Jump to content
House Price Crash Forum
Sign in to follow this  

U.s. Early Warning System For Financial Crises Gets Low Marks

Recommended Posts


In June 2009, a small group of academics sent an envoy to a Washington, D.C., think tank to pitch their vision for a research office to help the nation avoid the next financial crisis.

The idea was to create a premier U.S. data powerhouse that would be a National Weather Service for financial storms, with up-to-the-minute information on transactions and the analytical juice to anticipate where systemic risks were quietly growing.

Their pitch worked. The Office of Financial Research was created within the Treasury Department, part of sweeping reforms in response to the worst financial crisis in decades.

But more than three years since the passage of the 2010 Dodd-Frank law, it is struggling to stay relevant.

Its first formal study, which found possible risks posed by the activities of asset managers like BlackRock Inc and Fidelity, was panned by many as ill-informed and ripped to shreds by the industry.

The office must compete for top minds on a lower pay scale than some other agencies. And crucially, other regulators are hesitant to share data and expertise.

Even some of the office's key backers criticized its early work. The office, or OFR, needs a turnaround to avoid becoming a second-class bureaucratic operation, succumbing to regulatory turf wars and becoming unable to spot a brewing financial crisis.

"In order to be effective, OFR must have data integrity and thorough, accurate analysis," said U.S. Senator Jack Reed, a Rhode Island Democrat who drafted the legislative language that created the research unit.

Even if they get all the data they are still expecting to predict the future. That's a near impossibility you'll get maybe 70-80% of predictions coming true but that will be to luck rather than an ability to predict accurately.

Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   224 members have voted

    1. 1. Which of the Prime Minister's options would you choose?

      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.