4 232:18 260:7

work 4:10 5:12,14,17

6:2,20 7:3,14,17 27:4

27:10,12 31:15 39:13

42:5 45:5 54:19 61:12

61:17 66:14 70:12,19

74:16 95:18,19

122:19,20 123:4,20

126:22 127:4,9

130:19 131:16 132:7

132:17 142:19 143:13

149:18 150:16 153:20

154:11 160:15 165:5

168:21 169:3,7,14

170:9 171:5 172:15

173:3 184:10 186:16

186:18 187:4 188:3

191:10 192:4 200:11

201:3,5 203:10 204:9

204:16 208:10,18

210:1,2 218:6 220:2

220:17 221:11 222:17

223:1,9,10,11 224:22

226:5,6,11 232:22

239:10 240:22 245:5

246:6,18 249:14

251:10,19 257:8

260:11 266:1,5,9,17

270:22 274:15 275:16

275:22

worked 14:21 99:22

126:6 171:6 200:16

201:1 206:10 208:4

208:16 229:12 239:19

266:2

working 6:16 62:12

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308

70:8 71:12 121:13

125:21 131:2 136:7

137:5 147:19 149:8

162:1 165:22 207:16

224:15,21 227:2,9

230:19 247:1 249:8

249:10 256:15 266:15

works 13:21 52:13,13

63:15 120:12 158:10

184:13,16 227:7

236:14

world 36:14 39:17 74:9

97:20 125:17 127:19

133:1 147:12 157:22

176:7 180:12 184:11

worlds 101:1 220:4

worried 77:12

worries 110:9,11 195:7

worry 111:9,10

worth 21:19 134:16

worthiness 243:13

worthwhile 86:16

wouldn't 56:9 134:11

147:8 177:6 190:16

208:8 240:21

wound 177:10

wrap 154:4

wrestling 188:9

write 257:5

write-downs 188:13

writing 116:5 243:7

written 103:11 204:14

wrong 115:9 183:11

256:1 273:18

X

X 41:14 46:11 67:10

125:22 138:16,17

Y

Y 41:14 67:10

Yeah 240:12 274:10

year 6:13 16:14 38:11

38:18 49:16 50:13

74:11 90:3 121:8

145:7 174:3 219:6

221:1 222:3 225:3

227:10 234:7,13

249:16 250:9 263:19

266:14

Year's 272:9

year-to-year 81:5

years 8:21 54:11,11,12

81:17 171:16 185:9

185:11 190:19 195:4

214:12 228:6 229:12

232:5 237:2 262:8

264:6 267:4

years' 244:7

yesterday 4:22 20:15

89:11

yield 244:6

York 87:16 227:19

young 266:16

Z

Z 67:10

zero 253:1

0

1

1 6:18 113:21 114:5

133:21 134:9

1,000 80:6

1,800 237:2

1:40 228:19

1:53 229:5

10 197:8 210:9

100 177:18 232:5

245:15 248:3

100- 126:21

100-page 83:15

100-percent 127:11

100,000 80:7 260:7

262:21 269:1

11.6 133:21

11:44 169:11

11:55 169:11

12:54 229:5

120 245:15

120-ish 255:21

14 1:14

14-1 29:3

150 266:14

165 69:22

165(d) 7:22 159:18

169 3:6

17th 1:20

18 185:9 242:15,21

19 77:4

1987 166:4

1st 23:21 50:18 90:2,3

90:11 93:14 94:7

170:9 234:7,8,13

263:19

2

2 114:6 183:1

2,000 79:19

2:50 276:5

20 137:15,21 232:9

2008 11:9 103:6 170:21

177:22 266:18 275:10

2011 9:8

2012 9:17 172:14 182:5

184:2

2013 9:21,21 10:11

173:17 233:4

2014 10:12,14 11:2,22

12:16 13:1 14:9,19

24:14 33:7 50:16,17

67:9 92:10,13 99:6

105:12 107:21 135:20

224:21 234:5

2015 13:6 24:9 33:13

87:10 92:14 99:8

105:6,12 107:21

135:21

2016 1:14 90:3 94:14

266:7

2017 89:9 94:7 170:9

171:22

2024 268:18

21 77:5

229 3:10

25 18:1 84:15,17 168:11

257 85:3

274 3:15

3

3,000 79:19

3,000-page 79:20

3,500 260:16

30 233:15

300 266:14

4

4 210:16

4,000 260:16

400 183:5

42 17:22

45 169:18

48 35:1

5

5 3:2

5,280 17:21 18:12

50 159:9

50-ish 257:19

500 183:5

55 268:16,21

550 1:20

5th 24:14

6

60 49:17

6010 1:20

65 50:17 53:21

7

70 257:20

75 49:17 103:22

8

8 3:3 167:22,22

9

9 57:11 167:22 168:5

9,000 83:15

9:00 1:18

9:06 4:2

90-day 90:5

90-something 206:3

98 184:12

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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 

309

Meeting of the Systemic

Resolution Advisory Committee

FDIC

04-14-16

Washington, DC

UNOFFICIAL/UNREVIEWED