Financial expert Allan Mendelowitz yesterday estimated that if U.S. financial regulatory agencies adopted consistent data formats for the information they collect, instead of using today’s document-based reports, a typical large investment firm could save “20 to 30 percent of operating expenses, or $200 to $300 million annually,” with similar savings across the whole financial industry.
Mendelowitz, former chairman of the Federal Housing Finance Board, joined a panel organized by the Congressional Transparency Caucus, which is co-chaired by Reps. Darrell Issa (R-CA) and Mike Quigley (D-IL). Last May, Issa introduced, and Quigley cosponsored, the proposed Financial Transparency Act (H.R. 2477), which would require all eight major financial agencies to transform their existing reporting requirements into structured data.
The bipartisan bill now boasts 29 cosponsors in the House of Representatives. Today’s panel featured Mendelowitz, Center for Data Innovation director Daniel Castro, and Sunlight Foundation senior policy analyst Matt Rumsey. All three praised the Financial Transparency Act.
Transforming financial regulatory reports from documents into data is “a win-win for both the [financial] industry and the regulatory community,” said Mendelowitz. “Most regulatory reporting today is a dead-weight loss. I have yet to find a firm that uses the material provided to the regulator to manage the firm.” But if regulators collected structured data instead of documents, management could “be looking at the same analytics as the regulators,” reducing compliance costs.
Meanwhile, regulators would benefit from the ability to deploy analytics. Switching from documents to data “is going to help identify [future] Enrons and … Bernie Madoffs … better open data that can be analyzed quickly by regulators and by [the public can] catch those problems before they become huge scandals,” said Rumsey.
For more, keep reading the Coalition press release.