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Stecher at Goldman Sachs Bank USA. The letter, dated July 2, 2013, addresses a request for a transition period under Section 716(f) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Goldman Sachs Bank USA, referred to as “GS Bank,” is a New York state-chartered member bank that provisionally registered as a swap dealer with the Commodity Futures Trading Commission (CFTC) on December 31, 2012. Section 716 of the Dodd-Frank Act establishes provisions for “federal assistance” to swap entities, with certain exceptions for insured depository institutions. It also outlines requirements for the appropriate federal banking agency to permit a swap entity to engage in swap dealing activities for up to 24 months, subject to compliance with Section 716. The Board of Governors, in consultation with the SEC, is mandated to consider various factors, including the potential impact of divestiture or cessation of swap-dealing activities on the insured depository institution’s mortgage lending, small business lending, job creation, and capital formation. The letter details the considerations for granting a transition period, including mitigating operational risk and reputation risk related to GS Bank’s swaps activities, and their potential impact on mortgage lending, small business lending, and job creation. The Board has delegated authority to the Director of the Division of Banking Supervision and Regulation to establish such transition periods, up to 24 months, upon consultation with the General Counsel.",{"@graph":63,"@context":122},[64,80,101],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":41,"@type":70,"position":76},"https://docshare.wps.com/template/letters/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/federal-reserve-system-letter-goldman-sachs-bank-usa/255830/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/federal-reserve-system-letter-goldman-sachs-bank-usa/255830.png","ImageObject",442,249,{"name":88,"@type":89},"Aria Callaghan","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-10-28","2026-09-13",true,{"@type":98,"interactionType":99,"userInteractionCount":25},"InteractionCounter",{"@type":100},"ViewAction",{"@type":102,"mainEntity":103},"FAQPage",[104,110,114,118],{"name":105,"@type":106,"acceptedAnswer":107},"What is the main purpose of the letter from the Federal Reserve to Goldman Sachs Bank USA?","Question",{"text":108,"@type":109},"The letter addresses Goldman Sachs Bank USA's request for a transition period under Section 716(f) of the Dodd-Frank Act related to their registration as a swap dealer.","Answer",{"name":111,"@type":106,"acceptedAnswer":112},"What is Section 716 of the Dodd-Frank Act?",{"text":113,"@type":109},"Section 716 establishes provisions for \"federal assistance\" to swap entities and outlines requirements for federal banking agencies to permit swap entities to engage in swap dealing activities for a specified transition period.",{"name":115,"@type":106,"acceptedAnswer":116},"What factors does the Federal Reserve consider when granting a transition period?",{"text":117,"@type":109},"The Federal Reserve considers the potential impact of divesting or ceasing swap-dealing activities on mortgage lending, small business lending, job creation, and capital formation, as well as potential negative impacts on insured depositors and the Deposit Insurance Fund.",{"name":119,"@type":106,"acceptedAnswer":120},"What is the potential impact of GS Bank ceasing swap activities on mortgage and small business lending?",{"text":121,"@type":109},"Near-term cessation or divestiture might increase operational and reputation risks, which could disrupt financial markets and indirectly affect mortgage and small business lending. A 24-month transition period is seen as a way to mitigate these risks.","https://schema.org",{"og:url":78,"og:type":124,"og:title":59,"og:site_name":91,"og:description":61},"article",{"robots":126,"canonical":78},"index,follow",{"doc_id":128,"site_id":56},255830,1790196795,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":88,"user_avatar":133,"doc_module":9,"category_id":40,"category_name":41,"doc_title":59,"doc_description":61,"doc_content":60,"file_id":134,"file_url":135,"file_type":136,"file_size":137,"view_count":25,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":138,"language":139,"language_code":57,"site_id":56,"html_lang":57,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":61,"update_tm":143,"read_time":73},962084926284,"https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0","cbCaiteM85Pxn6S8","https://ap.wps.com/l/cbCaiteM85Pxn6S8","pdf",1032533,6,"English","# Background\nSection 716 is contained in Title VII of the Dodd-Frank Act, which establishes a comprehensive new regulatory framework for swaps, security-based swaps, and the markets for such instruments. An orderly restructuring of swaps-dealing activities as a result of the application of Section 716 is related to and affected by regulatory actions to implement Title VII. Development of the regulatory structure under Title VII is ongoing. The CFTC and the SEC, which have primary regulatory authority for Title VII, are actively issuing proposed and final rules, as well as guidance and exemptive orders, to implement Title VII. Although the Title VII regulatory structure is still being implemented, section 716 goes into effect on July 16, 2013.\n\nIn granting a transition period under section 716(f), the Board is required by statute to take into account and make written findings regarding the potential impact of divestiture or cessation of swaps-dealing activities on the insured depository institution’s (1) mortgage lending, (2) small business lending, (3) job creation, and (4) capital formation versus the potential negative impact on (1) insured depositors and (2) the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“the Statutory Factors”). The Board also considers other factors as may be appropriate. The Board has delegated authority to the Director of the Division of Banking Supervision and Regulation (“Director”) or his or her designee, in consultation with the General Counsel, to establish a transition period of up to 24 months for institutions requesting transition-period relief.\n\n# Consideration of the Statutory Factors and Findings\nIn establishing the appropriate transition period to effect divestiture or cessation of swaps-dealing activities, the Director has considered the statutory factors as well as the extent to which the length of the transition period would affect the potential for operational risk plus and risk associated with restructuring swaps activities. In its request for transition-period relief, GS Bank represented that it would be required to divest or cease a portion of its current swaps activities in order to comply with the provisions of Section 716. The Board of Governors of the Federal Reserve System (the “Board”) is the appropriate federal banking agency for GS Bank. Section 716(f) requires the Board to consult with and consider the views of the CFTC and the Securities and Exchange Commission (the “SEC”), as appropriate, when determining an appropriate transition period.\n\n## Mortgage Lending\nNear-term cessation or divestiture of GS Bank’s swaps activities may increase operational risk. Operational problems in swaps markets could easily disrupt broad financial markets since swaps are widely used by corporations, institutional investors, and other financial market participants. A disruption to broad financial markets could indirectly disrupt mortgage-lending markets. For instance, an insured depository institution that is novating derivatives contracts or ceasing derivatives activities may experience operational problems and be subject to reputation risk. These risks could negatively affect the insured depository institution’s ability to access capital markets or hedge its own risk. In turn, this could lead to a slowdown in the insured depository institution's own mortgage market activity and decrease in the amount of mortgage lending.\n\nDivestiture or cessation of GS Bank’s swaps activities in the short run may also pose challenges to the bank’s clients who are active in the mortgage market as investors, servicers, and originators to the extent that it could complicate the routine implementation of risk management strategies. As a consequence, counterparties could execute more quickly run up against their limits on counterparty exposure to GS Bank and its affiliates, which would likely raise the cost of mortgage lending or lead to a reduction in the amount of mortgage lending.\n\nA 24-month transition period could significantly mitigate operational risk and reputation risk by providing reasonable time for GS Bank to develop and implement an orderly transition plan. Lower operational risk, in turn, decreases the probability that cessation of GS Bank’s swaps activities would adversely affect mortgage lending.\n\n## Small Business Lending\nConsistent with the effects on mortgage lending, near-term cessation or divestiture of GS Bank’s swaps activities may pose operational risks and reputation risks that affect small business lending by GS Bank. Operational problems in the swaps market in general could also have a negative effect on small business lending.\n\nA 24-month transition period could mitigate these risks and, therefore, mitigate the risk of a financial market disruption that could impair small business lending. Lower risk, in turn, could decrease the probability of a financial market disruption that could adversely affect small business lending.\n\n## Job Creation\nIn evaluating the effects of divestiture or cessation of swaps dealing on job creation, the Director has considered the direct relationship between immediate cessation of derivatives activities and the resolution of revenues and jobs.\n\nThe near-term cessation or divestience of GS Bank’s swaps dealings has the potential to result in job losses throughout the broader economy if the bank reduced its lending and financial intermediation activities.\n\nA 24-month transition period could mitigate the potential for general market disruptions, including disruptions to credit and capital markets that could weaken job growth and have other negative macroeconomic consequences.","[{\"question\":\"What is the main purpose of the letter from the Federal Reserve to Goldman Sachs Bank USA?\",\"answer\":\"The letter addresses Goldman Sachs Bank USA's request for a transition period under Section 716(f) of the Dodd-Frank Act related to their registration as a swap dealer.\"},{\"question\":\"What is Section 716 of the Dodd-Frank Act?\",\"answer\":\"Section 716 establishes provisions for \\\"federal assistance\\\" to swap entities and outlines requirements for federal banking agencies to permit swap entities to engage in swap dealing activities for a specified transition period.\"},{\"question\":\"What factors does the Federal Reserve consider when granting a transition period?\",\"answer\":\"The Federal Reserve considers the potential impact of divesting or ceasing swap-dealing activities on mortgage lending, small business lending, job creation, and capital formation, as well as potential negative impacts on insured depositors and the Deposit Insurance Fund.\"},{\"question\":\"What is the potential impact of GS Bank ceasing swap activities on mortgage and small business lending?\",\"answer\":\"Near-term cessation or divestiture might increase operational and reputation risks, which could disrupt financial markets and indirectly affect mortgage and small business lending. A 24-month transition period is seen as a way to mitigate these risks.\"}]","FEDERAL RESERVE SYSTEM - LETTER - GOLDMAN SACHS BANK USA | PDF",1789293605]