Resurrecting the OFR

Abstract

Financial regulators need new types of expertise to address the systemic threats arising from climate change and fintech innovation. At present, climate, complexity, computer, and data science expertise are largely unrepresented in the financial regulatory agencies, but financial regulation – particularly financial stability regulation – can no longer be fully effective without them. This Article argues that the Office of Financial Research (“OFR”) should be built up as a hub of these types of interdisciplinary expertise: the OFR will then be equipped to monitor new types of systemic risks, research innovative solutions to those risks, and assist other financial regulatory agencies with technical expertise as the need arises. The staff and other resources of the OFR were decimated under the Trump Administration, but this affords an opportunity to the Biden Administration to rebuild the OFR – not only to fulfill the OFR’s original data collection and analysis functions, but also to address the new sources of systemic risk that have emerged since it was founded in 2010. This Article therefore offers detailed proposals for rebuilding the OFR, giving thought to how to structure the OFR’s relationships with other financial regulatory agencies, as well as its staffing, funding, and culture.