Feb. 12, 2023
February 12, 2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-1090 Dear Sir or Madam, I am writing to express my opposition to the SR-OCC-2022-012 proposal, which aims to replace the STANS model in use since 2006 with a similar model. While I appreciate the desire to modernize and streamline our financial systems, I strongly believe that this proposal carries significant risks that have been overlooked. The most significant concern I have with the proposal is that it ignores the potential long-tail risks, such as those that caused the 2008 Global Financial Crisis. The STANS model has been in use for nearly two decades, and has proven its effectiveness in mitigating the risk of financial crises. By replacing it with a similar model, the proposal ignores the lessons we learned from the 2008 crisis and the improvements that were made to the STANS model to address these risks. In addition, the proposal relies on the assumption that the new model is "similar on average" under "typical scenarios." However, this overlooks the possibility of rare events that can cause widespread damage to the financial system. These rare events, known as "fat-tail" or "long-tail" risks, are the types of risks that can have the most significant impact on the economy. The 2008 crisis is a prime example of such a risk, and we cannot afford to ignore the possibility of similar events happening in the future. Furthermore, the proposal does not take into account the potential for changes in the financial landscape that could increase the likelihood of such long-tail risks. The rapid pace of technological and economic change means that the financial landscape could look very different in a few years, making the assumptions made in the proposal irrelevant. In conclusion, I urge the SEC to reconsider the SR-OCC-2022-012 proposal. While I understand the desire to modernize and simplify our financial systems, we must not forget the lessons of the 2008 crisis and the importance of mitigating long-tail risks. The STANS model has served us well for nearly two decades, and I believe that it would be imprudent to replace it with a model that ignores the potential for such risks. Thank you for considering my opposition to this proposal. Sincerely, Alice Oh