U.S. Congress and Executive Branch Agencies
United States of America

Recent catastrophic events in financial markets contributed to the worst economic and financial crisis experienced by the United States since the Great Depression. This crisis has revealed significant shortcomings with respect to the legal tools available to financial policy makers. Much of the ensuing debate on regulatory reform, including the recent proposal by the Obama Administration, has focused on reorganization of the regulatory structure and the needed authorities.

Missing from this discussion, however, is a serious and detailed examination of the significant gaps in the informational infrastructure — data and analytic tools — available to regulators and policymakers, which were revealed by these events. Without this infrastructure, decision makers who are charged with safeguarding the health of the financial system are largely flying blind, hence severely restricting their ability to use their granted authorities effectively.

The National Institute of Finance (NIF) would develop that missing infrastructure, bringing the mandate, resources, and capability to address current deficiencies. In addition to filling current regulatory gaps, it is estimated that the creation of this infrastructure, in particular the standardization of data, would save the industry billions of dollars annually.

Purpose: The National Institute of Finance would have the authority to gather appropriate data and provide the analytical capabilities necessary to monitor systemic risk, to perform independent risk assessments of individual financial entities, and to provide advice on the financial system to the Federal regulatory agencies and the United States Congress. The NIF would be a Government entity and resource for the regulatory community and would not overlap or duplicate existing or proposed oversight and enforcement responsibilities of existing regulatory agencies.

Funding: The NIF would be funded through non-appropriated funds by assessments placed on data-reporting entities.

Responsibilities: The NIF would have two principle organizational components: The Federal Financial Data Center (FFDC), and the Federal Financial Research and Analysis Center (FFRAC).

1) The Federal Financial Data Center: The FFDC would collect, clean, maintain and secure all data necessary to carry out its purpose. Such data include financial transactions, positions, holdings, obligations, and any other data important for systemic analysis. All U.S. based financial entities would be required to report these data. Other entities would report such data for their U.S. based activities.
• The FFDC would make these data available to regulators, as needed, to support their regulatory responsibilities.
• The FFDC would develop, maintain and provide the reference data, identification codes, and reporting standards for financial entities to provide the required data.
• The FFDC would maintain a classification system of all relevant financial products.
• The FFDC could provide data to industry and the general public to increase market transparency and facilitate research on the financial system, so long as such disclosure did not violate intellectual property rights or compromise business confidential information.

2) The Federal Financial Research and Analysis Center: Data alone do not constitute useful information. Therefore, the FFRAC would provide to regulatory agencies and policy makers independent analytical capabilities and computing resources to carry out its purpose.

• The FFRAC would support the development of metrics and systems to monitor and report on systemic risk levels and patterns.
• The FFRAC would conduct, coordinate and sponsor research to support regulatory policy and continuously improve systemic risk regulation and shall incorporate appropriate results into production level risk management tools.
• The FFRAC would maintain and promulgate standards for software verification and validation for software used by a financial entity for reporting valuations, risk, or results from stress tests. The FFRAC would maintain expertise in these areas to support specific requests for advice and assistance from financial regulators. The FFRAC would, at the request of regulators, develop and perform tests of valuation and risk management and stress testing software.
• At the request of the Executive Branch or Congress, the NIF, using the resources of the FFRAC, would conduct studies and provide advice, including advice regarding consumer risk posed by financial products and practices.
• The FFRAC would investigate disruptions and failures in the financial markets and report findings and make recommendations to regulators and policymakers.

Further information about the National Institute of Finance and the Committee-to-Establish the National Institute of Finance can be found at www.ce-nif.org.

By signing this petition, I indicate my personal support of the proposal to create the National Institute of Finance. I authorize the Committee to Establish the National Institute of Finance to identify me as a supporter of this effort. My title and organizational affiliation, if provided, will be used only for identification purposes, and shall not be construed to indicate an endorsement of the NIF by my organization, unless expressly indicated.

We recognize that a reorganization and creation of authorities and rights alone will not necessarily result in prudent regulation and effective policy. To make such steps effective, a new data and analytic infrastructure is required. In view of this reality, and recognizing the urgency of current efforts to reform the financial regulatory system, we call for the creation of the National Institute of Finance.

The A Call to Create the National Institute of Finance petition to U.S. Congress and Executive Branch Agencies was written by Committee to Establish the National Institute of Finance and is in the category Politics at GoPetition.