Apr.HFSC Examines Office of Financial Research Budget
At a House Financial Services Subcommittee on Oversight and Investigations on April 19, Republican lawmakers expressed disappointed with the Department of Treasury’s refusal to have Richard Berner, Counselor to Treasury Secretary Timothy Geithner, testify before the subcommittee. Berner was asked by Geithner to help establish the Office of Financial Research (OFR).
Instead, Republican lawmakers grilled OFR’s Chief Operating Officer Michele Shannon on the OFR’s FY 2013 budget, the metrics used to determine the budget, the office’s goals and strategic framework, what information the OFR is collecting, and what safety measures the OFR is putting in place to protect confidential information.
Testimony
In her testimony, Shannon said the OFR plans to hire 275-300 employees within the next 24 to 36 months, with 60 percent of the staff located in the Data Center and 20 percent located in the Research and Analysis Center. The remaining staff will reside in the Office of the Director, Counsel, and Operations.
According to Shannon’s testimony, “OFR spending is projected at $109.7 million for FY 2012 and $138.2 million for FY 2013.” On July 21, 2012, the OFR along with the Financial Stability Oversight Council (FSOC) will be funded through assessments on bank holding companies with total consolidated assets of $50 billion or greater, and on nonbank financial companies designated by the Council for supervision by the Board of Governors of the Federal Reserve.
The notice of proposed rulemaking (NPR) issued on January 3, 2012, established that assessment schedule. According to her testimony, publication of the final rule is expected in May.
The OFR’s Strategic Framework, published on March 15, 2012, established five goals for the OFR: 1) Support the Council through the secure provision of high-quality financial data and analysis needed to monitor threats to financial stability; 2) Develop and promote data standards and best practices; 3) Establish a center for excellence for research on financial stability and promoting best practices for risk management; 4) Provide the public with key data and analysis, while protecting sensitive information; and 5) Establish the OFR as an efficient organization and world-class workplace.
Shannon said the pace of OFR spending is projected to increase in the second-half of this year, and the OFR will continue to “ramp-up our efforts” next year.
Question & Answer
During the question and answer session, Shannon largely avoided detailing any of the metrics used to determine the OFR’s FY 2013 budget, what information the OFR is currently looking at, what information gaps the Office is looking to fill, when the subcommittee is likely to see a “comprehensive plan” that resembles the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) budget requests, whether there is a statutory limit to the OFR’s budget, and how the OFR will achieve its objectives.
In response to a number of questions from lawmakers concerning the OFR’s strategic plans, Shannon said the OFR’s intention is to include performance measures in the FY 2014 budget.
Shannon did indicate that plans are being put into place by the OFR to protect proprietary information. She said the Office is “very focused on protecting the data” and staff is adhering to the security protocols and policies of the Treasury Department. She added that the Office is looking to establish and expand its own internal security policies and will put in place a classification system “in the coming months.”
She also mentioned that the OFR is working to build an internal structure devoted to working with regulatory committees and financial markets participants to help ensure their concerns and needs are addressed. In addition, the OFR is working with other regulatory agencies to prevent the duplication of data requests.
Asked about an amendment offered by Rep. Francisco Canseco (R-Texas) during yesterday’s House Financial Services budget reconciliation markup, which was approved by voice vote, Shannon said the OFR is working to fulfill its mission of providing data and research and analysis to the FSOC. She continued by saying the data and research provided by the OFR will be important for understanding the threats to financial stability.
In response to a question from Rep. John Carney (D-Del.), Shannon said the purpose of the OFR is to conduct research and collect data that is “necessary to fill in the gaps.” In a response to a question from Canseco, Shannon said it is the OFR’s intention to only collect data when it is “absolutely necessary,” but did not elaborate.
In a follow up question, Carney asked Shannon what the Office’s top priorities are between now and next year. Shannon said the first priority is to work with FSOC agencies to conduct an inventory of data that they already have. She added that the OFR sees its mission “only as filling in the gaps.” She added, “we’re working to figure out what those gaps are.”
Notably, when asked by Carney about U.S. exposure to the European debt crisis, Shannon said the OFR is working with FSOC and that the OFR currently has “money market fund data, and is looking at that data to look at the exposures of U.S. entities to Europe.”
Canseco also asked Shannon whether the OFR has issued subpoenas to compel financial institutions to give data to the OFR. “I don’t believe so,” she said.
For more information on the hearing, please click here.
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At a House Financial Services Subcommittee on Oversight and Investigations on April 19, Republican lawmakers expressed disappointed with the Department of Treasury’s refusal to have Richard Berner, Counselor to Treasury Secretary Timothy Geithner, testify before the subcommittee. Berner was asked by Geithner to help establish the Office of Financial Research (OFR).
Instead, Republican lawmakers grilled OFR’s Chief Operating Officer Michele Shannon on the OFR’s FY 2013 budget, the metrics used to determine the budget, the office’s goals and strategic framework, what information the OFR is collecting, and what safety measures the OFR is putting in place to protect confidential information.
Testimony
In her testimony, Shannon said the OFR plans to hire 275-300 employees within the next 24 to 36 months, with 60 percent of the staff located in the Data Center and 20 percent located in the Research and Analysis Center. The remaining staff will reside in the Office of the Director, Counsel, and Operations.
According to Shannon’s testimony, “OFR spending is projected at $109.7 million for FY 2012 and $138.2 million for FY 2013.” On July 21, 2012, the OFR along with the Financial Stability Oversight Council (FSOC) will be funded through assessments on bank holding companies with total consolidated assets of $50 billion or greater, and on nonbank financial companies designated by the Council for supervision by the Board of Governors of the Federal Reserve.
The notice of proposed rulemaking (NPR) issued on January 3, 2012, established that assessment schedule. According to her testimony, publication of the final rule is expected in May.
The OFR’s Strategic Framework, published on March 15, 2012, established five goals for the OFR: 1) Support the Council through the secure provision of high-quality financial data and analysis needed to monitor threats to financial stability; 2) Develop and promote data standards and best practices; 3) Establish a center for excellence for research on financial stability and promoting best practices for risk management; 4) Provide the public with key data and analysis, while protecting sensitive information; and 5) Establish the OFR as an efficient organization and world-class workplace.
Shannon said the pace of OFR spending is projected to increase in the second-half of this year, and the OFR will continue to “ramp-up our efforts” next year.
Question & Answer
During the question and answer session, Shannon largely avoided detailing any of the metrics used to determine the OFR’s FY 2013 budget, what information the OFR is currently looking at, what information gaps the Office is looking to fill, when the subcommittee is likely to see a “comprehensive plan” that resembles the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) budget requests, whether there is a statutory limit to the OFR’s budget, and how the OFR will achieve its objectives.
In response to a number of questions from lawmakers concerning the OFR’s strategic plans, Shannon said the OFR’s intention is to include performance measures in the FY 2014 budget.
Shannon did indicate that plans are being put into place by the OFR to protect proprietary information. She said the Office is “very focused on protecting the data” and staff is adhering to the security protocols and policies of the Treasury Department. She added that the Office is looking to establish and expand its own internal security policies and will put in place a classification system “in the coming months.”
She also mentioned that the OFR is working to build an internal structure devoted to working with regulatory committees and financial markets participants to help ensure their concerns and needs are addressed. In addition, the OFR is working with other regulatory agencies to prevent the duplication of data requests.
Asked about an amendment offered by Rep. Francisco Canseco (R-Texas) during yesterday’s House Financial Services budget reconciliation markup, which was approved by voice vote, Shannon said the OFR is working to fulfill its mission of providing data and research and analysis to the FSOC. She continued by saying the data and research provided by the OFR will be important for understanding the threats to financial stability.
In response to a question from Rep. John Carney (D-Del.), Shannon said the purpose of the OFR is to conduct research and collect data that is “necessary to fill in the gaps.” In a response to a question from Canseco, Shannon said it is the OFR’s intention to only collect data when it is “absolutely necessary,” but did not elaborate.
In a follow up question, Carney asked Shannon what the Office’s top priorities are between now and next year. Shannon said the first priority is to work with FSOC agencies to conduct an inventory of data that they already have. She added that the OFR sees its mission “only as filling in the gaps.” She added, “we’re working to figure out what those gaps are.”
Notably, when asked by Carney about U.S. exposure to the European debt crisis, Shannon said the OFR is working with FSOC and that the OFR currently has “money market fund data, and is looking at that data to look at the exposures of U.S. entities to Europe.”
Canseco also asked Shannon whether the OFR has issued subpoenas to compel financial institutions to give data to the OFR. “I don’t believe so,” she said.
For more information on the hearing, please click here.