An amendment adopted during the House Financial Services Committee mark up of the budget reconciliation legislation would repeal provisions in the Dodd-Frank Act creating the Office of Financial Research. The amendment, offered by Rep. Francisco Canseco (R-TX) was approved by voice vote.
The Dodd-Frank Act established the OFR as an executive agency to collect and standardize data on financial firms and their activities to aid and support the work of the federal financial regulators. The Office of Financial Research, headed by a Director appointed by the President for a six-year term, provides the Council and financial regulators with the data and analytic tools needed to prevent and contain future financial crises by developing tools for measuring and monitoring systemic risk. The logic behind the Office is that it makes no sense to pass legislation creating a systemic risk regulator when there are no standardized tools for measuring systemic risk. The Office is patterned on an executive agency envisioned by the National Institute of Finance Act of 2010, S 3005, sponsored by Senator Jack Reed (D-RI), Chair of the Securities Subcommittee.
The OFR not only develop the metrics and tools financial regulators need to monitor systemic risk, it also help policymakers by conducting studies and providing advice on the impact of government policies on systemic risk. Thus, the Office provides independent periodic reports to Congress on the state of the financial system. This will ensure that Congress is kept apprised of the overall picture of the financial markets. The legislation provides for the Office to house a data center that would collect, validate and maintain key data to perform its mission.