We’ve been doing some more digging into the US Office of Financial Research (OFR), a new initiative at the US Treasury Department, to understand how it expects to fulfill the substantial mission discussed in both Dodd-Frank and the OFR’s recently released 2012 annual report (see our review on the impacts of this report for securities finance here). This is going to be a big agency – in April 2012, OFR COO Michele Shannon testified that the agency expects to have 275-300 employees by 2015, with 60% of them in data center alone. It appears that the OFR is delivering on its intention to collect and analyze data. Here are some other interesting details.
Technology is going to be central to the success of the OFR as they are dealing with terabytes of data that need to be crunched. How are they doing? According to the same April 2012 testimony, fair enough: “As a first stage, the OFR has established a foundational analytics environment to support the short-term needs of researchers and analysts. The OFR is also pursuing pilot projects as part of its broader planning process for systems to meet longer-term needs. Consistent with the OFR’s commitment to a careful and prudent approach to its expenditures, this planning includes measures to refine and validate estimates for costs and timing. This planning is well advanced, and implementation is expected as soon as the end of the year.” The OFR’s website also posts multiple vacancies for IT specialists.
Spending for the OFR’s mandate is ramping up. In FY 2011 the Office spent US$11.3 million. For FY 2012 it expects to spend US$109.7 million, and that figure rises to US$138.2 million in 2013. The big spending is supposed to kick in through the second half of 2012. While the budget for this activity is paid for by the Fed for the first two years, after that the budget is paid for by an assessment on the biggest banks. This is all part of Section 155 of Dodd-Frank. Here’s a link to the Federal Register, courtesy of the St. Louis Fed, for how the actual rules will be calculated.
We took a look at the two Working Papers the OFR currently has online. They were a little too academic for our taste but we appreciate that the effort is being made. Hopefully future papers will take a more realpolitik approach to actually managing and using the data that will be stored at the OFR.
For more about the OFR in general, here is their homepage.