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Minutes of the Financial Stability Oversight Council
Held April 18, 2016
PRESENT:
Jacob J. Lew, Secretary of the Treasury and Chairperson of the Financial Stability Oversight
Council (Council)
Janet Yellen, Chair, Board of Governors of the Federal Reserve System (Federal Reserve)
Martin J. Gruenberg, Chairperson, Federal Deposit Insurance Corporation (FDIC)
Mary Jo White, Chair, Securities and Exchange Commission (SEC)
Timothy Massad, Chairman, Commodity Futures Trading Commission (CFTC)
Richard Cordray, Director, Consumer Financial Protection Bureau (CFPB)
Melvin Watt, Director, Federal Housing Finance Agency (FHFA)
Thomas J. Curry, Comptroller of the Currency, Office of the Comptroller of the Currency (OCC)
Debbie Matz, Chairman, National Credit Union Administration (NCUA)
Roy Woodall, Independent Member with Insurance Expertise
Richard Berner, Director, Office of Financial Research (OFR), Department of the Treasury
(nonvoting member) (via telephone)
Michael McRaith, Director, Federal Insurance Office, Department of the Treasury (non-voting
member)
John P. Ducrest, Commissioner, Louisiana Office of Financial Institutions (non-voting member)
Adam Hamm, Commissioner, North Dakota Insurance Department (non-voting member)
Melanie Lubin, Securities Commissioner, Maryland Office of the Attorney General, Securities
Division (non-voting member)
GUESTS:
Department of the Treasury (Treasury)
Sarah Bloom Raskin, Deputy Secretary of the Treasury
Antonio Weiss, Counselor to the Secretary
Patrick Pinschmidt, Deputy Assistant Secretary and Executive Director of the Council
Mark Kaufman, Counselor to the Deputy Secretary
Eric Froman, Deputy Assistant General Counsel for the Council
Board of Governors of the Federal Reserve System
Daniel Tarullo, Governor
Nellie Liang, Director, Office of Financial Stability Policy and Research
Federal Deposit Insurance Corporation
Jason Cave, Special Advisor to the Chairman for Supervisory Matters
Securities and Exchange Commission
Nathaniel Stankard, Deputy Chief of Staff

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Commodity Futures Trading Commission
Lawranne Stewart, Special Counsel
Consumer Financial Protection Bureau
Ron Borzekowski, Assistant Director for Research
Federal Housing Finance Agency
Sandra Thompson, Deputy Director, Division of Housing Mission and Goals
Comptroller of the Currency
Jennifer Kelly, Senior Deputy Comptroller for Bank Supervision Policy and Chief National Bank
Examiner
National Credit Union Administration
Ralph Monaco, Chief Economist
Office of the Independent Member with Insurance Expertise
Diane Fraser, Senior Policy Advisor
Federal Reserve Bank of New York
William Dudley, President and Chief Executive Officer
Office of Financial Research
Stacey Schreft, Deputy Director for Research and Analysis
Federal Insurance Office
Steven Seitz, Deputy Director (Financial Stability)
Louisiana Office of Financial Institutions
Margaret Liu, Senior Vice President & Deputy General Counsel, Conference of State Bank
Supervisors
North Dakota Insurance Department
Mark Sagat, Counsel and Manager, Financial Policy and Legislation, National Association of
Insurance Commissioners
Maryland Office of the Attorney General, Securities Division
Christopher Staley, Counsel, North American Securities Administrators Association
PRESENTERS:
Annual Report
• Trent Reasons, Director of Analysis, Treasury
• Erik Heitfield, Assistant Director, Research and Statistics, Federal Reserve
Update on Review of Asset Management Products and Activities
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•
•
•

Patrick Pinschmidt, Deputy Assistant Secretary and Executive Director of the Council,
Treasury
Charles Cohen, Deputy Director of Analysis, Treasury (available for questions)
Lyndsay Huot, Deputy Director of Policy, Treasury (available for questions)

Executive Session
The Chairperson called the executive session of the meeting of the Council to order at
approximately 4:32 P.M. (EDT). He outlined the meeting agenda, which had previously been
distributed to the members together with copies of the resolutions and other materials. The
agenda for the executive session of the meeting included the Council’s 2016 annual report.
The Chairperson began by acknowledging that this was the last Council meeting for the
Chairman of the NCUA, Debbie Matz, and he thanked her for her service.
The Chairperson then noted the decision, issued March 30, 2016, of the U.S. district court for the
District of Columbia rescinding the Council’s final determination regarding MetLife, Inc. under
section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The
Chairperson noted that the government was appealing the decision, which he said misinterprets
the Council’s interpretive guidance.
1. 2016 Annual Report
The Chairperson then introduced the first agenda item, the Council’s 2016 annual report to
Congress. The Chairperson introduced Trent Reasons, Director of Analysis at Treasury, and
Erik Heitfield, Assistant Director for Research and Statistics at the Federal Reserve. Mr.
Reasons provided an update on the status of the drafting of the annual report, and noted that the
draft report remained under review by staff of Council members and member agencies.
Members of the Council then asked questions and had a discussion, including regarding the
presentation of certain risks in the report.
2. Other Business
The Chairperson then noted that the Council would be voting during the open session of the
meeting on the Council’s public update regarding asset management products and activities. He
thanked the Council members for their work on the update. He also noted that the Council’s
assessment of certain potential risks arising from asset management products and activities
would benefit from additional information and analysis, and called upon Council member
agencies to participate in the ongoing analysis.
The Chairperson then called on Antonio Weiss, Counselor to the Secretary at Treasury, to
provide an update on Puerto Rico. Mr. Weiss noted that Puerto Rico began defaulting on certain
of its obligations in December 2015 and that the next large payment, by the Government
Development Bank, was due on May 2. He explained that Treasury was working with Congress
on a legislative solution to Puerto Rico’s difficulties. The Chairperson noted that the situation in
Puerto Rico is dire.
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The Chairperson adjourned the executive session of the meeting at approximately 4:50 P.M.
(EDT).
Open Session
The Chairperson called the open session of the meeting of the Council to order at approximately
5:00 P.M. (EDT). The agenda for the open session included: (1) an update on the Council’s
review of asset management products and activities; and (2) consideration of, and a vote on,
resolutions approving the minutes of the Council’s meetings on March 2, 2016, and March 21,
2016.
1. Update on Review of Asset Management Products and Activities
The Chairperson introduced the first agenda item, an update on the review of potential risks to
financial stability arising from asset management products and activities. He noted that the
Council’s work on asset management underscores the importance of the Council’s mission. The
Chairperson noted that the Council’s most fundamental duty is to monitor potential risks and
emerging threats to financial stability, and he stated that this work only can be achieved by
bringing the entire regulatory community together. He noted that, before the financial crisis, no
single entity had this responsibility, and excessive risks grew within regulatory gaps and across
markets. He said that the Council was created to give its members the collective responsibility to
address emerging risks before they threaten the financial system and damage the economy.
The Chairperson said that the Council did not begin its work with pre-determined outcomes but
with a recognition that the asset management industry is a significant and growing segment of
the U.S. financial system. He said that the Council has a responsibility to understand the
potential implications for financial stability as markets evolve. He noted that the Council has
focused on issues and questions that are being studied by market participants, academic experts,
and other market observers as they seek to understand and manage risk in a changing world. He
also noted that the Council has an interest in well-functioning markets that promote stable
economic growth, particularly in times of stress.
The Chairperson said that the update that the Council would vote on at this meeting is not a
rulemaking but rather the Council’s collective view on key areas of potential risks. He explained
that Council members have consulted and worked closely with each other and harnessed the
extensive analytical resources of their expert staffs. He emphasized that the Council has
conducted outreach to the asset management industry and market observers to inform its
analysis, including holding a public conference and issuing a request for public comment.
The Chairperson noted that the Council benefited greatly from the expertise of many of its
member agencies in this analysis, particularly the insights of Chair White and the SEC staff. He
noted that the SEC is engaged in important rulemaking initiatives affecting the asset
management industry in a number of the areas explored in the Council’s review, and that the
Council welcomes these initiatives by the SEC. He said that it is important that the work of the
Council and the work of the other regulators are complementary.
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Finally, the Chairperson expressed the importance of the Council continuing to lead the
international regulatory conversation in this area. He said that the Council’s work represents a
domestic consensus on potential risks to financial stability from asset management products and
activities.
The Chairperson then highlighted the two risk areas emphasized by the Council’s analysis—
liquidity and redemption risk, and risks related to leverage. He said that the Council’s analysis
indicates that financial stability concerns may arise from liquidity and redemption risks in pooled
investment vehicles, in particular in mutual funds, and that the Council has laid out a number of
important policy steps that should be considered. He said that these are important steps to help
regulators and investors better understand, monitor, and mitigate potential financial stability
risks.
With respect to leverage, the Chairperson said that the Council has not concluded that the use of
leverage by private funds currently presents financial stability risks. He noted that, overall, the
use of leverage in the financial system has decreased dramatically since the crisis and that
leverage among hedge funds does not appear high on average, but that, by several measures,
leverage appears to be concentrated in large funds. He said, however, that greater leverage does
not necessarily imply greater risk, and many other factors need to be considered. He noted that
individual regulators do not have a complete picture of the risks being taken. He stated that the
need for further analysis and information sharing is clear, and that the Council plans to create a
working group composed of experts from the relevant Council member agencies to address the
questions identified by the Council’s initial review.
The Chairperson then asked Patrick Pinschmidt, Deputy Assistant Secretary and Executive
Director of the Council at Treasury, to discuss the details of the asset management update. Mr.
Pinschmidt started by describing the Council’s work to date. He recounted how, in May 2014,
the Council hosted a public conference on asset management that brought together a diverse
group of industry and non-industry participants that helped shape the Council’s initial approach
to its work. He said that after the conference, the Council undertook a more focused analysis of
potential risks related to industry-wide products and activities across the asset management
sector. He then noted that in December 2014, the Council issued a notice for public comment
regarding a broad array of potential risks, as well as existing risk management practices.
Mr. Pinschmidt said that the engagement with market participants and other stakeholders had
contributed greatly to the Council’s work. He said that the Council’s focus has been on potential
risks to financial stability, rather than investment risk, which is a normal and necessary part of
market functioning. He explained that the Council has been focused on assessing whether asset
management products or activities could create, amplify, or transmit risk more broadly in the
financial system in ways that could affect U.S. financial stability.
Mr. Pinschmidt then outlined the five areas of the Council’s proposed public update on asset
management products and activities: (1) liquidity and redemption; (2) leverage; (3) operational
risks; (4) securities lending, and (5) resolvability and transition planning. He said that liquidity
and redemption risk and leverage were the key areas of focus by the Council.
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Mr. Pinschmidt said that, for each of the five areas, the Council had reviewed potential risks to
financial stability and considered the materiality of such risks and potential mitigants, including
the extent to which market practices or regulations may address the risks. He said that,
throughout this process, the members of the Council had consulted extensively and had drawn on
the expertise of their staffs and those of the member agencies and that the Council considered
many sources of information, including publicly available data, data reported on the SEC’s Form
PF, analyses from market participants, academic studies, and information submitted in response
to the Council’s request for public comment. Mr. Pinschmidt also noted that the Council’s
review recognized that the SEC had issued several proposed rules since May 2015 affecting the
asset management industry. He said that, as the SEC rulemakings progress, the Council intends
to monitor the effects of any regulatory changes and their implications for financial stability.
Mr. Pinschmidt then noted that the Council’s review of liquidity and redemption risk focused on
pooled investment vehicles. He explained that there are two primary features of these
investment vehicles—liquidity transformation and first-mover advantage—that may raise
potential financial stability concerns, particularly during times of market stress. He then outlined
the six steps that should be considered as ways to help mitigate these financial stability risks.
First, robust liquidity risk management practices for mutual funds should mitigate the risks of
potential deterioration in the liquidity of fund assets, particularly with regard to preparations for
stressed conditions by funds that invest in less-liquid assets. Second, clear regulatory guidelines
addressing limits on mutual funds’ ability to hold assets with very limited liquidity should be
considered. Third, enhanced reporting and disclosures by mutual funds of their liquidity profiles
and liquidity risk management practices would help mitigate financial stability risks. Fourth,
taking steps to allow and facilitate mutual funds’ use of tools to allocate redemption costs more
directly to investors who redeem shares should help reduce first-mover advantage and mitigate
the risk that less-liquid asset classes would be faced with widespread sales under stressed
conditions. Fifth, additional public disclosure and analysis of external sources of financing for
mutual funds should be considered. Finally, regulators should consider whether these measures
are appropriate for reducing potential liquidity risks in collective investment funds and similar
pooled investment vehicles subject to their respective jurisdictions.
Mr. Pinschmidt said that the next area the Council focused on was leverage, among both
registered funds and private funds. He said that the Council’s primary focus was on private
funds. He noted that, on average, the use of leverage by private funds is not particularly
elevated, but that the use of leverage appears to be concentrated in larger funds. He said that
fully evaluating these issues requires additional analyses, involving more and better data.
He also noted that available measures of leverage are imperfect, and that the relationship
between a hedge fund’s level of leverage and risk, and whether that risk may have financial
stability implications, is highly complex. He said that differences in investment strategies,
counterparties, asset classes, hedging, and financing terms all play a critical role in understanding
hedge fund risks. He said that while hedge fund reporting on Form PF has increased
transparency to regulators on the use of leverage, the data do not provide a complete picture of
risk-taking.

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Mr. Pinschmidt noted that hedge funds and their counterparties are supervised or regulated by
multiple agencies with various jurisdictions, meaning that no single regulator has a complete
window into the risk profile of funds, which limits the Council’s ability to assess potential risks
to financial stability from these activities. He said that the Council is therefore creating an
interagency working group that will share and analyze relevant regulatory information in order to
better understand hedge fund activities and further assess whether there are potential risks to
financial stability. He said that the working group will also assess the sufficiency and use of
regulatory data to evaluate the extent and types of leverage employed by hedge funds and will
consider potential enhancements to this data as well as the establishment of standards governing
the measurements of leverage. Mr. Pinschmidt said that the working group will seek to provide
findings to the Council by the fourth quarter of 2016. He explained that if risks to financial
stability are identified, the Council intends to (1) determine what actions can be taken by
regulators using existing authorities; (2) assess whether existing regulatory and supervisory tools
are sufficient to address such risks, and (3) consider whether additional authorities may be
needed for market regulators or other supervisory agencies.
With respect to the other three areas of the Council’s analysis, Mr. Pinschmidt said that the
review of operational risks focused on the potential for a disruption or failure of a service
provider or the provision of a flawed service resulting in broader transmission of risk. He said
that the Council believes further analysis is appropriate and will seek continued engagement with
industry participants and other stakeholders to develop a greater understanding of service
providers, their operating infrastructure, and the measures used by asset managers to mitigate
these potential risks.
Mr. Pinschmidt said that with respect to securities lending, more comprehensive information on
securities lending is necessary to assess potential risks. He stated that, in addition to encouraging
a number of data enhancements, the Council encourages improved and regular data collection
and reporting, interagency data sharing, and additional engagement with international
counterparts.
With respect to resolvability and transition planning, Mr. Pinschmidt said that the Council
identified certain potential risks and steps to address such risks in the context of its analysis of
liquidity and redemption risks and leverage. He noted that SEC staff are developing a proposed
rule for consideration by the SEC that would require registered investment advisers to create and
maintain transition plans that address, among other things, a major disruption in their business.
After the presentation, the Chairperson recognized other Council members who had comments.
Mary Jo White, Chair of the SEC, expressed her support for the publication of the Council’s
update and commended the transparency and the work of the staff that led to the update. Chair
White stated that the Council’s work on this topic is complementary to the regulatory reforms the
SEC is currently undertaking. She noted that the SEC has been the primary regulator of the vast
majority of the asset management industry since 1940 and highlighted the SEC’s pending
initiatives to modernize and enhance its asset management regulatory regime. She noted that
SEC rule proposals regarding enhanced reporting of data, liquidity risk management, and use of

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leverage are outstanding and that she expected proposals on transition planning and stress testing
to follow.
Chair White said that, although there is overlap in the topics covered in Council’s update and the
SEC’s proposed reforms, it should be understood that the SEC’s analysis of asset management
issues is set forth in the SEC’s proposals. She stated that the SEC, in developing final
regulations, will consider and rely on its analysis of the input received from the public. She
stated that the Council update should not be read as an indication of the direction that the SEC’s
final asset management rules may take.
Chair White said that the Council views set forth in its public update describe certain relevant
principles and next steps for consideration. She stated that the exercise had also highlighted
other important issues not within the SEC’s jurisdiction, including the interaction of asset
managers with other financial institutions, the use of economic substitutes across the industry,
and the behavior of market participants before and after the financial crisis. She noted that
careful examination of these and other issues by both the Council and relevant regulators is
important for analyzing risks to financial stability and the materiality and likelihood of such
risks. She commended the work of the staff and that stated that she looked forward to continued
collaboration with her colleagues on the Council.
The Chairperson then turned to Janet Yellen, Chair of the Federal Reserve. Chair Yellen began
by stating that she supports the Council’s public update. She noted that in recent years the asset
management industry has expanded its role in providing credit to the economy and that some
products and activities have become more complex. She stated that the Council’s update
highlights several areas where these developments could create risks to financial stability. She
stated that an important risk pertains to funds that in recent years have developed a greater
mismatch between the liquidity of the assets they hold and the liquidity offered to shareholders.
She said that such mismatches increase the incentives for fund investors to redeem ahead of
others. She stated her belief that the steps described in the Council’s update should be
considered to reduce the mismatch and any first-mover advantage in order diminish the
likelihood of broad market disruptions that could arise from sales of less-liquid assets by funds
that are forced to meet large and widespread redemptions.
Chair Yellen also observed that some registered funds have increased their use of leverage,
including through derivatives, in ways that are not transparent. She noted that the SEC has taken
several important steps related to liquidity risks and leverage, and that steps to improve reporting
risk management practices are the foundation for any efforts to mitigate potential risks to
financial stability. Chair Yellen stated that she supports the creation, under the Council’s public
update, of an interagency working group to study private funds that appear to have significant
leverage, stating that the group should seek to improve the systematic analysis of regulatory
information that is collected by the agencies for different purposes and that the aim should be to
better assess potential systemic risks from these funds. She added that as the asset management
industry has grown, it is important for the Council to continue to evaluate potential risks to
financial stability arising from increased reliance on a small number of service providers. She
said that this effort highlights that as financial intermediation practices have expanded and
become more interrelated, some practices that create risks do not fall within the scope of any
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individual regulatory agency. She said that the Council is positioned to facilitate cross-industry
efforts and a system-wide approach, which is important to identifying and mitigating emerging
risks in the financial system.
The Chairperson then turned to Martin Gruenberg, Chairperson of the FDIC. Chairperson
Gruenberg Gruenberg said that he supported the issuance of the Council’s public update. He
noted that the asset management industry has grown in size and importance in recent years,
becoming more consequential to the financial markets and the broader economy. He said that, as
of December 2014, U.S. pooled investment vehicles, excluding money market mutual funds, had
approximately $25.8 trillion of assets. He said that to mitigate liquidity risks, mutual funds
should consider adopting risk management practices that incorporate the impact of stress
conditions on less-liquid assets. He also said that the establishment of regulatory guidelines
establishing limits on less-liquid assets should be considered.
Chairperson Gruenberg then said that the Council also focused on the potential risks to U.S.
financial stability associated with leverage in certain investment vehicles. He said that one area
that bears further analysis is the use of leverage by hedge funds. He said that the Council’s
public update notes that many hedge funds use relatively small amounts of leverage but that
large hedge funds tend to use more leverage than smaller funds. He said that he supports the
creation of the Council’s interagency working group that will share and analyze regulatory
information in order to assess potential risks to financial stability.
Timothy Massad, Chairman of the CFTC, then stated that he supports the issuance of the
Council’s public update and thanked the staffs of the member agencies for their efforts. He
endorsed the update’s suggestion that the Council study further the use of leverage, particularly
by hedge funds. He said that the issues raised by the update regarding leverage are particularly
relevant to the work of the CFTC because of the role of derivatives, noting that, while the CFTC
does not regulate hedge funds, it is responsible, along with the SEC, for derivatives regulation.
Chairman Massad said that the first challenge is in determining the metrics the Council should
use to measure leverage. He said that, as the Council’s public update notes, no good metric for
leverage in this context is available. He noted that the leverage metrics cited in the update may
not indicate the levels of underlying risk. As an example, he described gross notional exposures,
which include derivatives, but not in a manner that measures risk or that takes into account
factors that affect risk, such as product type, offsetting positions, whether a transaction is cleared,
and whether margin is collected. He said that to analyze the implications of leverage, the
Council needs to take into consideration these and other critical market structure details.
Chairman Massad said that the CFTC made a preliminary analysis of the data it collects to
identify hedge funds with the largest derivatives exposures, finding that most of the exposure
relates to cleared derivatives. He said that the funds generally had extremely low levels of
uncleared derivatives and that the counterparties were typically large registered swap dealers
Chairman Massad also highlighted that the swaps marketplace is changing. He noted that the
CFTC now requires clearing of most swaps and reporting of all swaps. He said that the CFTC is
implementing margin requirements for uncleared swaps between swap dealers and large
financial institutions and that trading on swap execution facilities is increasing. He said that
9

these steps have brought greater transparency to this market and a greater ability to address risk
and that these and other regulatory reforms, taken together with other changes in the
marketplace, may be contributing to increased derivative activity by hedge funds and other asset
management firms.
Chairman Massad stated that the first step is to work with and improve the data the Council
member agencies are now collecting to help transition from an emphasis on collecting historical
data on past quarterly periods to something closer to real-time analysis of exposures across
cleared and uncleared positions. He said that this will take time but that this is work is necessary
to assess potential risk to the financial system.
The Chairperson then turned to Chairman Matz. Chairman Matz thanked the staff of the Council
member agencies who have worked on this issue. She expressed her agreement with the
statements of the other Council members. She said that the Council’s public update shows that
the Council has moved carefully, based on the comments of industry participants and academics
and the expertise of the Council members. She highlighted that there are still data gaps, and that,
with respect to leverage, the Council has taken a serious but preliminary look at leverage in
hedge funds and realized that it needs additional information. She noted that the Council’s
creation of the hedge fund working group to collect all available regulatory data on hedge funds
will assist in tracing the interconnections hedge funds have with other parts of the financial
sector. She noted that the Council’s public update is a progress report and that there is still more
to consider.
Thomas Curry, Comptroller of the Currency, then thanked the staff of the Council member
agencies for their hard work. He called the Council’s public update an important step in the
process of identifying financial stability risks and developing options for addressing those risks.
He noted that a key recommendation is the creation of an interagency working group that will
focus on hedge fund activities that might pose risks to financial stability. He said that the group
is expected to examine regulatory and supervisory data to evaluate the use of leverage by these
funds, assess the sufficiency and accuracy of existing data, and consider how the data might be
augmented to improve the Council’s ability to evaluate risks to financial stability.
Comptroller Curry noted that that collective investment funds were of particular interest to the
OCC. He said that, as the regulator of many of these funds, the update goes a long way in
clarifying the differences and similarities between collective investment funds and other pooled
investment vehicles, such as mutual funds, including that collective investment funds cannot be
accessed by retail investors or intuitional money managers and that there are restrictions on how
collective investment funds are advertised. He said that the vast majority of the assets in these
funds are retirement savings that tend to pose less liquidity and investment risk than other
investments but that the OCC will continue to focus on liquidity and leverage issues that may be
associated with these funds and is closely following developments at the Council in this area.
The Chairperson then turned to Michael McRaith, Director of the Federal Insurance Office.
Director McRaith thanked the staff who had worked on the Council’s public update. He said that
the work of the Council in this area underscores the importance of collaboration among the

10

Council members. He noted that this work is relevant to the insurance sector and that he strongly
supports the views in the update.
The Chairperson then turned to Richard Cordray, Director of the CFPB. Director Cordray
thanked the staff for their work on the Council’s public update. He noted the importance for the
Council to continue to make progress regarding potential risks. He stated that the creation of the
hedge fund working group was important, because no single regulator has a complete window
into the risk profile of hedge funds, and that the ability to assess risks and mitigants is
constrained by data limitations. He expressed his support for the Council’s public update.
The Chairperson then presented to the Council the following resolution approving the
publication of the Council’s public update on asset management:
“WHEREAS, section 112 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
provides that the purposes of the Financial Stability Oversight Council (the “Council”) are to
identify risks to the financial stability of the United States that could arise from the material
financial distress or failure, or ongoing activities, of large, interconnected bank holding
companies or nonbank financial companies, or that could arise outside the financial services
marketplace; to promote market discipline, by eliminating expectations on the part of
shareholders, creditors, and counterparties of such companies that the government will shield
them from losses in the event of failure; and to respond to emerging threats to the stability of the
United States financial system; and
WHEREAS, in May 2014, the Council hosted a public conference on asset management; and
WHEREAS, in July 2014, the Council directed staff to undertake a more focused analysis of
industry-wide products and activities to assess potential risks across the asset management
sector; and
WHEREAS, in December 2014, the Council published a notice seeking public comment
regarding whether and how certain asset management products and activities could pose
potential risks to U.S. financial stability; and
WHEREAS, the Council and the staffs of the Council members and of their agencies have
analyzed potential risks to financial stability that may arise from certain asset management
products and activities; and
WHEREAS, the members of the Council have consulted extensively and have drawn on the
expertise of their staffs and the staffs of their member agencies with respect to the Council’s
evaluation of potential risks to financial stability that may arise from certain asset management
products and activities; and
WHEREAS, the staffs of the Council members and of their agencies have prepared the “Update
on Review of Asset Management Products and Activities” attached hereto (the “Asset
Management Update”).

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NOW, THEREFORE, BE IT RESOLVED, that the Council approves the Asset Management
Update and authorizes the Chairperson, or his designee, to cause the Asset Management Update
to be published on the Council’s website, in a form and manner acceptable to the Chairperson or
his designee, and to otherwise make it available to the public as the Chairperson deems
appropriate; and
BE IT FURTHER RESOLVED, that the Council hereby delegates authority to the Chairperson,
or his designee, to make technical, nonsubstantive, or conforming changes to the text of the Asset
Management Update and to take such other actions as they deem necessary or appropriate to
fulfill the Council’s objectives in connection with its publication.”
The Chairperson asked for a motion to approve the resolution, which was made and seconded.
The Council approved the resolution by unanimous vote.
2. Resolutions Approving the Minutes of the Meetings Held on March 2, 2016 and March
21, 2016
“BE IT RESOLVED, by the Financial Stability Oversight Council (the “Council”), that the
minutes attached hereto of the meeting held on March 2, 2016 of the Council are hereby
approved.”
“BE IT RESOLVED, by the Financial Stability Oversight Council (the “Council”), that the
minutes attached hereto of the meeting held on March 21, 2016 of the Council are hereby
approved.”
The Chairperson asked for a motion to approve the resolutions, which was made and seconded.
The Council approved the resolutions by unanimous vote.
3. Other Business
The Chairperson then noted that this was the last meeting of the Council that Chairman Matz
would be attending, and thanked her for her service. Chairman Matz said that the Council had
sent a strong message that the era of “too big to fail” is over. She said that the Council has
promoted greater collaboration across financial regulators and has been careful to seek out
industry opinions and academic research and consider a wide range of views. Chairman Matz
also noted that the Council’s public update on asset management highlights the risks to that
sector from service providers. She noted that the NCUA does not have the authority to oversee
third-party service providers, and that this inability was a regulatory blind spot. She thanked the
Council for its support in closing this loophole. She stated that she believed the Council’s
actions will mitigate the likelihood of another financial crisis. She concluded that the Council
must not lose sight of the need to protect jobs and businesses on Main Street by providing
effective oversight of Wall Street, and she encouraged the Council to remain steadfast in this
objective.
The Chairperson adjourned the meeting at approximately 5:38 P.M. (EDT).

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102