Senators Warren, Reed Call on Office of Financial Research to Use Authority to Safeguard our Financial System Following Bank Collapses
“(W)e urge OFR to utilize the full extent of its data collection powers to address all of the data gaps it has identified.”
Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.) and Jack Reed (D-R.I.) sent a followup letter to the U.S. Treasury Department's Office of Financial Research (OFR), urging the office to fully utilize its statutory authorities to safeguard our financial system and to answer key questions regarding data gaps identified in OFR’s 2022 Annual Report, including with respect to crypto, climate risk, and hedge funds.
In 2010, Congress established OFR as an independent office to identify and analyze risk to our financial system and granted it the authority to subpoena data from financial companies. This data collection function was intended to serve as an early warning system to identify and flag financial stability risks before it was too late.
“Recent turmoil in the banking system following the failures of Silicon Valley Bank and Signature Bank, which forced financial regulators to take extraordinary action to stem contagion, underscores the need for OFR to use all its tools to live up to its mission and help keep our financial system safe,” wrote the lawmakers.
OFR’s 2021 Annual Report highlighted several data gaps that have prevented regulators from having sufficient visibility into financial stability risks, but it did not articulate how OFR would use its statutory power to help address those gaps. In January 2022, Senators Warren and Reed sent a letter to then-Director Falaschetti urging him to “fully utilize the capabilities of the Office of Financial Research (OFR) to safeguard our financial system, consistent with the statutory function of the agency.”
“OFR’s 2022 Annual Report highlights steps the agency has taken over the last year to address some of these data gaps through two pilot programs: the Non-centrally Cleared Bilateral Repo pilot and the OFR-hosted Climate Data and Analytics Hub pilot,” wrote the lawmakers. “These are important steps to improve financial regulators’ visibility into risks in these areas, and we urge OFR to utilize the full extent of its data collection powers to address all of the data gaps it has identified.”
This year’s report once again highlighted data gaps but did not articulate how OFR would address these issues. To better understand OFR’s plans to collect the data necessary to address these ongoing sources of risk, the lawmakers are asking the office to fully utilize its statutory authorities to safeguard our financial system and to answer key questions regarding specific risks identified in the 2022 Annual Report, including on crypto, climate risk, and hedge funds, no later than May 2, 2023.
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