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FINANCIAL STABILITY OVERSIGHT BOARD Page 1 Minutes of the Financial Stability Oversight Board Meeting May 23, 2011 A meeting of the Financial Stability Oversight Board (“Board”) was held at 2:00 p.m. (EDT) on Monday, May 23, 2011, at the offices of the Federal Housing Finance Agency (“FHFA”). Ms. Golant, Attorney-Advisor, Office of Financial Stability, Department of the Treasury Mr. Apgar, Senior Advisor to the Secretary, Department of Housing and Urban Development MEMBERS PRESENT: Mr. Bernanke, Chairperson Ms. Schapiro Mr. DeMarco STAFF PRESENT: Mr. Treacy, Executive Director Mr. Gonzalez, General Counsel and Secretary AGENCY OFFICIALS PRESENT: Mr. Massad, Acting Assistant Secretary for Financial Stability, Department of the Treasury Ms. Caldwell, Chief of Homeownership Preservation Office, Office of Financial Stability, Department of the Treasury Mr. Pendo, Director of Investments, Office of Financial Stability, Department of the Treasury Mr. Hopkins, Special Assistant to the Acting Assistant Secretary for Financial Stability, Department of the Treasury Mr. Cuttler, Liaison Officer, Office of Financial Stability, Department of the Treasury Mr. Delfin, Special Counsel to the Chairman, Securities and Exchange Commission Mr. Lawler, Chief Economist, Federal Housing Finance Agency Mr. Ugoletti, Senior Advisor to the Office of the Director, Federal Housing Finance Agency Chairperson Bernanke called the meeting to order at approximately 2:00 p.m. (EST). The Board first considered draft minutes for the meeting of the Board on April 20, 2011, which had been circulated in advance of the meeting. Upon a motion duly made and seconded, the Members voted to approve the minutes of the meeting, subject to such technical revisions as may be received from the Members. Treasury officials then provided an update on the programs established by Treasury under the Troubled Asset Relief Program (“TARP”). Discussion during the meeting focused on the Automotive Industry Financing Program (“AIFP”); the American International Group, Inc. (“AIG”); the Capital Purchase Program (“CPP”); the Making Home Affordable (“MHA”) program and related initiatives; FINANCIAL STABILITY OVERSIGHT BOARD and the Hardest Hit Fund Initiative (“HHF”). Among the materials distributed in advance of the meeting was the monthly report issued by Treasury under Section 105(a) of the Emergency Economic Stabilization Act, which contains information concerning the programs established by Treasury under TARP and aggregate information regarding the allocated and disbursed amounts under TARP. During the meeting, Members raised and discussed various matters with respect to the effects of the policies and programs established under TARP. Using prepared materials, Treasury officials provided an update on the expected final cost of TARP programs. Treasury officials discussed with Members the results of Treasury’s daily TARP update for May 1, 2011, which showed for each TARP program the amount of funds obligated, the amount actually disbursed, repayments and income received, and any losses with regard to individual TARP investments. Officials noted that in April, four financial institutions redeemed their CPP preferred shares, generating approximately $319 million in additional revenue under the program. As part of this discussion, Treasury officials also discussed the twenty-five largest remaining CPP investments, the likely pace of future repayments, and the influence of such repayments on the ultimate return to taxpayers. Treasury officials also provided an update on the status of applications filed by CPP institutions to convert Treasury’s CPP preferred shares or subordinated debt into comparable instruments from Treasury’s Small Business Lending Fund, a nonTARP program designed to promote small businesses. Officials also updated Page 2 the Members on the status of missed dividend or interest payments by institutions participating in the CPP and Treasury’s progress in identifying candidates to serve as directors for institutions that have missed at least six payments. Using materials distributed at the meeting, Treasury officials then provided an update on the status of Treasury’s investments under the AIFP. As part of this discussion, officials reviewed Treasury’s current interest in Chrysler Group LLC (“Chrysler”), which included approximately $5.1 billion in outstanding loans, approximately $2 billion in undrawn commitments, and approximately 8.6 percent of Chrysler’s common equity. Officials noted that in April, Chrysler announced its intention to repay its outstanding loans provided by Treasury during the second quarter of 2011, subject to market and other conditions. As part of this discussion, officials also discussed Treasury’s investment in General Motors, Inc. (“GM”) and Ally Financial, Inc. (“Ally”), and the public and private options available to exit from Treasury’s investment in GM and Ally. Using materials distributed at the meeting, Treasury officials then provided the Members with an update on the investment in AIG. As part of this discussion, officials discussed the future prospects for completion of a registered public offering by AIG and Treasury, as the selling shareholder, as contemplated under the April 5, 2011, amendment to AIG’s registration statement on form S-3 with the Securities and Exchange Commission. Using materials distributed at the meeting, Treasury officials then provided FINANCIAL STABILITY OVERSIGHT BOARD an update on the MHA and other related housing initiatives, including the Home Affordable Modification Program (“HAMP”). Among the matters discussed were: the numbers of temporary and permanent modifications made under HAMP and the status of the Second Lien Modification Program, Home Affordable Unemployment Program (“UP”), and the Home Affordable Foreclosure Alternatives (“HAFA”) Program. As part of this discussion, Members and officials also discussed the supplemental directive issued by Treasury on May 18, 2011, which requires each servicer subject to the directive to establish and implement a single point of contact (“SPOC”) process through which borrowers who are potentially eligible for HAMP, UP or HAFA are assigned a relationship manager to serve as the borrower’s SPOC throughout the process for addressing and resolving situations of delinquency or imminent default. Treasury officials also discussed Treasury’s progress in implementing certain legislative changes to HAMP under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Officials noted that Treasury had recently made available to consumers an online tool designed to assist homeowners in learning about the net present value NPV evaluation of the various alternative loss mitigation approaches that might be available for their mortgage. Treasury officials then provided the Members with an update on the HHF initiative. As part of this discussion, officials reviewed the status of the programs approved under each funding of the HHF. Officials noted that approximately 70 percent of all obligated funds under the program are currently Page 3 targeted to assigning unemployed borrowers pay or reinstate their mortgages. The meeting was adjourned at approximately 3:00 p.m. (EST). [Signed Electronically] ______________________________ Jason A. Gonzalez General Counsel and Secretary
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