OFR Director Berner Discusses Filling Gaps in Data (with Lofchie Comment)

Office of Financial Research ("OFR") Director Richard Berner delivered remarks to the 2014 Financial Stability Conference, discussing the importance of filling gaps in data in order to inform policy for financial stability.

According to Director Berner, policy tools, analysis, and data are interconnected: "success in our work must begin with good data" to inform analysis to create good policy.

In order to obtain adequate data, Director Berner said the industry needs data standards and to close data gaps. He explained that it is imperative in the financial stabililty policy community to share data appropriately without compromising confidentiality, and highlighted the importance of making financial data "usable and transparent."

Additionally, Director Berner mentioned the OFR's recently released 2014 Annual Report, which identified a number of areas in which progress has been made to fill data gaps, including, among other things:

• a project with the Board of Governors of the Federal Reserve System to fill gaps in data regarding repurchase agreements, which will begin to gather data in early 2015;
• the OFR's evaluation of leverage across different hedge fund strategies, with a specific interest in sources of leverage; and
• the assessment of data in the activities of the asset management industry, particularly in separately managed accounts.

Furthermore, Director Berner mentioned areas where more work needs to be done regarding gaps in data, including:

• working with the CFTC to promote the use of data standards in swap data reporting to ensure data quality and utility; and
• universally mandating the use of the Legal Entity Identifier ("LEI") in order to, among other benefits, improve data quality for measuring and modeling counterparty networks.

Lofchie Comment: Across the entire financial industry, regulators seem to be engaged in a hasty, uncoordinated, and poorly conceived grab for "useful" information. It is time to slow down, formulate what information would actually be useful, stop collecting useless data, and develop long-range plans, with realistic timetables, as to how to collect the data that can actually be used.

See: Director Berner's Speech. Related news: OFR Issues 2014 Annual Report (with Lofchie Comment) (December 2, 2014).