2024 Supervisors Symposium

FSOC Under Trump • Bessent-led FSOC likely to de-emphasize firm designations • Congressional fixes unlikely—forget FDIC fund for servicers. • Servicer access to FHLB advances?? • Will the new team use the Servicer report as a roadmap for activities designations? • Will they be more comfortable with state-based regulation of servicers? • Connections between GSE exit plans/nonbank risks/Basel end game will be important—do banks want to reclaim the business??

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Resolution and Recovery Planning Expectations-FSOC Report • Considerable focus on RRP for large nonbank servicers • “Large servicing portfolios cannot be transferred quickly because the transfer process is inherently lengthy and complicated” • “any large nonbank mortgage servicer that failed might need to remain operational while in bankruptcy for some time to maintain critical mortgage servicing functions” • “absent sufficient liquidity just before bankruptcy, the NMC would likely only be able to sustain operations for a limited period of time” • “federal banking agencies have resolution tools to enable core operations, such as mortgage servicing by a bank, to continue in the event of a bank failure” • no servicing transfers have ever occurred at the scale of the largest current NMC portfolios; the largest ever -- ResCap BK 375B would be 9 th on the today’s list.

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