In this report, FedFin assesses key policy issues raised in the FSOC 2013 annual report. None of it binds any of the agencies and most is a consensus view that mutes dissenting voices. Nevertheless, it provides insight not only into the threats FSOC sees, but also into Treasury’s view of potential Administration and policy responses. The focus in the report on MMF reform is unsurprising, but the call here also for comparable rules for competing cash-management products lays out potential standards on which the banking agencies act as the MMF issue moves toward resolution. Speaking of which, the FSOC presses the FRB and FDIC to take a strong stand on pending resolution plans, presumably doing so to reinforce the Administration, FRB and FDIC view that Dodd-Frank meaningfully addresses TBTF. The report also includes an extensive discussion of operational risk, much of it sparked by Super-Storm Sandy, that reinforces ongoing work at the SEC and OCC and, we suggest, points to additional standards in the works on contingency planning and related issues. Interest-rate risk is mentioned without clear specific policy responses, as is the need for housing-finance reform.

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