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75–090 PDF 2012

BUDGET HEARING—THE OFFICE 

OF FINANCIAL RESEARCH 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

APRIL 19, 2012 

Printed for the use of the Committee on Financial Services 

Serial No. 112–118 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

JAMES H. CLINGER, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

RANDY NEUGEBAUER, Texas, Chairman 

MICHAEL G. FITZPATRICK, Pennsylvania, 

Vice Chairman 

PETER T. KING, New York 

MICHELE BACHMANN, Minnesota 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEPHEN LEE FINCHER, Tennessee 

MICHAEL E. CAPUANO, Massachusetts, 

Ranking Member 

STEPHEN F. LYNCH, Massachusetts 

MAXINE WATERS, California 

JOE BACA, California 

BRAD MILLER, North Carolina 

KEITH ELLISON, Minnesota 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

April 19, 2012 ................................................................................................... 1 

Appendix: 

April 19, 2012 ................................................................................................... 39 

WITNESSES 

THURSDAY, APRIL 19, 2012 

Shannon, Michele, Chief Operating Officer, Office of Financial Research, U.S. 

Department of the Treasury ................................................................................ 7 

APPENDIX 

Prepared statements: 

Neugebauer, Hon. Randy ................................................................................. 40 

Shannon, Michele ............................................................................................. 43 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Neugebauer, Hon. Randy: 

Letter to Treasury Secretary Timothy F. Geithner, dated April 18, 2012 .. 52 

Capuano, Hon. Michael: 

‘‘Strategic Framework, Office of Financial Research, FY2012-FY2014,’’ 

dated March 2012 ......................................................................................... 54 

(1) 

BUDGET HEARING—THE OFFICE 

OF FINANCIAL RESEARCH 

Thursday, April 19, 2012 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:01 a.m., in room 

2128, Rayburn House Office Building, Hon. Randy Neugebauer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Neugebauer, Fitzpatrick, 

Pearce, Posey, Renacci, Canseco, Fincher; Capuano, Waters, 

Ellison, and Carney. 

Ex officio present: Representative Bachus. 

Also present: Representative Green. 

Chairman NEUGEBAUER. Good morning. This subcommittee will 

come to order. Today’s hearing is on the Office of Financial Research (OFR). 

We will have opening statements by each side, as previously 

agreed, for 10 minutes per side, and I ask unanimous consent that 

the members of the Committee on Financial Services who are not 

members of the Subcommittee on Oversight and Investigations be 

permitted to sit with us for the purposes of delivering a statement, 

hearing testimony, and questioning witnesses today. 

We think we are going to have votes here shortly, so what we 

are going to try to do is get through the opening statements and 

maybe even Ms. Shannon’s statement. As soon as the votes are 

over, we will reconvene the hearing. 

I want to start off by saying we are extremely disappointed that 

Dr. Berner was not allowed to come and testify this morning. We 

appreciate Ms. Shannon being here, but we think it was very appropriate for the person who has headed this agency for over a year 

to have been here, and this is extremely disappointing. I think this 

is somewhat contrary to what Dr. Berner said when he was here 

before, and I quote, ‘‘to make sure this committee in particular understands that OFR wants to be accountable to Congress and that 

OFR wants to be completely transparent.’’ I think the fact that Dr. 

Berner is not here today is contrary to that statement. 

One of the other things that we rolled out in our committee this 

week was the Dodd-Frank burden tracker, the purpose of which is 

to identify what it is going to cost to implement the Dodd-Frank 

Act. Certainly, one of the things we were hoping that many of the 

agencies were doing was some more detailed cost-benefit analysis. 

2 

But one of the things we learned through this process is the fact 

that there are about 400 rulemaking requirements in Dodd-Frank, 

and we are about 185 of those rules into the process. We learned 

something that I think is disturbing, and it is a trend that I think 

has pretty big consequences, which is, we learned that 24 million 

manhours will be required to comply with the 185 rules that have 

been promulgated up to this point. 

You know, I had to kind of put that in perspective—what does 

that mean? Well, what we learned is it only took 20 million 

manhours to build the Panama Canal, and so one of the things that 

somebody said was that instead of joining two bodies of water, 

what Dodd-Frank is doing is joining lawyers with billable hours. 

There is a cost and there is a burden to these regulations, and certainly that is just one part, one aspect of it. I think the CBO has 

estimated it is going to take about $27 billion of additional expense 

over 10 years to implement Dodd-Frank. So it is with consequence. 

Today, we are talking about the OFR, which is another agency 

created by Dodd-Frank, and quite honestly there is a trend here. 

We have seen two agencies created by Dodd-Frank that basically 

don’t seem to have a lot of accountability, agencies that basically 

can either get money from the Treasury, or agencies that can get 

money from the Treasury and create fees and assessments without 

anybody really having to approve it. I think we find that troubling. 

I think some of the events that we have seen in the last few 

weeks of trips to Las Vegas bring to light that there needs to be 

accountability in government. The American people are demanding 

that kind of accountability. And so today, hopefully in this hearing, 

we are going to hear more about the internal structure of OFR, the 

goals and directives. 

We are still waiting to see a strategic plan for this organization, 

but what we do know is they are spending money and not small 

sums of money. We think obviously one of the requirements of this 

Oversight Subcommittee is to make sure that we shed light on 

those different areas. 

But, again, I have to close by saying I am extremely disappointed. I think when Secretary Geithner said we were going to 

start this process of Dodd-Frank, he said we are going to start it 

with a lot of transparency and openness. I guess transparency and 

openness to Secretary Geithner is not allowing the person who has 

been nominated and is currently heading up this very important 

agency to come and share his testimony with us today. 

So with that, I will yield to my good friend, the ranking member 

of the subcommittee, Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. Ms. Shannon, I am 

looking forward to your testimony. I totally agree that accountability of all agencies, even those that are off budget, is our responsibility. Actually, this is why I wanted this subcommittee; I actually played a role in creating this subcommittee, and I am glad that 

I did. I think we have a responsibility, I think we are doing it, and 

I think we should continue to do it. I think the chairman has done 

a good job of making sure that this subcommittee fulfills that obligation. 

At the same time, I also do think that we have a responsibility 

to see both sides. When we have one side constantly saying we 

3 

have to get a Dodd-Frank burden factor, that is a fair point, I agree 

with that, but I think we have to see what the non-Dodd-Frank 

burden factor was. We talk about hundreds of millions or billions 

of dollars it is costing us to do these things, but we continue to ignore the fact that it almost cost the entire economy many trillions 

of dollars because we didn’t do these things previously. 

So as we do this, there are two sides of the ledger, and I would 

like to—I just think it is important to point that out on a regular 

basis. But that doesn’t mean that we should just be throwing 

money away. That is the accountability factor. 

I will tell you that, honestly—I am going to hear this for the next 

6 months, and I know it, and it is appropriate—I was probably one 

of the most angered people in America when I saw this GSA story 

last week, because I hate waste more than most people, believe it 

or not, and I hate it for two reasons. First, I hate it because I am 

a taxpayer, and I hate it for the exact same reason everybody else 

hates it. Second, I hate it because I think there is a responsibility 

and a good part of government that gets broad painted when you 

have one agency that goes rogue and does something incredibly 

stupid, probably—certainly unethical in my opinion, immoral, and 

possibly illegal. 

So, honestly, for those of us who actually think government has 

a positive role to play, believe it or not, I think we get more angry 

when we see a government agency go crazy than those people who 

never liked government in the first place, and therefore, if anyone 

at OFR or the Treasury or the Fed or anybody else you talk to on 

a regular basis is taking vacations in Vegas, maybe that should not 

happen. 

But be that as it may, on the presumption that no one at OFR 

has been out partying in Vegas lately—I guess I should ask that 

and maybe you will put that in your testimony—I still think that 

you have an important role to play, and that is what I am here to 

talk about today and going forward. I know that I am going to hear 

the GSA thing on every committee I serve on for the next 6 

months. Honestly, if I was on the other side, I would be doing it, 

too, so I don’t blame you, have some fun, and you are right. But 

when it comes time to line up the GSA guys and kind of take care 

of business, count me in. I will be at the front of that line. 

I am looking forward to seeing Dr. Berner when he finally does 

get confirmed. It is my understanding that the policy, which I don’t 

like in the first place, but at least it is my understanding that it 

is not a new policy, it has been a long-term policy followed by several Administrations, including the Bush Administration. I didn’t 

like it then, I don’t like it now, but at least I understand it. So although I join with my chairman in not appreciating the policy, I 

want to be clear that the policy is not new, it is not Mr. Geithner’s 

policy; it is a policy that he is simply extending from previous Administrations. I guess that is a typical Administration versus Legislative Branch difference of opinion, but there will come a time 

when Dr. Berner hopefully will be confirmed, and when he does, I 

am sure he expects to be called here, and I look forward to that 

day. With that, I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. I have a letter 

that I sent yesterday to Treasury Secretary Geithner expressing 

4 

my disappointment about Dr. Berner’s failure to testify here today, 

and I ask unanimous consent that the letter be made a part of the 

record. 

Without objection, it is so ordered. 

I also want to say that without objection, all Members’ opening 

statements will be made a part of the record, and at this particular 

point in time, I recognize the chairman of the full Financial Services Committee, Chairman Bachus, for 2 minutes. 

Chairman BACHUS. Thank you, Chairman Neugebauer, for convening this important hearing to examine the budget of the Office 

of Financial Research. The Oversight and Investigations Subcommittee held its first hearing on the OFR last July when we discussed concerns about how the Office will secure the vast amounts 

of personal and corporate financial data it will collect. If the OFR 

is going to stockpile sensitive financial information, then it needs 

to make sure the data stays out of the hands of hackers, criminals, 

and those who would do this country harm. 

Last July, we also examined whether the OFR’s data collection 

efforts would burden American businesses. Our hearing today examines the OFR’s budget. For the first 2 years after Dodd-Frank 

enactment, OFR is funded by the Federal Reserve. That 2-year period is about to end. Starting in July, the OFR will fund itself by 

leveling assessments on financial institutions, a process that is entirely removed from the appropriations process. In light of the fact 

that the OFR will impose direct costs on American businesses, and 

especially because the OFR has virtually complete autonomy in setting its yearly budget, it is critical that this committee examine 

whether the OFR is spending money in a way that promotes its 

mission in a cost-effective manner. 

In examining the OFR’s budget, I especially look forward to hearing more about how the Office will fund itself by leveling assessments on financial institutions, how the OFR is going to collect 

data in a way that will minimize the burden on businesses and individuals, and the systems the OFR is putting in place to safeguard 

that data and prevent its unauthorized disclosure or use. 

It is very disappointing, however, that Treasury refused to make 

Dr. Berner available today to address these questions. They are important questions that need to be addressed, and it is especially 

troubling and amplifies the concerns that many of us already have 

that the OFR lacks accountability and transparency. I do thank 

Ms. Shannon for being here today as our witness, and I thank you, 

Chairman Neugebauer, for holding this hearing. 

Chairman NEUGEBAUER. I thank the gentleman. Now, the vice 

chairman of the subcommittee, Mr. Fitzpatrick, is recognized for 

11⁄2 minutes. 

Mr. FITZPATRICK. Thank you, Mr. Chairman. We are here today 

to discuss the unprecedented powers of the Office of Financial Research. When this agency was created by the Dodd-Frank Act, a 

majority of the American public was unaware of the far-reaching 

access that the Federal Government would be granted in matters 

of personal and corporate finance. The OFR, charged with collecting information for regulators, was given the power to demand 

all data necessary, including sensitive, private information, information from banks, hedge funds, brokerages, and other financial 

5 

companies, as well as information about individual loans. The vast 

amount of information would be a gold mine for anyone able to access it for nefarious purpose. As someone who is concerned with financial security and also personal privacy, the OFR approach to 

gathering and storing information is a major concern. 

I believe, Mr. Chairman, that there are also some serious questions regarding to the accountability and transparency at the OFR, 

two characteristics of vital importance for any government agency. 

For example, its budget is set by the agency itself, and the Office 

is not funded through the regular appropriations process, so that 

there is a lack of meaningful congressional oversight, and the 

American people are left without much of a say at all in its operations. The American people deserve to know that their information is protected and that this agency is acting in the best interests 

of the public trust. 

The most reasonable thing we can expect are clearly defined 

budgets, strategic plans, goals, and fully vetted policies and procedures. These are standard practices in the private sector, and they 

hold more importance when agencies are operating in the public 

sector. Thank you, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. The gentleman 

from Texas, Mr. Canseco, is recognized for 21⁄2 minutes. 

Mr. CANSECO. Thank you, Mr. Chairman. This past Saturday 

marked the 100th anniversary of the sinking of the Titanic. In the 

aftermath of that disaster, government hearings on both sides of 

the Atlantic found plenty of blame to go around: an irresponsible 

captain; a faulty design; or an attitude of arrogance that the ship 

was unsinkable. All throughout it, though, very little blame was assigned to the iceberg itself, which at the end of the day is what 

sank the Titanic. 

In a similar vein, our economy in 2008 was sunk by its own iceberg, but unlike the Titanic, we had plenty of warning. For years, 

Congress and regulators heard warning after warning that government housing policies and the risks being built up by Fannie Mae 

and Freddie Mac were going to sink our economy. Way back in 

2000 at the end of the Clinton Administration, Peter Wallison told 

Congress, ‘‘If Fannie and Freddie are not restrained, it is no exaggeration to say that this is a threat to the private sector to the 

same degree it is a threat to the taxpayers.’’ 

In 2005, former Fed Chairman Alan Greenspan said, ‘‘If Freddie 

and Fannie continue to grow, they potentially create ever-growing 

potential systemic risks down the road.’’ 

These weren’t the only voices, but all of them were ignored by 

regulators and Members of Congress who continued to push for 

government intervention in the housing market. Of course, the 

house of cards came crashing down, and we are left today trying 

to dig ourselves out of it. 

Taking its cue from the post-Titanic inquiries, the last Congress 

gave us Dodd-Frank. This bill included the formation of the Office 

of Financial Research. I am profoundly confused by the logic behind 

all of this when the threats to our economy leading up to 2008 were 

so clear and so transparent. You didn’t need an army of Ph.D.s to 

tell you that Fannie and Freddie were out of control or that even 

a meager drop in home prices would wipe out their capital and the 

6 

capital of hundreds of other financial institutions, and I remain 

deeply concerned about this agency with its threat to sensitive information and its misguided mission. That is why I have introduced a bill to repeal it, which was adopted in amendment form by 

voice vote in this committee yesterday. 

We know what our iceberg was and what caused it to get so big, 

and we know more than ever that all the information in the world 

can’t compete with a lack of will on behalf of politicians and regulators alike. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman, and now the 

gentlewoman from California, Ms. Waters, is recognized for 2 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman, for organizing this very important hearing to discuss the Office of Financial Research. I believe that OFR will serve as a vital role in supplying our regulators with critical data and analysis that will help 

them monitor systemic risk and ensure that our financial markets 

are sound. 

The OFR was created by Title 1 of Dodd-Frank for the purpose 

of collecting information for the Financial Stability Oversight 

Council (FSOC), developing tools for risk management, and monitoring and conducting research using complex data to inform how 

we can make our financial system more resilient and robust. Essentially, the Office of Financial Research is just like the National 

Oceanic and Atmospheric Administration (NOAA): monitoring 

gathering storms; assessing threats; and trying to coordinate actions that would minimize any collateral damage. 

Likewise, it is similar to the intelligence gathering agencies 

which attempt to aggregate and analyze data for the purpose of 

protecting the country. I think the OFR was a critical accomplishment under Dodd-Frank, and I hope that all my colleagues agree 

that consolidating and understanding this complex financial data 

will be a key to preventing another systemic risk like the one we 

experienced 4 years ago. Having this data is all the more important, in fact, given the lingering economic instability in the euro 

zone. 

So with that said, I was frankly dismayed by some of the activity 

in our budget reconciliation markup yesterday, including an 

amendment to repeal the Office of Financial Research. While I understand that congressional oversight of OFR is appropriate, I 

think that efforts to undermine it are extremely dangerous. I thank 

you, and I yield back the balance of my time. 

Chairman BACHUS. Would the gentlelady—I am hard of hearing, 

you know. I have problems. 

Ms. WATERS. Me, too. 

Chairman BACHUS. But did you say that the Office of Financial 

Research, you compared them collecting private data of individual 

Americans that they have to file with institutions when they get 

a loan or their stock portfolios, that that is analogous to the Weather Bureau collecting temperature and rainfall data? 

Ms. WATERS. I guess you do have a problem hearing. No, I did 

not say that. 

Chairman BACHUS. Oh, okay. 

7 

Ms. WATERS. What I said was essentially the Office of Financial 

Research is just like the National Oceanic and Atmospheric Administration: monitoring gathering storms; assessing threats; and trying to coordinate actions that would minimize any collateral damage, and further, likewise, it is similar to the intelligence gathering 

agencies we have in national security which attempt to aggregate 

and analyze data for the purpose of protecting the country. That 

statement you interjected, collecting private data on individuals, 

etc., no, I did not say that. 

Chairman BACHUS. So it is necessary to collect all this private 

financial information on American citizens to protect the country? 

Ms. WATERS. You are making that up. I didn’t say that. 

Chairman BACHUS. Okay. All right. I don’t want to 

mischaracterize what you said. 

Ms. WATERS. Do you want me to read it again? 

Chairman NEUGEBAUER. I thank the gentlewoman. At this time, 

I am going to recess the subcommittee until after votes, at which 

time we will hear Ms. Shannon’s opening statement and begin our 

question period. So we are standing in recess. 

[recess] 

Chairman NEUGEBAUER. The hearing is called back to order. Ms. 

Shannon, without objection, your written testimony will be made a 

part of the record, and you will now be recognized for 5 minutes 

to summarize your testimony. 

STATEMENT OF MICHELE SHANNON, CHIEF OPERATING OFFICER, OFFICE OF FINANCIAL RESEARCH, U.S. DEPARTMENT 

OF THE TREASURY 

Ms. SHANNON. Chairman Neugebauer, Ranking Member 

Capuano, and other members of this subcommittee, thank you for 

the opportunity to be here today. Since this subcommittee’s hearing 

on the OFR 9 months ago, the Office has made substantial progress 

in carrying out its statutory responsibilities. As we move through 

Fiscal Year 2012 and look toward Fiscal Year 2013, that progress 

is accelerating. My written testimony reports on steps we have 

taken to achieve our goals and provides details about the OFR’s 

budget and financing. In my statement this morning, I will give 

some examples of the headway we have made. 

Last month, the OFR published the strategic framework that will 

guide our way forward. This framework establishes five goals. 

First, one of the primary responsibilities of the Office of Financial 

Research is to serve the Financial Stability Oversight Council and 

its member agencies. We have begun to provide data and analytical 

input to the Council and are implementing an inventory of data 

held by Council member agencies. We are also collaborating on 

data-related issues through the Council’s data committee. 

A second important goal is to promote stronger data-related 

standards. The early centerpiece of this effort is our ongoing work 

with policymakers, regulators, and the private sector to establish 

a unique global standard for identifying parties to financial transactions. This legal entity identifier, or LEI, will allow for better understanding of true exposures and counterparty risks across the financial system. It will also create efficiencies for transactions and 

reporting. 

8 

A third focus involves work to create a collaborative environment 

for research and analysis on risks to financial stability and best 

practices and risk management. Results of this initiative include 

publication of the first two entries in the OFR’s working paper series, announcement of the establishment of a financial research advisory committee, and, looking forward, publication of the OFR’s 

first annual report this summer. 

Under the fourth goal of the OFR, we are required not only to 

make nonsensitive data and information available to the public, 

but also to protect sensitive information. The OFR is committed to 

collecting data securely, safeguarding the data it holds, and being 

very thoughtful and judicious in fulfilling its data-related mandate. 

The OFR will collect data only when necessary to assess threats to 

financial stability and only when the data are not otherwise available. 

Under our final goal, we are making substantial progress in establishing the OFR as an efficient organization. We now have 69 

employees and plan to reach a steady state staffing level of 275 to 

300 employees in the next 2 to 3 years. To support good stewardship of our resources, we are installing sound planning and review 

protocols as well as rigorous controls. As we stand up the OFR, a 

key objective is to put in place the information technology and business systems needed to support the secure delivery of our data and 

research mandates. The OFR has established a foundational infrastructure to support the short-term needs of researchers and analysts. We are taking all the time needed for robust planning and 

testing to determine the most secure, efficient, and cost-effective solutions for the longer term. 

The complex, highly specialized mission of the OFR and the 

scope of the task to establish the Office from the ground up both 

dictate that the OFR take a careful, prudent approach to its budget 

and funding. We also recognize the importance of moving forward 

as expeditiously as possible. 

As my written testimony details, the pace of our spending is projected to increase in the second half of this year, and next year we 

will continue to ramp up our efforts. Thank you again for the opportunity to be here today. I would be happy to answer your questions. 

[The prepared statement of Ms. Shannon can be found on page 

43 of the appendix.] 

Chairman NEUGEBAUER. Thank you, Ms. Shannon. We will now 

go to questions from Members. Ms. Shannon, I want to better understand your role at OFR. OFR’s Fiscal Year 2013 budget is $157 

million. Are you in charge of finalizing and approving that budget? 

Ms. SHANNON. Congressman, my role as the Chief Operating Officer is to oversee the resources of the Office, both the financial resources and the human capital resources of the Office. I am responsible for the work to prepare the budget, and ultimately, that budget is reviewed by the other parts of the Treasury, including the 

management team in financial management in Treasury, and ultimately approved by the Secretary of the Treasury, currently. When 

we have a confirmed Director of the OFR, it would also be approved by the Director. 

9 

Chairman NEUGEBAUER. I didn’t hear you use Dr. Berner’s name. 

So he is currently not required to—he didn’t have anything to do 

with this budget? 

Ms. SHANNON. Congressman, as you know, we do not have a confirmed Director of the OFR currently. Dr. Berner is the Counselor 

to the Secretary of the Treasury, and in that role has been asked 

by the Secretary to help support the stand-up of the OFR. In that 

context, we worked with him and other members of the Treasury 

to establish the budget and prepare the budget for the approval. 

Chairman NEUGEBAUER. So you prepared the budget? 

Ms. SHANNON. I have responsibilities for helping to prepare the 

budget. That process involves other members, other Treasury officials, but ultimately is approved by the Secretary. 

Chairman NEUGEBAUER. And the Secretary of the Treasury approved it? 

Ms. SHANNON. That is correct. 

Chairman NEUGEBAUER. So Dr. Berner is just kind of on the 

sidelines right now until he is confirmed? He was not involved in 

that process? 

Ms. SHANNON. Mr. Chairman, again, without a confirmed Director, the authorities of that Office sit with the Secretary of the 

Treasury, and the Counselor, Dr. Berner, is supporting the day-today stand-up of the Office, and in that context, he has been involved in the budgeting process. 

Chairman NEUGEBAUER. I also noticed that you expect to have 

284 FTEs by next fall. Did you decide that was how many people 

the agency needed? 

Ms. SHANNON. Congressman, in order to prepare our budget and 

our strategic plan, looking at issues such as the level of staffing 

that we would need, we, working with, again, members of Treasury’s financial management team, looked at the specific mission of 

the OFR, what the specific needs would be to meet both the research mission and the data-related mission. We worked with managers that we brought into the OFR to look at what the specific 

needs would be and the particular functions, and from that basis, 

built up to the— 

Chairman NEUGEBAUER. Okay. So who is hiring a number of senior members? Somebody hired you. Who is making those decisions? 

Ms. SHANNON. Congressman, again, the OFR doesn’t currently 

have a confirmed Director. 

Chairman NEUGEBAUER. Okay, I see where we are going with 

that answer. So, you mentioned the strategic framework. 

Ms. SHANNON. Yes. 

Chairman NEUGEBAUER. I have reviewed that, and I didn’t see 

anything to lead me to believe that there was anything strategic 

about the framework. It was pretty general. And yet you are going 

to have a budget of $157 million, you are going to have 284 fulltime employees, but it really didn’t give a lot of indication of the 

direction the agency was headed and how it was going to operate. 

When I look at some of the other documents that other agencies—this is the CFTC’s and this is the SEC’s submissions of their 

plans and budgets, and then I look at the budget for your agency, 

and obviously when you look at the difference between, these agencies have gone into much more detail about being strategic about 

10 

how they are going to spend money, what these people are going 

to do. Would you say yours is adequate? 

Ms. SHANNON. Congressman, as you know, the budget of the 

OFR was published as part of the President’s budget. We are a 

start-up. We are—we did prepare information consistent with this 

stage of our stand-up. Of course, over time, as the institution continues to grow, we are going to be elaborating further details in the 

preparation of our budget and the publication of our budget. 

One thing I would emphasize, and I think it is a very important 

point that you raise, is that we do need to be very transparent 

about our operations. We are starting to do that, with the publication of our strategic framework, with the publication of our budget 

as part of the President’s budget, and we are going to continue to 

do that, we are going to continue to be transparent about what we 

are doing. We want to be accountable for the way that we are 

spending money, and we are going to continue to elaborate those 

plans going forward. 

Chairman NEUGEBAUER. My last question is, you are an independent agency, and so your budget for 2013 was projected to be 

at $157 million, 284 full-time employment units. Could that number have been $350 million? 

Ms. SHANNON. Congressman, we, in preparing the budget, look 

to the needs of the organization as relates to— 

Chairman NEUGEBAUER. This is a very simple question. Yes or 

no, could the budget have been $350 million? 

Ms. SHANNON. Congressman, in preparing the budget— 

Chairman NEUGEBAUER. Ms. Shannon, I know that they have 

coached you very well, and you are doing a great job, but we are 

here to get facts, and so the question is, could that budget have 

been $350 million, yes or no? 

Ms. SHANNON. Congressman, I would like to give you a full answer to your question. 

Chairman NEUGEBAUER. No. I want a yes-or-no answer because 

my time has expired. So it is yes, it could have been, or no, it 

couldn’t have been. It is either one or the other. Could that budget 

have been $350 million? 

Ms. SHANNON. Congressman, in preparing the budget— 

Chairman NEUGEBAUER. Ms. Shannon, I want a yes-or-no answer, please. It is either yes, it could have been $350 million, or 

no, it couldn’t have. Does the agency have the authority to have a 

$350 million budget? 

Ms. SHANNON. Congressman— 

Chairman NEUGEBAUER. Ms. Shannon, I want a yes-or-no answer, please, ma’am. Yes, it could, or no, it couldn’t. This is not 

rocket science. 

Mr. ELLISON. Mr. Chairman, I have an objection. 

Ms. WATERS. Regular order, please. 

Mr. ELLISON. I think the witness is entitled to be treated with 

respect. 

Chairman NEUGEBAUER. I am treating her with— 

Mr. ELLISON. No, I believe this hearing is not proper respect. 

Chairman NEUGEBAUER. I have the time, please. 

Ms. WATERS. Regular order. 

11 

Mr. ELLISON. I want to interpose an objection to the manner in 

which you are conducting this hearing with this witness. This is 

disrespectful. 

Chairman NEUGEBAUER. Ms. Shannon, I am looking for a yes-orno answer. 

Ms. WATERS. Regular order, please. Regular order, please. 

Chairman NEUGEBAUER. Ms. Shannon, yes or no? 

Mr. ELLISON. Also, the red light is on; I think the chairman is 

beyond his time. 

Chairman NEUGEBAUER. I am not yielding my time until Ms. 

Shannon answers my question. Ms. Shannon? 

Mr. ELLISON. And I want to register an objection to the abusive 

nature of this hearing. 

Chairman NEUGEBAUER. So noted. 

Ms. WATERS. Regular order. The questioning time has passed. 

Chairman NEUGEBAUER. So, Ms. Shannon, we are going to get 

back to the question. Could that budget have been $350 million? 

Ms. SHANNON. Congressman, I fear—I want to be very responsive to your question. 

Chairman NEUGEBAUER. You are not being responsive. I have 

asked for a yes-or-no answer. 

Ms. WATERS. Mr. Chairman, Mr. Chairman, I think you have 

made your point, and I don’t think that you can badger the witness 

into saying yes or no. Let’s move on. 

Chairman NEUGEBAUER. I am not trying to badger anybody. I am 

just trying to get an answer. With that, I yield back. 

Mr. CAPUANO. Mr. Chairman, if you would yield for just a question or comment. Pursuant to the law itself, it does say that they 

can collect assessments equal to the total expenses of the Office, 

that is all the law says. So they could collect it to the total expenses of the Office, and it may or may not be a yes-or-no answer, 

but that is the legislative requirement regardless of whether Ms. 

Shannon knows that or not. 

Chairman NEUGEBAUER. And so, it could be $350 million if they 

decide to spend $350 million. 

Mr. CAPUANO. The expenses of the Office is the legislation. 

Chairman NEUGEBAUER. With that, I yield to the gentleman from 

Massachusetts, Mr. Capuano. 

Mr. CAPUANO. I yield to Ms. Waters. 

Ms. WATERS. Thank you very much. Ms. Shannon, earlier today 

one of my colleagues on the opposite side of the aisle I think attempted to ask me a question about whether or not information 

that is collected is protected, or whether or not this information 

could be used against some of the entities that I suppose you are 

doing research on or individuals, and I, even though he did not 

frame the question quite that way, I think that is what he was trying to get at, and I would like you to help us to understand, given 

the nature of what you will be doing and the research that you will 

be doing, how can you assure us that all of these entities that you 

will be interacting with and doing research on will be protected? 

Ms. SHANNON. Congresswoman, thank you, this is a very important question. This is something that we are very focused on across 

the organization, protecting the data that we take in-house and 

12 

making sure that it is available only to those who absolutely need 

to have it. 

First, the OFR has been established within the Treasury, and 

therefore, it inherits the security structures within the Treasury, 

the IT infrastructure of the Treasury, but also the security protocols and policies of the Treasury Department, and these are policies 

to which we are adhering closely. 

At the same time, we recognize that the OFR has a particular 

mission, and that in the context of that mission, we need to look 

at what additional policies and procedures we need to put in place 

within the OFR itself to make sure that we are protecting data, 

and so we are looking at that now. We are looking at how our data 

gathering mandate, what additional protections are required in 

that context, and also in the context of data sharing between agencies, what we need to do. 

One thing, again, that I want to emphasize is that we are only 

going to be collecting the data that we absolutely need to fulfill our 

mission. We are trying to fill data gaps. We are not going to be collecting for collections sake. We are going to be making sure that 

only those people who absolutely need to have access to sensitive 

data have that access through access control, both systems and in 

policies. 

Ms. WATERS. But what concerns me a bit is that you will be collecting data and interacting with two other newly-established entities, the Orderly Liquidation Authority you will be working with 

also; is that correct? 

Ms. SHANNON. Congresswoman, we will be working with the— 

Mr. PEARCE. Mr. Chairman, could you have the witness kind of 

pull the microphone over, she is talking to this side, and the microphone is on the other side. 

Ms. SHANNON. Sure. Is this better? 

Congresswoman, we will be working with members across the Financial Stability Oversight Council. 

Ms. WATERS. Oh, I see, so you don’t have any direct interaction 

with the Orderly Liquidation Authority, either? You will not be 

supplying research at all for the Orderly Liquidation Authority? 

Ms. SHANNON. Congresswoman, we will be working with regulators across the FSOC, and so in that context, we will be responding to requests from various parts of the system. 

Ms. WATERS. I see. But there are no regulations that have been 

established for these particular new interactions that you will be 

having? You talk about the Treasury, of course. We know that 

there are established rules and regs, laws that relate to confidentiality and other kinds of things. Do there need to be new regs developed, new laws developed that would make sure that the data 

you are collecting that will be available to these new entities will 

be protected? 

Ms. SHANNON. Congresswoman, thank you, this is also an important question in terms of how we go about sharing data that we 

may have and also how we go about the process of data dissemination that we may take in-house, and this is an issue that we are 

working on with other members of the regulatory community to set 

in place the kind of procedures and protocols, controls that you are 

mentioning, and one of the aspects of this that we are working on 

13 

right now is looking at how to classify data within the OFR, obviously building upon systems that already exist for data classification, and how we can mount that classification that we have inhouse at the OFR with the systems of other regulators so that we 

can make sure we are talking the same language and that we are 

protecting the data appropriately. 

Ms. WATERS. So what is the timeframe? How long is it going to 

take you to put these protocols together? 

Ms. SHANNON. Congresswoman, we already do have a set of protocols in place, again, as part of the Treasury infrastructure. We 

are working to expand those protocols. We are working on the classification system, that I mentioned, is going to be in place in the 

coming months, and other aspects of these enhancements should be 

coming online over the coming months as well. 

Ms. WATERS. Thank you very much. I was just reminded by the 

staff that we are talking about process with the Orderly Liquidation Authority rather than an agency. Thank you. 

Chairman NEUGEBAUER. Thank you. Now, I recognize the vice 

chairman of the subcommittee, Mr. Fitzpatrick for 5 minutes. 

Mr. FITZPATRICK. Thank you, Mr. Chairman. Ms. Shannon, I appreciate your testimony. Dr. Berner was here before the subcommittee on July 14th, over 9 months ago. At that point, I requested a strategic plan with specific goals and metrics for OFR’s 

Fiscal Year 2012 be submitted to the subcommittee by fall of 2011, 

and Dr. Berner agreed at that time, that it would be a reasonable 

timeframe to submit it. 

Looking at the testimony from July 14th, I said it would be more 

comforting to hear a specific strategy plan with specific goals and 

metrics. So when might we see that plan? Berner said, ‘‘That is a 

good question, we are in the process of developing that.’’ I asked, 

‘‘Will we see the plan perhaps by the fall of this year, 2011?’’ He 

said, ‘‘Perhaps by then; that seems like a reasonable date.’’ 

Thus far, Ms. Shannon, all we have received is a 9-page Fiscal 

Year 2013 financial research fund. I think it was released in February. As the chairman pointed out, we get documents over 200 

pages from organizations like the CFTC, they are line-by-line budgets, they are specific, they have goals, they have objectives, they 

have metrics. So we were promised we would see something by the 

fall by Dr. Berner. When might we see a comprehensive strategic 

plan forthcoming from your agency? 

Ms. SHANNON. Congressman, thank you for your question. As I 

mentioned, the OFR— 

Mr. PEARCE. Ma’am, I hate to keep saying it, but you keep talking away from the microphone. 

Ms. SHANNON. Better? 

Mr. PEARCE. Yes. I am trying to read and listen, too, and that 

makes it much better. 

Ms. SHANNON. Absolutely. Congressman, we published the strategic plan of the OFR in March of this year. Again, as I mentioned, 

the OFR is a start-up organization. That is the initial plan of the 

organization. We also have published our budget as part of the 

President’s budget, and we are expecting over time, as the organization grows, as we bring on more staff, that these—that we will 

be expanding this kind of documentation. 

14 

The other thing I would mention is that we are currently working on performance measures that we would include as part of the 

Fiscal Year 2014 budget to help us better measure how we are 

doing, how we are meeting our mission. Within the strategic framework that we recently published, we did establish specific goals for 

the organization, the work that we are doing to support the FSOC, 

the work that we are doing to strengthen data standards, to establish a research center and begin to publish research and analysis, 

also to make data available to the public, and to establish the organization as an effective— 

Mr. FITZPATRICK. Ms. Shannon, would you agree that this document you are referring to, the March document, contains no strategic—there are goals, but there are no deadlines, there are no performance measures at all in this document? 

Ms. SHANNON. Congressman— 

Mr. FITZPATRICK. We are just wondering, how do you take a document like this and budget to an aspiration as opposed to a specific 

measurable outcome? 

Ms. SHANNON. Congressman, we prepared that as our initial 

strategic plan to establish the goals of the organization, to establish 

the mission of the organization. We also established within that 

plan implementation priorities for the OFR, laying out in those implementation priorities the priorities that we saw for the current 

fiscal year as well as priorities looking out into the future. Again, 

we will be establishing performance measures, as we mentioned, in 

that strategic plan during the current period, and plan to have 

them in place for the next budgeting cycle. 

Mr. FITZPATRICK. We understand that the agency has goals, but 

we are just wondering about the measurable outcomes. I have 

worked with chambers and small businesses in my private practice. 

Small banks for small start-ups require greater measures, more 

specific measurable outcomes than we are seeing in a document for 

an agency that is spending over a hundred, a couple hundred million dollars. 

Ms. SHANNON. Congressman, we published our budget. It is part 

of the President’s budget. And, again, we are working to establish 

exactly the kind of measures that you are talking about. We fully 

agree on the importance of accountability, the importance of linking how we are spending money to achievement of our mission and 

fulfilling our statutory requirements, so I absolutely agree with you 

on the importance of this. This is something that we are working 

on right now, and we expect to have it in the next fiscal year cycle. 

Mr. FITZPATRICK. So we won’t receive that before September 30th 

of this year, is that what you are saying? 

Ms. SHANNON. Congressman, we are working on it right now. 

Mr. FITZPATRICK. When might we receive it? 

Ms. SHANNON. It is our intention to include those measures in 

the next year’s budget, and they would be published as part of the 

President’s budget. 

Mr. FITZPATRICK. Thank you, Mr. Chairman. 

Chairman NEUGEBAUER. Mr. Ellison is recognized for 5 minutes. 

Mr. ELLISON. Thank you, Mr. Chairman, I also thank the ranking member. Yesterday, I believe action was taken in this committee that would potentially defund OFR. Are you aware of that? 

15 

Ms. SHANNON. Yes, sir. 

Mr. ELLISON. If that were to happen, would the FSOC, which is 

tasked with monitoring the financial stability of the United States 

financial industry, be able to discharge its duty? 

Ms. SHANNON. Congressman, the OFR has a specific mission to 

support the FSOC in the discharge of its duty. In particular, related to the data and research analysis that it might need to conduct its operations. And so that is the purpose of the OFR, and we 

are working to fulfill that mission. 

Mr. ELLISON. So could the FSOC discharge its responsibility 

without financial information and analysis? 

Ms. SHANNON. Congressman, I think in establishing the OFR 

there was a recognition that this kind of data, this kind of research 

would be important for understanding threats to financial stability, 

and that the data gaps that existed during the financial crisis had 

profound effects, and therefore that an organization like the OFR, 

with the mission of the OFR to collect data, to make that data 

available to the FSOC and its member agencies served a critical 

purpose in ensuring that they could carry out their function. 

Mr. ELLISON. You are using terms like ‘‘important’’ and ‘‘critical 

purpose’’ when the truth is that the OFR is essential to the FSOC 

functioning; isn’t that right? 

Ms. SHANNON. We do think that we have a very important mission and that it is a critical mission to ensure that that data and 

analysis is happening. 

Mr. ELLISON. Okay, fair enough. So since 1930, has there ever 

been a financial crisis quite as bad as the one we just went through 

a few years ago? 

Ms. SHANNON. Congressman, this obviously has been a very profound crisis, and it has had an effect obviously within the financial 

system and across the economy. 

Mr. ELLISON. But I am asking for you to rank it in terms of other 

financial crises. We have had recessions and stuff in the last, since 

the 1930s. Has there been one as damaging to the U.S. economy 

since the Great Depression? 

Ms. SHANNON. Congressman, the profound effects of this crisis, 

as you note, the effect— 

Mr. ELLISON. To your knowledge, has there been a worse one? 

Ms. SHANNON. No, sir. 

Mr. ELLISON. Okay. So we saw giants of the financial services industry like Bear Stearns fall, Lehman Brothers fall, Merrill Lynch 

had to be bought. We saw catastrophic harm, and as a result, we 

did something to protect our economy from systemic damage, and 

what just happened yesterday is this committee voted to deprive 

the committee that is charged with watching systemic risks be deprived of their eyes basically. Can you respond to that if you 

choose? 

Ms. SHANNON. Congressman, the OFR has an important mission 

to fill these data gaps, to perform the research and analysis functions that were established under statute. We are continuing to 

work to build the organization to fulfill that mission. We think it 

is an important mission, and we are going to continue to work to 

move forward. 

16 

Mr. ELLISON. There has been some focus today on your submission, and I think some might have expressed their personal opinion 

that it could be a little bit more robust, a little bit more detailed. 

In comparison, there has been some lavish praise heaped on the 

CFTC structure. However, the Majority underfunded this agency 

and ignored the warning of the impending fiscal crisis of former 

Commissioner Brooksley Born and slashed a number of the examiners. 

So I just find it quite remarkable that today CFTC is being 

looked upon as some sort of model agency when this very committee has underfunded that very agency. 

Do you feel that at the stage the OFR is at in its evolution since 

its founding, that the submission your office has provided to this 

committee is adequate to the moment under the conditions that 

you are in? 

Ms. SHANNON. Congressman, we absolutely are doing our best to 

be transparent. We are dedicated to making sure that this committee and the public has the information that they need, that we 

can be held accountable for what we are doing, and that there is 

a good understanding of how we see our mission, and we think that 

initial strategic framework— 

Mr. ELLISON. I just have to ask you a quick question about my 

own district if I have time. Minneapolis, my town, is a magnet for 

immigrants who actively participate and contribute to our local 

economy, and the vitality and security of other nations’ financial 

markets is of deep concern to us. Could you tell me how the OFR 

effort to establish the global legal entity identifier, that is the LEI, 

for parties in financial transactions, what is the status on the proposals you hope to deliver to the G20 at the June 2012 summit? 

Ms. SHANNON. Congressman, again, as I mentioned in my opening statement, this legal entity identifier is a very important initiative of the OFR and part of our broader mission to support better 

data standards. The LEI itself would create a specific identifier for 

every financial entity, and what this does is it lets us understand 

and lets data be collected to understand the position of institutions, 

the exposures of institutions. It will give us better understanding 

of counterparty risk, it will increase the ability of analysts, both 

regulators and in academia and in the markets themselves, to understand the interconnections within the system and better assess 

risks. 

It also is going to create important efficiencies for market participants, and having this identifier, it will improve data management, 

improve efficiencies in trading and in operations, and we think it 

is going to lead to important cost savings. 

Mr. ELLISON. Thank you, ma’am. I yield back the balance of my 

time, and I thank the chairman. 

Chairman NEUGEBAUER. I thank you. And now, we recognize the 

gentleman from Florida, Mr. Posey, for 5 minutes. 

Mr. POSEY. Thank you, Mr. Chairman. Just as an edification of 

a question you asked a little while ago to Ms. Shannon, you asked 

about their budget. And I think you asked that same question in 

July to her boss, Dr. Berner, and he said, ‘‘I am not aware that 

there is a statutory limit in the statute itself.’’ So just for the 

17 

record, your boss knows that there is not or apparently thinks 

there is not. 

Ms. Shannon, you seem like a very nice person, and I certainly 

hope you don’t take personally the frustration expressed by members of this committee, and there is a lot of frustration over a lot 

of wrongdoing that has resulted in no consequences and no accountability. It says that one of the top five goals of your agency 

is to build a world-class workplace. Can you give me an example 

of an existing world-class workplace that you would like to emulate? 

Ms. SHANNON. Congressman, what we are trying to do is make 

sure that we have in place the kind of HR policies, the kind of communication infrastructure— 

Mr. POSEY. I know, but is there a model? We want to build—are 

we going to reinvent the wheel or is there already another worldclass workplace you could just emulate? 

Ms. SHANNON. Congressman, we are trying to look at best practices across government and other organizations. 

Mr. POSEY. Do you know that another one exists? Is there another one that you consider a world-class workplace that exists 

now? 

Ms. SHANNON. Congressman, I am happy to get back to you on 

this. I don’t have one currently. 

Mr. POSEY. Okay. It sounds like we are going to build a worldclass waste of taxpayers’ money, quite frankly. What concerns a lot 

of us is that so many agencies now have just turned into lobbyist 

manufacturing machines, and with the information that your employees are going to have, the power that they are going to have 

to do good and do bad, we are really concerned about that. I have 

read the rules that you have laid out for your employees, that they 

shouldn’t do this because it would be improper, but there are no 

consequences or accountability for that behavior, and that kind of 

concerns us. 

We know with Madoff, the SEC, hey, they did a great job, they 

had great intel, and they knew what Madoff was doing wrong for 

10 years; they just refused to take any action. So, of course, we 

wonder, your agency, which seems to think it can outsmart Wall 

Street if they have enough extra people and enough software that 

they can see where the next problem is going to be, but everyone 

with half a brain in this country saw the last problem way before 

it burst. 

We knew there was a subprime crisis. It was just a matter of 

how long it would be before it burst. It was identified years in advance. But nobody took any action, just like Madoff—identified for 

10 years, but nobody took any action. So I don’t think we really 

have a problem finding out what goes wrong. The problem we have 

is holding people accountable for it. Madoff basically had to almost 

turn himself in. I don’t know if he was scared of the other people 

that he scammed and felt he was safer in prison. So far, I am told 

Corzine hasn’t even been interviewed yet by the Justice Department. Maybe he has since the last time I got an update. But we 

don’t see anybody going to jail for this bad behavior, and that is 

the only thing that is going to fix the bad behavior. 

18 

I just don’t think we are ever going to have anybody who is 

smart enough to dream up the next wave of criminal behavior and 

prevent it from happening if there are not consequences for that 

bad behavior, and that is the frustration we all have. 

Can you identify what you might be able to point out to be the 

next type of crisis, give us an example of what that might look 

like? 

Ms. SHANNON. Congressman, what we are trying to do is to gather data to fill gaps that existed in things like the shadow banking 

market in order to help regulators across the system to analyze 

what threats may exist. Now, this is a very complex mission, this 

is an issue that requires a certain amount of humility. It is a mission that requires that we continue to look forward because this is 

a dynamic market, and it is a dynamic system, and so what we are 

trying to do is to build the tools to allow for that analysis to happen, to build the process that will allow for both better analysis to 

help reduce the risk of a crisis but also— 

Mr. POSEY. Okay. A lot of people are concerned with the proprietary information you will have, even the trade secrets to which 

you will have access. They are concerned about the security of it. 

We know some of our national defense agencies have been hacked, 

and I wonder whether or not you will be able to have a safer process than some of them did. We have people who are concerned. 

They knew people who had Chrysler dealerships that the government took away and gave it to somebody else that they liked better. 

We know people who had Jeep dealerships that the government 

took away and gave to somebody else that they liked better. And 

so virtually, you are empowering a bunch of bureaucrats with the 

absolute confidential total information of every business in the 

United States of America, and I think some of them are concerned 

with the ability to abuse that power, again notwithstanding the 

fact you have some guidelines set up for your employees of how 

they must behave, but there is absolutely no penalty, no prescription for what happens if they violate the law, like so many other 

people have. Again, our biggest fear it that it is going to be another 

lobbyist manufacturing machine. Thank you, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. The gentleman 

from Delaware, Mr. Carney, is recognized for 5 minutes. 

Mr. CARNEY. Thank you, Mr. Chairman, for holding this hearing 

today, and thank you, Ms. Shannon, for coming in. I just really 

want to try to understand how you are going to achieve the objectives, which I think having an arm like yours, an agency like yours 

is an important thing. Clearly, there were things that were missed 

in the lead-up to 2008. I disagree a little bit with my colleague 

from the other side of the aisle that everybody saw this coming. I 

think if people saw it coming, there would have been a lot more 

people shorting the market, and that didn’t happen to the extent 

that you would have expected. 

So tell me how you, as the Chief Operating Officer of this new 

agency, are going about putting together a work plan in terms of 

identifying data needs? You mentioned establishing data standards. What kind of data are we talking about and how are you 

going to use that to help identify these risks? 

19 

And then, I would like to have you talk about what you might 

have done with some of the mortgage data and information and the 

concentration of risk at AIG and the derivatives markets, CDSs in 

particular. So tell me how you are going to approach this problem, 

what you are doing now, maybe what data you will be collecting 

this year and next, just so I have a better idea of how you are going 

to accomplish the charge that you have been given? 

Ms. SHANNON. Congressman, thank you very much. Again, the 

purpose of the OFR, the mission of the OFR is to collect data and 

conduct research, and in that data collection, only the data that is 

necessary to assess threats to financial stability, only the data that 

is necessary to fill gaps— 

Mr. CARNEY. So what does that look like for me, who doesn’t 

know the particulars that you are dealing with every day? 

Ms. SHANNON. So going to the example that you mentioned, in 

the crisis there was not a very good understanding of some of the 

interconnections within the market, some of the risks in the market that were created through the securitization and through the 

use of CDS. The data that were available at the time to assess 

these risks and to see how those risks may be transmitted through 

different markets, from one financial institution to another, that 

data was not available in a form that was most effectively useful 

to policymakers, to market participants themselves to truly understand their own exposures and the exposures of their counterparties, and the work of the OFR, the work of the FSOC to try and 

better understand risks across the entire system. Individual regulators are looking at one part of the system. The FSOC is charged 

with making sure they are looking across the entire system, and 

the OFR has been established to help in that mission. 

Mr. CARNEY. My time is ticking off, so what are the top two or 

three priorities with respect to what you need to do between now 

and next year? 

Ms. SHANNON. Congressman, let me point to two initiatives that 

we have under way. Right now, we are working with other FSOC 

agencies to conduct an inventory of the data that they have already. So, again, we see our mission only as filling gaps. We don’t 

intend to collect data for datas sake. The first thing that we need— 

Mr. CARNEY. Does that mean you don’t know what the gaps are 

yet or you are just identifying them? 

Ms. SHANNON. We are working to find out what those gaps are, 

and the data inventory is going to help us do that. If we understand what information already exists within the regulatory community, make that information available to others within the regulatory community, within the FSOC, we are going to be better able 

to utilize the data that already exists, and we are also going to be 

able to understand where the data gaps exist that need to be addressed. 

Mr. CARNEY. So are you doing anything or have you done anything with respect to the risk associated with European sovereign 

debt issues? 

Ms. SHANNON. Congressman, we are working with the FSOC, 

and this is obviously a very important issue in terms of the financial system. The OFR is supporting the FSOC on this and other 

issues. One issue or one example I would just point to, the OFR 

20 

has money market fund data, and is looking at that data to look 

at the exposures of U.S. entities to Europe. So that is one way that 

we are helping the FSOC in its analysis of those threats. 

Mr. CARNEY. Those principal agencies, I guess, are the ones that 

transmit those findings or make those findings and then share 

them with us? 

Ms. SHANNON. The analysis that might be conducted by the 

FSOC using those data— 

Mr. CARNEY. Would be done by you, but then the agencies themselves would issue those findings? 

Ms. SHANNON. We would support the FSOC and the member 

agencies. We also are working to publish some of our research. 

That research is obviously informed by the work that we are doing 

to support the FSOC. Let me just point to one example. 

Mr. CARNEY. I see my time has expired, so unless I am given the 

okay from the Chair, you probably should— 

Chairman NEUGEBAUER. I thank the gentleman. And now, someone who is doing a lot of good work on this issue of the OFR, Mr. 

Canseco from Texas. Thank you for the work you are doing. 

Mr. CANSECO. Thank you, Mr. Chairman. Ms. Shannon, thank 

you for being here today. The Office of Financial Research was created by Dodd-Frank more than 20 months ago. Has the OFR 

helped to prevent a financial crisis since that time? And, if so, what 

was the nature of that potential crisis? 

Ms. SHANNON. Congressman, we are working to stand up the 

OFR, and the mission of the OFR obviously is to help assess 

threats to financial stability. 

Mr. CANSECO. But let me interrupt you a second, please. Has it 

prevented any crisis or any potential crisis in those 20 months? 

Ms. SHANNON. Congressman, it is very hard for me to answer the 

counterfactual. I think what we are doing is putting in place the 

tools that we need to achieve our mission, and we are already— 

Mr. CANSECO. So then, your answer is no? 

Let me ask you this, how will the OFR know and, more importantly, how will the public know when the agency has played a 

hand in the prevention of an ongoing crisis? In other words, what 

is the measure of success for this agency? 

Ms. SHANNON. Congressman, we have established the mission of 

the OFR to support the FSOC and to provide research and analysis 

on threats to financial stability. Our function is to provide information, to provide data, to provide analysis to support policymakers, 

to support market participants in understanding and addressing 

the public— 

Mr. CANSECO. In other words, forgive me for interrupting you, 

but in other words, you are only a data-gathering institution, is 

that what I am hearing? 

Ms. SHANNON. The mission of the OFR is to— 

Mr. CANSECO. Gather data. 

Ms. SHANNON. Gather data, provide that data to FSOC agencies, 

also to publish data and to perform research and analysis. So we 

are a research organization. We provide data services. Those are 

the key functions of the OFR. 

21 

Mr. CANSECO. Dr. Berner is not here with us today. So do you 

know if Dr. Berner has created any kind of performance goals for 

the OFR? 

Ms. SHANNON. Congressman, we are working right now on establishing performance measures. As we mentioned in the strategic 

framework that was published last month, the OFR, in that strategic framework, established goals, established implementation priorities for the organization for this year and for the period ahead, 

and one of the things that we mentioned in that strategic framework that we are working on right now is performance measures. 

Mr. CANSECO. Good. 

Ms. SHANNON. We plan to have— 

Mr. CANSECO. Would you please ask if you and Dr. Berner can 

directly report to my office—1339 Longworth—on how the OFR 

plans to measure its success, and if you could provide it to us in 

writing, please. And I would also like to offer it as part of the 

record, if I may, once it is provided. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. CANSECO. Thank you. Ms. Shannon, at the last hearing, I 

asked Dr. Berner about what the OFR is doing to implement a robust cost-benefit analysis on their proposed methods for collecting 

data. Unfortunately, he did not provide specifics, and as we have 

noted, the Treasury Department has refused to provide him as a 

witness today for me to question him further. So can you please 

elaborate on what specific methods are being implemented for data 

collection to ensure cost-effectiveness? 

Ms. SHANNON. Congressman, I think the first priority is that the 

OFR will only collect data when it is absolutely necessary. The 

OFR recognizes and fully agrees with the principle that we need 

to focus that data collection on our mission. The only data that are 

necessary to assess threats to financial stability and only the data 

that is not otherwise available. And, again, I mentioned earlier 

that we are currently focused on establishing a data inventory of 

data available in FSOC agencies, purchased data, we have already 

completed this portion, collected data, and also derived data. 

And the intention there is to make sure that we don’t collect data 

that is not absolutely necessary. We are also very focused on ensuring that whatever data we collect is tied to the analytical needs related to threats to financial stability. So I would just note that we 

agree fully with the notion that we have to be very parsimonious 

in our data collection and that that data collection needs to have 

a high benefit. 

Mr. CANSECO. What kind of benefits have you identified as a result of these things that you just mentioned? 

Ms. SHANNON. Congressman, we are still in the process of putting together the data inventory. What we are doing is making sure 

that we know what data exists. Another benefit of this is that it 

is allowing us to work with other FSOC member agencies so that 

they also are aware of what data is available. I would mention that 

in the FSOC’s data committee, the OFR has been very actively 

working with other FSOC member agencies on what data needs 

they have. 

Mr. CANSECO. I have one more question. My time is about to run 

out, Mr. Chairman. 

22 

Chairman NEUGEBAUER. Okay. 

Mr. CANSECO. I want to know if the OFR has issued any subpoenas to compel a financial institution to give data to the OFR? 

Ms. SHANNON. I don’t believe so. 

Mr. CANSECO. Thank you very much. I yield back my time. 

Chairman NEUGEBAUER. I now recognize the ranking member, 

Mr. Capuano, for 5 minutes. 

Mr. CAPUANO. Thank you, Mr. Chairman. Ms. Shannon, do you 

drive a car? Do you drive? 

Ms. SHANNON. Yes, sir. 

Mr. CAPUANO. The last time you drove, did you put your seat belt 

on? 

Ms. SHANNON. Yes, sir. 

Mr. CAPUANO. Did it prevent you from having an accident? Did 

it prevent you from dying that day? 

Ms. SHANNON. I can’t answer that. 

Mr. CAPUANO. You don’t know, right? But you put the seat belt 

on? 

Ms. SHANNON. Yes. 

Mr. CAPUANO. Because you weren’t sure you were going to get in 

an accident? The last time you flew, did you go through those 

metal detectors? 

Ms. SHANNON. Yes, sir. 

Mr. CAPUANO. Did everybody go through those metal detectors on 

that flight? Did it absolutely stop a terrorist attack on that flight 

that day? You don’t know, do you? 

Ms. SHANNON. That is correct. 

Mr. CAPUANO. So what you do, you may never know. No one may 

ever know if you actually prevent a bad occurrence. No one can 

ever know if anybody ever prevents a bad occurrence; no police officer, no firefighter, no emergency technician. When you get asked 

an impossible question, it is impossible to answer it except with ridiculous analogies like I just did. 

I also wanted to submit for the record the strategic framework 

of the Office of Financial Research that is online. I know everybody 

has it, it has been referred to a bunch of times, but I would like 

to put it in the official record, without objection. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. CAPUANO. I have read it—well, I didn’t read it; I looked 

through it. It was very nice. I don’t know, Ms. Shannon, next time 

you do one of these updates, maybe you would be better off putting 

more pages in, making it thicker, and putting a glossy cover on it. 

Maybe that would make some people satisfied. Maybe not. You 

would probably then get criticized for spending too much time and 

wasting too much paper, I am not sure of that, either. 

I will tell you, though, I agree with one of my colleagues when 

he said people who commit bad behavior should be jailed, and that 

I actually think in this instance I totally agree with his assessment, that not enough people have paid enough consequences for 

the actions that they participated in in 2008 and other years. Do 

you have the authority under the statute to place anybody in jail? 

Ms. SHANNON. Congressman, the OFR does not have that authority. 

23 

Mr. CAPUANO. No, I didn’t think so. That is the Justice Department that does that and others, and I would agree, I totally agree, 

that I don’t think that they have been strong enough on their actions. I totally agree with that, but you are not the right agency 

to ask that question. I would hope that as you find, if you find 

wrongdoing, that you would submit it to the appropriate agencies 

for their review. Is that a fair assessment? Would that be in your 

responsibilities? 

Ms. SHANNON. Congressman, absolutely, the OFR, as I said, we 

are very dedicated to the objective of protecting data, we think this 

is essential to achieving our mission, and we will do whatever it 

takes to— 

Mr. CAPUANO. So if you uncovered wrongdoing, you would send 

it along to the appropriate investigative agency? 

Ms. SHANNON. Absolutely. 

Mr. CAPUANO. That is what I thought. I will tell you that—look, 

you are a new agency, you are just getting started, I share the frustration of some that a lot of the things from Dodd-Frank have 

taken so long to get going, I share that frustration. Yet at the same 

time, it is impossible to blame you specifically because I actually 

think it is along the line and I would like to be further down the 

road as well. I am looking forward to you being up and running. 

I happen to think the collection and analysis of data is an important thing that we should be doing. I really don’t care if it is OFR 

or somebody else doing it, but I do care deeply about the potential 

for excessive data collection. 

I think that is a very reasonable concern. I think that many— 

I think everybody here shares that. I would like to know from you, 

are you working on—do you already have a process if some business gets a thousand requests for information from you and more 

requests, the same requests from the Fed, and the same requests 

from the OCC, and the same requests from OFR, again, I think 

that is a very fair thing. I would like to know for a minute, are 

you working together with other agencies to make sure that the 

same questions, the same information is not gathered by each of 

you independently, thereby causing excessive cost and time to the 

private companies? 

Ms. SHANNON. Congressman, thank you for asking. This is an 

important question, and I am glad to have the opportunity to address it. We do see an important part of our mission is to help to 

support greater efficiencies in data collection across FSOC agencies, including of the type that you mentioned. If we do find in the 

data inventory that there are overlaps, duplication of effort, this is 

something that we would work to address. 

Our work on data standards, I think, also is relevant to this 

point. If there are specific data standards about how certain items 

of data are reported, that would create efficiencies, both for the regulatory community and also for those reporting, and we are very 

focused on this, and we do think that mission of helping to create 

efficiencies for regulators, for financial market participants, is a 

crucial part of what the OFR was set up to do. 

Mr. CAPUANO. I thank you. As time goes on, I will tell you that 

I think a lot of us will be keeping a close eye on that, and we will 

be keeping a close eye on your budget, even though we don’t techVerDate Nov 24 2008 18:52 Nov 30, 2012 Jkt 075090 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\75090.TXT TERRI
24 

nically have any role in the matter. Let’s be very clear about it. But 

if you get to the point where we think you are excessive, we will 

say so, and I will join them if I agree with them even though I 

think your mission is important. 

We are not there yet, obviously. I know you know that, but I 

wanted to say it because so many people have been commenting on 

the lack of some budgetary magic number, and I understand that, 

but if you exceed some number that upsets us, that we think is excessive, we will call you on it. If I am one of them, I will join my 

colleagues in doing that. I know you know that. 

The same thing with the data collection. I guess I would like to 

know, assuming I am a major company for which you are seeking 

information, is there a process that I could follow to say, hey, I just 

gave the same exact information to this other agency, didn’t you 

know that? And, by the way, I would like to make a complaint because you are killing me on this data request. Is there a process 

to follow by the companies or is it simply left up to your judgment 

that you have asked too many questions? 

Ms. SHANNON. Congressman, this, again, is an important question. It is something that we are working to build within our organizational structure, resources within the OFR that are dedicated 

to working with all of our stakeholders, with the regulatory community, but also with the financial market participants who are 

providing data to the FSOC and to the OFR to help ensure that 

we understand their concerns, their needs, and that the way that 

we are going about data collection is as efficient as possible, and 

I think this is critical to what the OFR was set up to do. 

Mr. CAPUANO. I appreciate it, Ms. Shannon. When the time 

comes, when you finalize this, I would really appreciate an education, an update on it because I actually think it is critically important. It is going to happen, there is no question that somebody 

is going to say, we provided too much data to too many people, the 

same data, and they are going to come to us, and I would like to 

know that there is a process whereby they should be following internally before they come to us, and when that gets settled, not 

just your agency, it will be other agencies as well, I would like to 

be updated on that when it happens. Thank you very much, and 

thank you, Mr. Chairman, for being reasonable on time. 

Chairman NEUGEBAUER. I thank the gentleman. The gentleman 

from Ohio, Mr. Renacci, is recognized for 5 minutes. 

Mr. RENACCI. Thank you, Mr. Chairman, and thank you, Ms. 

Shannon, for being here today. I have been listening to you. I know 

you have said a couple things, and I am going to repeat them. You 

said that the OFR’s role is—you have an important and critical 

mission. I have heard you say that 5 or 6 times. The other thing 

I heard you say was there is an importance of linking spending 

money to meet our goals, which are your goals, and the strategic 

plan. You mentioned that to Mr. Fitzpatrick. 

So I have a question for you, especially when it comes to that, 

because I think when it comes to spending money, when it is not 

your money it is a little easier, and one of our jobs up here is really 

oversight of money being spent, and I think that has to be a key 

to what we are talking about today. So you would admit, though, 

25 

that if you were giving somebody money, you would want to know 

what it was being spent for, correct? 

Ms. SHANNON. Congressman, it is absolutely essential that the 

OFR is accountable for how it is spending money. We completely 

agree with that. 

Mr. RENACCI. Okay. I have an email that is dated November 

15th from Dr. Berner, and I wish he was here, although you were 

copied on it, and you may have a copy of it, but it is where your 

organization was asking for $29 million, and you basically say that 

these amounts include a payment for the period July 10th through 

July 30th, we will continue to work with the board to provide them 

detail. So you are asking for money. There is not very much detail 

in that email. 

Then I have another email dated November 23rd which says, 

‘‘Here is your $29 million.’’ Now, it is kind of interesting because 

as a taxpayer, which I am, you are, and everybody in this room is, 

isn’t it more important—shouldn’t we know what that $29 million 

is being spent for? And can you give me some answers as to what— 

are we just asking for $29 million? Could it be a trip to Vegas, 

what could it be? What are the things that could be in that $29 

million, and wouldn’t it be better to have the detail for that? Can 

you kind of give me some details on that? 

Ms. SHANNON. Congressman, thank you. The emails that you reference were part of the materials, or a discussion between the 

Treasury and the Federal Reserve about the transfer of funds from 

the Fed. As you know, under the statute, the OFR is financed 

through the Federal Reserve for— 

Mr. RENACCI. I understand. I don’t want to go into the details. 

I understand that. What are the details of the $29 million? That 

is what I want to know. And are they expenditures you already 

made? Are they expenditures you are planning? Are they contractual obligations? Just tell me what the details are and how the 

process works to get $29 million because this seems—if I am a taxpayer, I am not very happy with just the process of asking without 

the details. 

Ms. SHANNON. That is right, Congressman, and I absolutely 

agree, we need to have clear documentation on these requests, and 

we do. These emails are part of a discussion, but there is other documentation related to that request. There were also meetings between the Treasury and the Federal Reserve about these requests. 

Mr. RENACCI. My time is running out. Is there any detail that 

supports the $29 million request? 

Ms. SHANNON. There are details. 

Mr. RENACCI. Specifically in writing? 

Ms. SHANNON. There are details, and we would be happy to work 

with your office to provide you the information you need. We also 

did provide in the testimony some background details on this. 

Mr. RENACCI. Would you be willing to send me in the next—as 

soon as possible, the details of the $29 million and something that 

shows what the request was for? 

Ms. SHANNON. Absolutely. And I should mention that the transfers are linked to the budget of the OFR, the published budget of 

the OFR and— 

26 

Mr. RENACCI. Look, I have been a business guy for 28 years, I 

understand what you are saying, but really, if you are going to ask 

for $29 million, that is not a drop in the bucket. We need to know 

what it is, and that is what this oversight panel is all about. We 

are trying to figure out what you are asking for. The concern I 

have is you asked—you told Mr. Fitzpatrick that you didn’t even 

have a strategic plan. I understand you have goals and missions, 

but you have to have a plan, and then after you have a plan, you 

have a request for dollars to implement that plan. I hear you don’t 

have the plan to implement, but yet you are asking for the dollars. 

It is problematic. 

Ms. SHANNON. I just want to note that we do have a budget in 

place, and that is the basis for this request. We do have a strategic 

framework in place, and we are continuing to work to elaborate on 

that further. 

Mr. RENACCI. All right. A number of us up here have talked 

about this financial research fund report that was put out. You are 

showing on October 1, 2012, that you are going to have 94 million, 

374 dollars of unobligated balances, so the start of the new year. 

Can you tell me a couple of answers to that? Where is that coming 

from? I also know that 2 years after the enactment of Dodd-Frank, 

you were supposed to refund the Fed and fund yourself through assessments. So let’s talk a little bit about that. Where is the $94 

million coming from in the report? Is it going to be refunded to the 

Fed? Did it come from assessments? There are a couple of questions there, if you could answer. 

Ms. SHANNON. Congressman, I am happy to explain the process 

and how those numbers relate to the process. The OFR is funded 

by the Federal Reserve. 

Mr. RENACCI. I understand the process. I am talking about the 

$94 million, where did it come from? It is a document. Is it Fed 

money that you are going to refund or is it assessments? These are 

pretty simple questions. 

Ms. SHANNON. Congressman, we are collecting money from the 

Fed. We will utilize the funding that we have requested. Any funding that is not utilized by July will be returned to the Fed. Beginning in July we will be financed through assessments— 

Mr. RENACCI. I understand that. How about the $94 million? The 

question is really simple, what are you going to do with the $94 

million of, as you call it, unobligated balances? 

Ms. SHANNON. At the end of this fiscal year? 

Mr. RENACCI. End of this year, start of next year. 

Ms. SHANNON. One important point I should make is that the fiscal year, the budget for the fiscal year does not align with the period for the assessments. The assessment period will begin in July 

of this year and cover a period— 

Mr. RENACCI. I understand that. I do understand the process. I 

am just asking a really simple question about $94 million and what 

are you going to do with the $94 million. Are there contractual obligations for it? You have not answered one of those questions. Is 

there a contractual obligation? Is it an amount you are going to refund? These are pretty simple questions. 

Ms. SHANNON. The money that we collect through assessments 

that is not obligated in Fiscal Year 2012 will be going towards 

27 

funding expenditures in Fiscal Year 2013. In that assessment period, if we don’t utilize any of those resources, they would go to reduce the assessment in the period that follows. So in each period, 

we are collecting the funding that we think we need to cover, that 

we estimate we need to cover the expenses for that assessment period, and if we— 

Mr. RENACCI. I have run so much out of time, and you are going 

in—it would have been a really simple answer to say, we know we 

have $94 million, we anticipate that so much is going to be given 

back to the Fed. Those are the kind of answers I think we are looking for. This is an oversight hearing. Tell us where you are spending the money. The taxpayers in this country want to hear those 

answers. They don’t want to hear all the policy and issues you are 

talking about. Thank you. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. And now the 

gentleman from New Mexico, Mr. Pearce, is recognized for 5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. Ms. Shannon, I know 

you feel like we are all kind of a little scratchy, and maybe we are. 

Some of that scratchiness comes—I am reading an email from Scott 

Alvarez. Do you know Scott Alvarez? It doesn’t matter if you know 

him or not. To George Madison from Scott Alvarez: ‘‘George, as we 

discussed the other day I have authorized our payment folks to 

transfer $29 million to OFR to cover expenses OFR and FSOC 

incur with the next quarter, so in response to your request—it goes 

on down later—I appreciate and will take you up on your offer to 

assemble the OFR folks next week or so to help us get a better 

handle on it.’’ 

Mr. CAPUANO. Will the gentleman yield for one second? I apologize for interrupting. 

Mr. PEARCE. No, I won’t yield. I appreciate and will take you up 

on your offer to assemble OFR folks in the next week or so to help 

us get a better handle on what amount— 

Mr. CAPUANO. Mr. Chairman, if the gentleman won’t yield, I 

would like to have a point of order. 

Mr. PEARCE. No, I won’t yield. 

Mr. CAPUANO. I am just curious as to what has shown up on the 

screen here. Is this something, is this a headline? It has nothing 

to do with Mr. Pearce’s time. 

Mr. PEARCE. This is a document that I have that I just want it 

to be advertised that the Treasury has refused to make Dr. Berner 

available. They refused to make him available. He is the one who 

ought to be at this hearing today. 

Mr. CAPUANO. So this is a commentary we can— 

Mr. PEARCE. Mr. Chairman, it is my time. I feel if the gentleman 

will stand down, he can ask for his own time. 

Mr. CAPUANO. This is a point of information. This is not—this is 

a point of information. I am trying to figure out how we use this. 

Mr. PEARCE. No, I am asking for that document to be up here. 

It is one I had prepared, so I thank the gentleman, and I will take 

my time back. 

Mr. CAPUANO. This is a statement. 

Mr. PEARCE. Mr. Chairman, if it is his time, let him speak. If it 

is not his time, then I would ask you to— 

28 

Mr. CAPUANO. Point of information, Mr. Chairman. I am just curious about the rules of the committee. 

Chairman NEUGEBAUER. I would ask both gentlemen to suspend 

a minute. This is an exhibit that Mr. Pearce has. The rules of the 

committee require that we distribute that. 

Mr. CAPUANO. And it has not been distributed. 

Chairman NEUGEBAUER. It has not been distributed, but it is 

being displayed for the members of the committee via obviously the 

two screens there. So I guess in the spirit that we— 

Mr. CAPUANO. I don’t mind, Mr. Chairman, that is all I was asking. I don’t mind the gentleman making a point. I do mind, when 

I see something on the screen and I have no idea what it is, I do 

mind not having notice of it. I think that is fair and reasonable. 

That is all. Actually, I think the gentleman has— 

Mr. PEARCE. I have no control of the screen. 

Mr. CAPUANO. I know you don’t. 

Mr. PEARCE. We asked for it to be displayed. I have no control 

of the screen. 

Mr. CAPUANO. That is why this wasn’t directed at you. 

Mr. PEARCE. If you are going to run an instant replay, we should 

put 4:07 back on the clock, that is when the gentleman’s objection 

started. 

Chairman NEUGEBAUER. I will give the gentleman time. 

Mr. PEARCE. All right. If I may resume, I appreciate and will 

take you up on your offer to assemble the OFR folks in the next 

week or so to help us get a better handle on what the amount of 

those expenses are expected to be. 

So we have this nice little buddy relationship between George 

and Scott. By the way, enjoy the Thanksgiving holiday. We have 

George and Scott just talking over an email, and we are shifting 

taxpayer money around, you are able to tax corporations without 

any oversight by the U.S. Congress. Our Constitution is pretty 

clear, and so if we are a little scratchy on our side, just understand 

it is because you are conducting things that we feel like are completely unconstitutional, I feel like they are completely unconstitutional, and with a guy who has been parading around, GSA all 

around the world the last few years, taking his wife along at taxpayer expense, our constituents, you don’t have to answer those 

questions, ma’am, because you don’t run for office. You are sitting 

up here in this kind of isolated little space requesting 29 million 

bucks for the next quarter, and, yes, we will get everybody together 

and we will kind of run those expenses up here some day, and we 

are going to want to look at the way our Founding Fathers intended this to occur is this body to appropriate, and they would 

bring you in here and they would grill you across, and you would 

have to really prove up on those. 

Instead, we get about a quarter of a page email to transfer 29 

million bucks, and that is offensive to the American people because 

they see our Secret Service, GSA, they see the waste of the taxpayer dollars; they see it. 

So you ran a $122 million budget last year and then your budget 

is roughly $60 million for contract services. What if we are going 

to look at those, Ms. Shannon, what are those for? What are you 

contracting $60 million out for? 

29 

Ms. SHANNON. Congressman, thank you. First, we absolutely 

agree on the importance of accountability. 

Mr. PEARCE. Can you pull the microphone up a little closer? We 

have a lot of people who would like to hear. 

Ms. SHANNON. Absolutely. Can you hear me? 

Mr. PEARCE. I just want to make sure everyone can hear you. 

Ms. SHANNON. Absolutely. We absolutely agree on the importance of accountability. 

Mr. PEARCE. So that is $60 million? 

Ms. SHANNON. And just to clarify, the email exchange that you 

pointed to— 

Mr. PEARCE. No, no, I am not asking about the email exchange, 

you can come back next week and talk about the email. I am asking about the $60 million that is in your budget for contract services. 

Ms. SHANNON. And I am happy to answer that. The contracting 

that we are doing right now falls into two categories, two main categories. First, the OFR receives certain services from the Treasury, 

from the Bureau of Public Debt, and also from the OCC. 

Mr. PEARCE. What kind of services? 

Ms. SHANNON. On the implementation of our operational activities, human resources, financial management, procurement. These 

are obviously crucial issues for our stand-up. These are things that 

we expect to continue. We are using the efficiency of operations 

that are— 

Mr. PEARCE. So you are contracting back with the government? 

Ms. SHANNON. So we are contracting— 

Mr. PEARCE. I really do need to move on if you don’t mind. So 

you are assessing, you had said in your document in your presentation, that you are trying to assess the threats to financial stability. If you were going to give me the greatest threat to financial 

security, stability, I am sorry, what would you—you are the COO. 

What would you say the greatest threat is? 

Ms. SHANNON. So, Congressman— 

Mr. PEARCE. Yes, to the financial stability. You are the COO, you 

are the one who calls the plays. What is the greatest threat to financial stability that we face? 

Ms. SHANNON. Congressman, in my position as COO, just to clarify, I am in charge of— 

Mr. PEARCE. No, just give me a one-word answer. What is the 

greatest threat we face? 

Ms. SHANNON. Congressman, I don’t—I think it— 

Mr. PEARCE. Okay, so we hired a COO who can’t put it into one 

word. I think one of the greatest threats, for instance, if you had 

me drawing your salary and pulling your job, I think one of the 

greatest threats is that we have allowed some of the financial institutions to build up a 40-to-1 leverage ratio. That sunk Lehman 

Brothers, and it should have sunk several others. But we have a 

COO who can’t call the plays. 

You can’t tell me in one word what you think the greatest financial risk is, and you are hiring all the people who are supposed to 

be putting this in place. So you spent $122 million last year with 

no performance measure in place, and you are assembling a team 

without knowing exactly what the goal is. If a coach wants to have 

30 

a team that is a passing team, he obviously needs a passer and 

some people to catch the ball. And if he hires all running backs, 

then he probably isn’t going to do that, and you have—you can’t 

tell me where the goal line is. 

I will guarantee you one of the greatest threats is that leverage 

ratio, and I wonder how we are building a team without a COO 

who can state in one word what she believes is the greatest risk 

to financial stability that we face. 

If you find a little bit of testiness coming from this side of the 

committee, understand it is because we think you are walking past 

the Constitution, whistling past the graveyard, and you are also 

putting a team in place without any understanding of where you 

want to go and without any performance measures in place, and 

you also, in your own words, you can’t state, in your view, what 

the greatest risk to financial stability in the country is, and you are 

tasked with that job. That maybe is why some of us are just a little 

bit testy on this side. I yield back, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman, and now the 

gentleman from Tennessee, Mr. Fincher, is recognized for 5 minutes. 

Mr. FINCHER. Thank you, Mr. Chairman, and thank you, Ms. 

Shannon, for being here today. How long have you worked for the 

OFR? How long have you been with the Office? 

Ms. SHANNON. I have been with the Office since July of last year. 

Mr. FINCHER. Okay. What is your salary? 

Ms. SHANNON. Congressman, I am paid within the pay bands of 

the OFR, I am in a management position within the OFR. I am 

paid within the pay band 8 of the OFR. 

Mr. FINCHER. And what is that? 

Ms. SHANNON. The band extends from $136,000 to $247,000. The 

bands in the OFR were established consistent with the statute to 

be FIRREA comparable, and so the way that the OFR set up its 

salary structure was to look at the salary structures within other 

organizations that are part of the FIRREA, the OCC specifically, 

and we worked on establishing bands that were consistent with the 

legislative requirements. 

Mr. FINCHER. So it was $136,000 to $247,000. Would you be on 

the lower end or the higher end of that scale? 

Ms. SHANNON. I am within that band, and, again, this is consistent with what the statute establishes for the way that the OFR 

is required to set its pay. 

Mr. FINCHER. Okay. During the July 14th hearing of last year, 

I asked whether there is a cap on salaries within the OFR. Dr. 

Berner testified that OFR has set a salary guideline, a set of salary 

guidelines that are consistent with the pay scale for other Federal 

financial regulators, and he would provide the salary cap to the 

subcommittee. We haven’t received that yet. And so, do you have 

the cap for the employees? 

Ms. SHANNON. Congressman, we are happy to make that information available about the pay bands within the OFR and the pay 

scales within the OFR. I had understood that we had provided that 

information, but we would be happy to provide that information if 

you don’t have it. 

31 

Mr. FINCHER. Okay. Following up with my colleague Mr. Pearce, 

when he was talking about the contractual services, have the contracts been subject to competitive bidding? 

Ms. SHANNON. Congressman, we do follow Federal regulation, 

and in general, yes, the contracts have been subject to competitive 

bidding. 

Mr. FINCHER. All of them? 

Ms. SHANNON. There has been, I think, and I can check this, I 

think on some of the data procurement, we have done some sole 

source contracting, and in all cases, have been doing so consistent 

with Federal regulations for that kind of contracting. 

Mr. FINCHER. Okay. Can you get us a detailed copy, the subcommittee, on all the contracts that have been bid, if all of them 

have? 

Ms. SHANNON. Congressman, we are happy to provide you the information you need. 

Mr. FINCHER. Thank you. And then another question: Have you 

ever owned your own business? 

Ms. SHANNON. Congressman, no, I haven’t. 

Mr. FINCHER. Okay, all right. That is all. I yield back, Mr. Chairman. Thank you. 

Chairman NEUGEBAUER. I thank the gentleman. Are there any 

other Members who would like a follow-up? Just Mr. Posey? 

Mr. POSEY. Thank you, Mr. Chairman, just momentarily. Ms. 

Shannon, I am a little bit chagrined that when the Congressman 

asked you what your salary was, you refused to tell him. 

Ms. SHANNON. Congressman, I didn’t refuse. I am paid within 

the OFR salary band. 

Mr. POSEY. He didn’t ask you what your salary range or band 

was, he asked you how much you made. It is no big deal. It ought 

to be a matter of public record. I just think you would be straightforward enough to tell him exactly what it is. 

Ms. SHANNON. Congressman, I am within the bands of the OFR, 

the band-aid of the OFR. 

Mr. POSEY. I can understand dodging a lot of questions, but I 

don’t see what the harm is in telling a Member of Congress who 

asks you how much you are paid just a straight answer. Do you 

not know how much you are paid? 

Ms. SHANNON. Congressman, I am paid within that band, and— 

Mr. POSEY. That is like the Fifth Amendment. 

Chairman NEUGEBAUER. Ms. Shannon, would you be prepared to 

furnish that to—rather than doing it in a public space here—Mr. 

Posey? 

Mr. POSEY. Mr. Chairman, I don’t even care about it. I just care 

that she refused to answer the gentleman’s question. 

Ms. SHANNON. Congressman, I believe I have answered the question. I am happy to provide any additional information about how 

we set salary structures within the OFR. 

Chairman NEUGEBAUER. I think he asked you a direct question, 

and I think the pinch is that you didn’t answer the question. 

Mr. Ellison? 

Mr. ELLISON. Thank you, Mr. Chairman. I had a follow-up on the 

point raised by the gentleman from Florida, Mr. Posey, not this last 

round but the one before, and I agree that there must be conVerDate Nov 24 2008 18:52 Nov 30, 2012 Jkt 075090 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\75090.TXT TERRI
32 

sequences for bad behavior, and some people should go to jail if 

that rises to the level of criminal conduct for the subprime fraudulent activity. Today, there are about 325 FBI agents pursuing almost 100,000 cases of mortgage fraud, and that is why I am sort 

of wondering why—I am actually at a loss to see how the OFR can 

be defunded by this committee. It can be seen as just creating, I 

guess the term ‘‘lobbying machine’’ was used in connection with 

OFR. I can’t really see that if our goal is to protect people. 

Here is my question: To assess the risk gaps you identified, do 

you have the appropriate level of independence to achieve your 

goals? 

Ms. SHANNON. Congressman, under the statute, the OFR has certain authorities and certain responsibilities, a confirmed Director of 

the OFR will have certain authorities to conduct the mission of the 

Office. We are working very hard to build the operations of the Office, and we think that we have the tools we need to meet that mission, and we are continuing to make progress in doing so. 

Mr. ELLISON. Just a quick follow-up. And I also just want to say 

that I can’t escape the fact that our Nation was brought to the 

brink of financial collapse in October 2008. That is what brought 

us to the moment where we had to legislate to create your agency, 

and the fact that so much of the questioning has to do with how 

much you are paid, I am curious to know, I was waiting for somebody to ask you what kind of car you drive or what kind of seats 

you have on your bathroom toilets. 

It gets crazy after a point. The real issue is, how are we going 

to protect the American financial system and does the FSOC need 

accurate data or not, and is your agency positioning itself to provide the data and the analysis that is needed? That is the issue for 

me. I guess that is not really a question, it is just my reaction to 

some of the things that were offered in the hearing today. 

Chairman NEUGEBAUER. Mr. Fincher? 

Mr. FINCHER. Yes, let me just say something in response to my 

colleague, Mr. Ellison. I don’t mean to offend you, Ms. Shannon, or 

my colleagues on the other side of the aisle, but this is taxpayer 

money, and when people back home see that this is happening and 

see that, with all due respect, you won’t answer the question about 

how much money you make, specifically. When is the last time you 

had a pay raise, would you answer that? 

Ms. SHANNON. Congressman, I have been in the OFR for 9 

months, and I haven’t received a pay raise since I have been in the 

OFR. 

Mr. FINCHER. Okay. The perception from the general public when 

they see this, it just upsets them, and with all due respect, I don’t 

work for the President, for the Speaker, or for the Chairman. I 

work for my district back home, and they are really sick and tired 

of this, and so it is just frustrating. I don’t understand why you 

won’t just tell me how much money you make, but at the same 

time you see, no offense to my colleagues on the other side of the 

aisle, but this is their money, it is not ours. I yield back. 

Mr. POSEY. Mr. Chairman? 

Chairman NEUGEBAUER. Just a minute, I think Mr. Pearce— 

Mr. PEARCE. Thank you, Mr. Chairman. If I could kind of follow 

along on that. The Treasury Secretary claims there is going to be 

33 

transparency in accountability and transparency and says that we 

post all the salaries—you are government workers, aren’t you? Are 

you a government agency? 

Ms. SHANNON. Yes, Congressman. 

Mr. PEARCE. That is what it comes down to. It has little to do 

with what you actually make; it has to do with the transparency. 

I know my friend from Minnesota really doesn’t think that is a part 

of transparency, but maybe we do, and maybe it is just a different 

point of view there. Are you familiar with—let me go to another 

question. I will come to the familiarity with— 

So you said that you want to fill in the gaps of information. Isn’t 

that kind of what you said, gaps of data? 

Ms. SHANNON. Data gaps related to assessing— 

Mr. PEARCE. Yes, data gaps related, that is your function, right? 

You have some data available and some gaps in the data. So 

what—can you identify those gaps in the data, what is not available? 

Ms. SHANNON. Congressman, we are working now to— 

Mr. PEARCE. So, again, you tell me the answer is no. It says in 

your first paragraph, we are beginning to deliver on our data- and 

research-related mandates, and yet you can’t give me one specific. 

You can’t tell me what the risks to financial security are, and you 

can’t tell me what the gaps are, and you are building a team to 

measure stuff that you can’t tell either component of, and we just 

sit up here and say we have no control, it is supposed to come 

through an appropriating committee who could defund you if you 

can’t provide these things. So it does get a little bit scratchy. 

Are you familiar with long-term capital? 

Ms. SHANNON. Congressman, to answer your question, we are beginning to deliver on our— 

Mr. PEARCE. No, no, but you can’t give me any of those specifics 

today. Could you provide them sometime in the next week or so? 

Ms. SHANNON. Congressman, we are happy to answer your questions. I would be happy to answer your question as well if you 

would permit me. 

Mr. PEARCE. So just itemize the data gaps that you see that we 

ought to be filling up. I don’t want to hear that we are getting 

around to it, and I don’t want to hear that because I have already 

heard that in every other answer, but if you have 1, 2, 3, these are 

the data gaps that we are trying to figure out how to assess, that 

would be something I would consider significant, but if you can’t 

answer 1, 2, 3, and fill in the blanks, then I am not much interested in hearing the circuitous discussion that you are having on 

every other question, ma’am. So if you have the 1, 2, 3, go. If you 

don’t, then don’t go. 

Ms. SHANNON. Congressman, we are inventorying the data that 

is in the FSOC now, we are going to be looking at that data, and 

we are going to be looking at what additional data we need to assess threats to financial stability. 

Mr. PEARCE. But I don’t hear any gaps there, I don’t hear you 

identifying any gaps. So thank you very much on that. 

Now I will go back to my other question, the last question is are 

you familiar with long-term capital? 

Ms. SHANNON. Congressman, I am familiar with— 

34 

Mr. PEARCE. So long-term capital—Mr. Ellison says that we are 

trying to fill a gap that was created by 2008. Long-term capital almost broke our financial system about 5 years before, and so we 

didn’t respond to long-term capital at all. We just bailed them out. 

Mr. Greenspan went and took a billion dollars from several of the 

different corporations and bought the assets up. So it is not like the 

government didn’t know we were in deep distress long before 2008. 

And so, again, part of the friction from this side is that we see 

a bureaucracy that is created out of thin air to do something that 

really can’t tell us much about what it is doing, it spent $122 million last year building a team without any performance specifics 

and without any taxpayer control and without any transparency, 

and people get a little frustrated with it. That is all that is going 

on here today. 

From my point, I am watching that seething anger toward the 

GSA people and towards the people who are running agencies who 

won’t answer questions in front of committees, and I want that 

seething anger to continue because they are getting frustrated with 

agencies that are totally unresponsive and are killing businesses 

that are close to them, and they see no purpose in it. And so that 

is the reason I ask questions. I don’t think I am going to get an 

answer when I come here, but I ask it so that the people out there 

watching feed that understanding of just how convoluted Washington has become. I will yield back, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. Mr. Capuano is 

recognized. 

Mr. CAPUANO. Thank you, Mr. Chairman. I believe I have something I want to put up on the screen. There it is. That is my political statement for the week, Mr. Chairman. I only put that up because, look, I want to be very clear. I believe that our offices have 

worked very cooperatively together for the last year and a half, and 

I enjoy working with you. I think today’s hearing asks some serious 

questions. I think most of the questions that have been asked are 

reasonable and fair, some tough, some not. I think some of them 

are kind of ridiculous, but in general, I think it is a good thing that 

we are having this hearing and keeping an eye on what they are 

doing. 

However—whoever is the technology can take that nonsense 

down because the truth is I only did it to make the point. The point 

is when you put something up on the screen that is unattributed, 

it looks like official policy of this committee, and all I want is if 

somebody wants to make a statement and publicize it, go ahead 

and do it, put your name on it so everybody knows it is your opinion, not the opinion of this committee. So that is point number one. 

Point number two, as far as your salary, Ms. Shannon, look, I 

don’t really mind one way or the other. What I do mind is the, and 

I don’t think it happened until later on, whenever we talk about 

our salaries in public life, nobody likes whatever we get paid, if you 

get paid 30 cents, some people think it is too much. If you don’t— 

I hope you do provide the information later on, the specific detail 

because, fine, if somebody wants to publicize your information, they 

can get it anyway, they can get mine. I don’t like putting mine out 

there, either. I file a document every year to tell them my whole 

35 

family’s income, more stuff about me than my proctologist knows, 

but so be it. 

I chose to be here. It is public rule, and here we are. You have 

to do the same thing. At the same time in a public hearing, I do 

think it is inappropriate to necessarily ask that question. 

I guess what I am saying is, I want to be clear, the differences 

I have had with today’s hearing are not a general thing. I actually 

think it is good. I share 95 percent of the questions that are here 

and the concerns about them. I do share the concerns about how 

much money you are spending, I do share the concerns about public disclosure of them, and I do think that that time will come, and 

if it is appropriate I may join my colleagues in saying it is too 

much. 

I might join them if I knew your salary saying you get paid too 

much. I don’t know. But the bottom line is here, we are here today, 

and I think most of us have done it, to be responsible to our constituents, and our job in Congress is to oversee the things we have 

created. OFR is one of them. And I think that today has been a 

good opportunity to ask questions. There will be more as you go 

along, and you know that, I know that, we all know that, and I am 

looking forward to having a more thoughtful discussion in the future when we have more to ask, when Dr. Berner is confirmed, 

when you file the first annual report, when you have a more thorough strategic plan, and, again, I don’t mind differences of opinion. 

I know some people don’t like the creation of your agency, and as 

I said from the beginning, I don’t think the creation of your agency 

was good, bad or indifferent, but somebody had to do it. If it wasn’t 

going to be you, it could have been somebody else, but the way 

Congress decided in our convoluted way, and it is not newly convoluted, it has been convoluted since day one, so in our convoluted 

way, we came up with a new agency because whatever the thousand reasons were. So be it. 

You have an important job to do, you know it. I hope that your 

agency does it. I believe, I hope that you will take the job seriously, 

and as time goes forward, we will have you or Dr. Berner or whoever back at a later time to ask more detailed, thoughtful information, and I thank you for today, and I thank the chairman for his 

indulgences. 

Mr. POSEY. Mr. Chairman? 

Chairman NEUGEBAUER. One minute. 

Mr. POSEY. Thank you, Mr. Chairman. When I got here, a senior 

Member told me, ‘‘The thing that is going to frustrate you the most 

in committee is when the bureaucrats come in here and they will 

prove that they are smarter than you are and that they run this 

institution and you don’t, they will refuse to give you a yes-or-no 

answer, they will dodge.’’ And, you know, it is absolutely true; that 

has been my biggest disappointment. 

When the gentleman from Massachusetts asked the 10 biggest 

bankers in this country how much they made a year and what 

their bonuses were, they didn’t have to tell him. 

Mr. CAPUANO. I didn’t ask that question. 

Mr. POSEY. But they did. They weren’t under oath. They didn’t 

have to tell him, but they did. A condescending attitude of evasiveness and arrogance and defiance is what fuels the public distrust 

36 

in this process. Sure, Congress does a lot of things to prove they 

shouldn’t be trusted, and so do others, but a blatant, arrogant, defiant, evasive attitude makes it even worse, and given the times that 

we are in, when we are seeing the excesses of the GSA, we are seeing the taxpayers’ money squandered, I just don’t think it is wise 

to refuse to answer the gentleman’s simple question when the 

agency flag-waving statement is, ‘‘We recognize the need for transparency.’’ 

The President said something to the effect of on a YouTube video 

I saw recently that the only people who don’t want transparency 

are people who have something to hide, and so when you refuse to 

answer a simple question, everybody up here has to immediately 

wonder why. We will have constituents say, why wouldn’t that lady 

tell you how much she made? She is a Federal employee. We know 

how much you make, we know how much the President makes. 

Why would somebody refuse to answer the gentleman’s simple 

question? We know how much members of the private sector who 

come in here make, and they are not that defiant, that arrogant, 

and that evasive, and so I am kind of at a loss as to what to tell 

them, and if any of the Members have any advice on how you 

would respond to something like that, I would kind of like to know 

it. Thank you, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. I just have a 

quick follow-up. Ms. Shannon, you and I had a dialogue when I 

was asking questions, and then I believe Mr. Posey pointed out 

that Dr. Berner said when he testified in July, ‘‘I am not aware 

that there is a statutory limit.’’ Do you believe there is a statutory 

limit on how much the agency can spend? Dr. Berner said there 

wasn’t. Do you agree with his statement? 

Ms. SHANNON. Congressman, I understand there are controls established within the statute for the spending of the OFR. We are— 

under the budget of the OFR, it must be tied to achieving the mission, it has to be, we are accountable to oversight. 

Chairman NEUGEBAUER. But basically, Dr. Berner said that 

there is no statutory limit. Do you agree with that statement, yes 

or no? 

Ms. SHANNON. Congressman, again, I think there are controls 

within the statute. 

Chairman NEUGEBAUER. Ms. Shannon, I want to say that your 

answer is no, that you don’t agree with Dr. Berner’s statement, 

then, all right? That is my assumption. I am going to assume that 

you disagree with Dr. Berner, that you don’t believe there is, because obviously you are not answering the question, so I am going 

to assume it is no. 

I know you are going to be disappointed, but we are going to 

close out the hearing. We very much appreciate you coming and 

testifying. Again, I think we were extremely disappointed, obviously, that Dr. Berner did not come. 

37 

The Chair notes that some Members may have additional questions for this witness, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for Members to submit written questions to this witness and to 

place her responses in the record. 

With that, the hearing is adjourned. 

[Whereupon, at 12:38 p.m., the hearing was adjourned.] 

(39) 

A P P E N D I X 

April 19, 2012 

40 


75090.001

Chainnan Randy Neugebauer 

Opening Statement 

"Budget Hearing Thc Office of Financial Research" 

Aeri I 1 20_12 __ " ______________ " _____ _ 

Thank you for attending this important hearing on the Office of Financial 

Research. This will be our second hearing that will focus on the initial stand-up of 

the OFR - yet another governmental agency created by the Dodd-Frank Act. 

What we learned in our hearing last July was not encouraging: The OFR has the 

authority to raise its own money, set its own budget, and fund long-term research 

projects at will. It can hire without limit, and OFR employees are not subject to 

ordinary government salary limits. It has subpoena power to compel financial 

companies to provide information to the massive database OFR is charged with 

creating. In short, the scope, mission, and cost of the OFR are limited only by the 

imagination of its Director. 

In that July hearing our members also raised specific concerns to Dick Berner - the 

person in charge of standing up the OFR - about the incoherence of the Agency's 

budget and its lack of a detailed strategic plan. The OFR's budget and strategic 

planning will be the subject of today's hearing. We were hoping to hear from Dr. 

Berner about what, if any, progress he has made in addressing our members' 

conccrns. Regretfully, Treasury has refused to make Mr. Berner available to this 

Committee. 

Given Mr. Berner's role as head of the OFR, there is no doubt that he is the most 

appropriate witness for this hearing. J believe that his failure to testify today is in 

tension with his prior testimony to this Subcommittee. Dr. Berner stated at our July 
41 


75090.002

hearing that he wanted "to make sure ... this committee, in particular, understands 

that rOPR] wants to be accountable to Congress" and that "[The OPR] wants to be 

completely transparent in what we do." Moreover, Dr. Bemer's pledge is on top of 

Secretary Geithner's promise of "full transparency and disclosure" in the financial 

reform process. 

I ask my colleagues to consider how it is possible for the OFR to be accountable 

for and transparent with its budget and strategic plan if Treasury withholds the 

testimony of aPR's most senior leader? 

Perhaps my concerns would be lessened if the aPR were making meaningful 

progress in its start-up phase. But the OPR'5 accomplishments so far appear to be 

few. For example, what has the aPR done to date to be a responsible steward of 

the information that it collects? What policies has it put in place to make sure that 

businesses are not saddled with duplicative information requests? And what work 

has it done to determine whether it is even realistic to expect to be able to reduce 

duplicative data requests? Finally, to the extent that the OFR has done work in 

these areas at all, is the progress of their work satisfactory considering that we are 

approaching the two-year anniversary of the Dodd-Frank Act? 

We are now at 20 months after the OFR's creation, and-by its own admissionthe OrR does not have any measures in place by which to measure its 

performance. In March of this year, the OFR published a "strategic framework," 

but even then the OFR didn't specify how it defined success and failure. It merely 

recounted a number of very broad aspirational goals. 
42 


75090.003

I believe that this is unacceptable. The OFR appears to be more big government 

with little accountability. Whatever the shortcomings in the law that created the 

OFR, [ want to be clear about one very important point: we are here today to 

demonstrate that Congress, and this Subcommittee, is watching. 

### 
43 


75090.004

EMBARGOED UNIIL DELIVERY 

Michele Shannon 

Chief Operating Officer 

Office of Financial Research, U.S. Department of the Treasury 

Written Testimony Before the House Financial Services Subcommittee on 

Oversight and Investigations 

"Budget Hearing - Office of Financial Research" 

April 19, 2012 

Introduction 

Chainnan Neugebauer, Ranking Member Capuano. and other members of the subcommittee. 

thank you for the opportunity to be here today and to testify about the progress that the OFR is 

making to fultill its mission and carry out its statutory responsibilities. 

The OFR has made substantial progress since this subcommittee's oversight hearing on the 

OfJice nine months ago. In my testimony today. I will discuss the mission of the OFR. explain 

our strategic goals and the steps we are taking to achieve them. and review the OFR budget and 

Ilmding. 

Mission 

The Dodd-Frank Act established the OFR to serve the Financial Stability Oversight Council 

(Council). its member agencies. and the public by improving the quality. transparency. and 

accessibility of financial data and infonnation. by conducting and sponsoring research related to 

financial stability. and by promoting best practices in risk managcmcnt. 

Although there will always be a fundamental uncertainty about the source of threats to financial 

stability. the basic idea underlying the OFR's mandate is that better data and analysis can support 

the design of stronger financial shock absorbers and guardrails to reduce the risk of crises. They 

can also support earlier warning and effective responses to reduce the effects of crises when they 

occur, and help draw lessons for the future, 

Page II 
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EMBARGOED UNTIL DELIVERY 

Strategic Goals and Work to Achieve Them 

The OFR has made substantial progress over the last nine months in its stand-up. A Strategic 

Framework is now in place to guide our way forward. we are seeing accelerated progress in 

building the OFR's staff and institutional infrastructure. and we are beginning to deliver on our 

data and research related mandates. 

The Strategic Framework. published on March 15.2012, establishes live goals for the OFR: 

I. Support the Council through the secure provision of high-quality financial data and 

analysis needed to monitor threats to financial stability. 

2, Develop and promote data standards and best practices. 

3. Establish a center for excellence for resean:h on financial stability and promoting best 

practices for risk management. 

4. Provide the public with key data and analysis, while protecting sensitive infom13tion, 

5. Establish the OFR as an etIicicnt organization and world-class workplace. 

These goals tie to our mission, and the work we have done in the last nine months focuses on 

accomplishing the goals in support of that mission. 

1. Support the Council through the secure provision of high-quality financial data and 

analysis needed to monitor threats to financial stability. 

The OFR has begun to support the Council and its member agencies by providing analyses and 

data-related services. For example. the orR is providing data for use by the Council in 

developing its Annual Report on financial stabi lity. as well as broader data-related procurement 

and support. The Ofticc is also providing analytic input for the Council's analysis, such as data 

and analysis related to designation of nonbank financial companies for consolidated supervision 

by the Federal Reserve Board. The OFR is also actively working with Council member agencies 

and staff to develop and maintain an initial "dashboard" of metrics and indicators related to 

tinancial stability, initially drawn from previous academic research and the Council's 2011 

Annual Report. 

The OFR fully recognizes the need to be thoughtful and judicious in fulfilling its data-related 

mandate. The OFR will not duplicate existing efforts. Rather, it will collect data only when 

necessary to assess threats to financial stability and only when the data are not otherwise 

available. At the same time, the OFR will seek to create new efficiencies through collaboration 

with other Council member agencies to eliminate redundant reporting requirements across the 

regulatory system. 

As a first step, the OFR is establishing an inventory of data held by Council member agencies. A 

first phase-an inventory of purchased data-has been completed, and a second phase on 

collected data has been initiated. The OFR has also begun work to improve data quality and 

processing efticiency and to broaden data availability among the Council and member agencies. 

Page 12 
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EMBARGOED UNTfL DELIVERY 

A key vehicle to support collaboration on data-related issues is the Council"s Data Committee, 

which the Council established to support data collection and information sharing. as well as to 

provide direction to, and request data from, th" OI'R. The committee also supports working 

teams on topics relevant to the Council, such as data classification among Council members and 

input on the "dashboard" noted above. 

2. Develop and promote data standards and best practices 

The OFR is promoting stronger data-related standards to improve the quality and scope of 

financial data. which in turn should help regulators and market participants mitigate risks to the 

financial system. Such standards will also help firms link and aggregate information more easily 

and allow them to use the same basic data If)r reporting to regulators and for managing their 

businesses-providing important efficiencies and cost-savings. 

A key early initiative of the OFR is its ongoing work with policymakers. regulators, and the 

private sector to establish a unique. global standard for identifying parties to financial 

transactions. This Legal Entity Identitier (LEI) will allow for better understanding of true 

exposures and counterparty risks across the system-to the beneiit of both market participants 

and regulators. The OFR is taking an active role in the process led by the intemational Financial 

Stability Board. which will deliver concrete proposals on the implementation of an LEI system to 

the G-20 at its Summit meeting in June 20l2. The OFR is also working with Council member 

agencies to ensure readiness tor the LEI and to support its adoption. 

Looking forward. the OFR will broaden its agenda to promote other global data-related standards 

when those standards enhance the ability to identify and mitigate threats to financial stability, 

and assist Council member agencies in defining standards and best practices for their own data 

collection and managemcnt. 

3. Establish a center for excellence for research on financial stability and promote 

best practices for risk management 

The OFR is working to create a collaborative environment tor conducting. coordinating, and 

sponsoring research and analysis on risks to financial stability and best practices for risk 

management. This effort is already producing results: 

The OI'R released the first paper of its Working Paper Series in January 20 12-A Survey 0/ 

Systemic Risk AnalVlics-focusing on quantitative tools for assessing threats to financial 

stability. Last month. the Office issued the sccond paper in the series--Forging Besl 

Practices in Risk Managemenl- providing a broad assessment of risk management practices 

and how risk management can be improvcd. The OFR is inviting researchers and other 

interested parties to review this work. 

• In December. the OFR teamed with the Council to host a conference entitled, "The 

Macroprudential Toolkit: Measurement and Analysis" in Washington. D.C. The conference 

brought together thought leaders from the financial regulatory community. academia, public 

interest groups. and the financial services industry to discuss issues related to data. 

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EMBARGOED UNTIL DELIVERY 

technology, and analytical approaches for assessing. monitoring. and mitigating threats to 

Jinancial stability. 

• Last fall, the OFR launched a Research Seminar Series. inviting researchers in academia, 

government, and tbe private sector to present Jlndings on a range of topics related to the 

OFR's mission. As of April 9, the Office has hosted 17 widely attended meetings. 

On March 22, 2012. the OFR announced plans to create the Financial Research Advisory 

Committee of distinguishcd academics, researchers, industry leaders. government officials. 

and experts in the iields of data and technology. The committee will serve as a valuable 

resource for broadening the OFR's analytical perspective and provide a critical link to 

diverse knowledge. experience. and perspcctives. 

During the remainder of FY 2012. the Offiee will conduct studies--in conjullction with the staffs 

of Council member agencies and on its own-and provide advice on the market impact of 

policies related to threats to financial stability, e.g .. on funding markets and interconnections 

across the financial system. Over time, the OFR will also develop and disseminate analyses of 

risk management tools on topics such as stress testing, contingent capitaL robust risk 

measurement. methods for quantifying counterparty risk in derivatives markets. and models of 

the propagation of risk through iin3ncial linkages. 

4. Provide the public with key data and analysis, while protecting sensitive 

information 

The OtIice is required under Dodd-Frank to make non-sensitive data and information available 

to tbe public, and to protect sensitive infornlation. Both are essential for the OFR to fulfill its 

mIssIon. 

As noted above, the OfJiee has taken initial steps in fulfilling its publication mandate by issuing 

its first two working papers. making accessible the OFR's in-depth work to analyze and measure 

threats to iinancial stability. The OFR also publicly released presentations, copies of remarks, 

and other materials associated with its "Macroprudential Toolkit"" conference in December. In 

addition, the Office will make original research and analysis public through its first Annual 

Report to Congress in July. The report will discuss the Ofiice's strategy for filling gaps in the 

research and data needed to identify. assess, and monitor threats to financial stability. 

OFR recognizes that secure data collection and storage are essential to juliilling its missioll, and 

has emphasized data protection throughout its organizational development activities. As an 

otIice within the Treasury. the OFR inherits the benefits of the Treasury Department's sccure 

infonnation technology infrastructure. The OFR is also adhering to the security policies of the 

Treasury's Chief Inforn1ation Officer. The OFR plans to expand its security controls as 

necessary for OFR -speciiic systems and data, as well as for information sharing across Council 

member agencies. 

The OFR will grant and administer access based on pre-deiincd roles and will monitor usage to 

cOlljim1 that proper controls are in place based on the identified and assigned classification of 

data. In addition. OFR employees who are handling highly sensitive, conJldcntial data will need 

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EMBAR(iOED UNTIL DELIVERY 

to sign an acknowledgement that they will be subiect to a one-year post-employment restriction 

from working for a financial services entity, unless a waiver is granted as detailed in the interim 

rule published in the Federal Register on Sept. 30, 20 II. 

5. Establish the OFR as an efficient organization and world-class workplace 

Human Resources 

The OFR is committed to building an effective workforce environment engaging its workforce 

to achieve organizational success, and supporting its mission in a cost-effective way. The DoddFrank Act established the organizational structure orthe OFR with a Director heading the Otlice 

and overseeing two core centers-the Research & Analysis Center and the Data Center. The 

OFR also has support offices for Operations and Chief Counsel. 

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EMBARGOED UNTIL DELIVER Y 

The OFR plans to build to steady state 

staffing levels of 275-300 FTEs within 

the next 24 to 36 months. More than 

60 percent of these employees will be 

in the Data Center. The Research & 

Analysis Center will constitute about 

20 percent of the OFR' s staff and will 

leverage a broader network of 

resources through work arrangements 

with outside researchers and 

collahoration with Council member 

agencies. The Offiee of the Director. 

Counsel, and Operations will make up 

the remaining staft~ 

Financial Managemel1l 

The Omee has made strong progress in 

estahlishing its leadership team, with 

five of eight senior positions lilled: a 

Chief Business Officer of the Data 

Center (also acting as Dcputy Director). 

the Chief Counsel. Chief Operating 

Officer. ChicI' of Analy1ic Strategy. and 

acting Chief Technology Officer. As of 

April 9. the OFR had a staff of 69, 

including seven employees on detail 

from other agencies. and the 

commitment of resources from the 

Treasury in the areas of budget. 

financial management, information 

technology, human resources, 

procurement. and facilities plmming. 

The OFR's financial activities arc subject to general Treasury financial management controls and 

protocols and are reviewed as part of the broader audit of Departmental Offices within the 

Treasury. The OFR's budget is puhlished with the President's Budget. Tbe OFR has also 

developed expanded intemal policies and procedures to support sound and efficient operations, 

and rigorous intemal controls, including through a program management office. In addition. the 

Office of the Inspector General and the Government Accountability Office periodically audit the 

OFR's activities and the Director of the OFR will testify to Congress annually on these issues. 

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EMBARGOED UNTIL DELIVERY 

h?/hrmalion ;\Ianagemenl 

As we stand up the OFR, a kcy focus is building the infrastructure for information technology 

and business systems to provide for: (I) data acquisition, management and dissemination under 

strict protocols for security and data sharing: (2) a robust research and analytical environment 

capable of handling large amounts of data to support complex finaneialmodcls, computations, 

and analysis: and (3) a secure platform for collaboration and communications with Council 

mcmber agencies and outside researchers, as well as for broader communication with the publie 

on OFR activities, 

As a lirst 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 cxpenditures, 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 thc end of the year, 

Budget and Funding 

The complex. highly specialized mission of tile OFR and the scope ofthc task to establish the 

Office hom the ground up both dictate that the OFR take a careful, prudent approach to its 

budget and funding, To stand up thc OFR correctly. the Of lice is tightly linking its expenditures 

to its mission. ensuring that we arc good stewards of the funds entrusted to us, Our careful 

approach contributed to the fact that the OFR spent less in FY 2011 than budgeted, with 

obligations totaling $1 L3 million, 

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EMBARGOED UNTIL DELIVERY 

The pace of spending is projected to pick up significantly in the second half of FY 2012 and FY 

2013. In the FY 2013 President's Budget. OFR spending is projected at $109.7 million for FY 

2012 and $138.2 million for FY 2013. Table I details the main budgeted expcnditures of the 

OFR:' 

• Personnel Salaries and benefits of employees. reimbursahle support as well as 

reimhursement costs for employees detailed to the OFR: 

• Research & Analysis - Contracts and other work arrangements with outside researchers: 

• Data Center - The build-out of the information technology infrastructure and processes to 

support analysis and collaboration: includes establishing a robust security framework to 

protect the integrity of financial data: also includes procurement of commcrcially available 

financial data: 

• Of lice of/he Direc{or and Support Offices - Administrative support. travel, supply, 

equipment costs, rent, and renovation of permanent office space. 

The Dodd-Frank Act mandates that the Board of Govcmors of the Federal Reserve System funds 

the OFR for the first two years follmving enactment. Beginning on July 21. 2012, the OFR 

(along with the Financial Stability Oversight Council and certain expenses of the Federal Deposit 

Insurance Corporation) is to be funded through assessments on bank holding companies with 

total consolidated assets of $50 billion or greater and nonbank financial companies designated by 

the Council for supervision by the Board. In a Notice of Proposed Rulemaking issued on 

January 3. 2012. Treasury proposed to establish that assessment schedule. The comment period 

on the proposed rule has closed: puhlication of the final rule is expected in May. 

I This table differs from data referenced in the Congressional Justification (Cl) for the Financial Research Fund in 

support of the FY 2013 President's Budget in two key respects, First, the C] presentation of obligations by object 

classification includes consolidated figures for expenses under the Financial Research Fund for the OFR and FSOC. 

as well as certain covered expenses of the FDIC, whereas this table covers the OFR only. Second, the presentation in 

the CJ uses standard object class categories. whereas this presentation uses a functional breakdown by OFR office. 

The three largest line items in the presentation in the C./ are: (I) "Other Contractual Services" ($60.7 million for 

FY2012. including $52.7 million for the OFR: and $72.3 million in FY2013, including $58.3 million for the OFR): 

this object class includes consulting services. interagency agreements, training. and O&M costs; (2) "Supplies and 

Materials" ($5.2 million in FY2012, including $5.1 million forthe OFR: and $10.2 million in FY2013. including 

$10.1 million for the OFR): this object class includes office supplies, publications, and data subscriptions: and (3) 

''Equipment"" ($21.6 million in FY2012. including $21.3 million for the OFR; and $22.4 million in FY2013, 

including $22.1 million for the OFR); this object class includes omce equipment, telecommunications. and IT 

equipment. 

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EMBARGOED UNTIL DELIVERY 

As of March 31.2012. the OFR has received $39.3 million in transfers fi'om the Federal Reserve. 

with obligations of $3 1.7 million at the end of the second quarter of FY 2012 Crable 2). 

Conclusion 

Chainnan Neugebauer and members of the Committee, the OFR has made significant progress 

since your hearing last July and the pace of progress is accelerating. 

Thank you again for the opportunity to be here today. I would be happy to answer your 

questions. 

Page 19 
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75090.013

SPENCER BACHUS. AL. CHAIRMAN 'lllnitcd ,ztatrs t'lOU5( of 1Reprrscntati\)(s 

([ommitm on jfimmcial iOcrlJiccs 

The Honorable Timothy F. Geithner 

Secretary, Department of the Treasury 

1500 Pennsylvania Avenue, NV? 

Washington, D.C. 20220 

Dear Mr, Secretary: 

Washington, B.il:. l0515 

April 18,2012 

BARNEY FRANK, MA. RANKING MEMBER 

I am writing to express my disappointment that the Department of Treasury ("Treasury") 

refuses to make Counselor to the Secretary, Richard Berner available for the Subcommittee on 

Oversight and Investigation's ("Subcommittee") April 19, 2012 hearing entitled, "Budget Hearingthe Office of Financial Research." The hearing will serve as a follow-up to the Subcommittee's July 

14, 2011 hearing entitled, "Oversight of the Office of Financial Research and Financial Stability 

Oversight Council." 

At the July 2011 hearing, Dr. Berner testified on your behalf, as he was chosen to oversee 

the standup of the Office of Fiuancial Research ("OFR"). On December 16, 2011, Dr. Berner was 

nominated by the President to be the first Director of OFR. The position is six years in term. 

Should Dr. Berner be confirmed, he will not only be responsible for OFR's standup, but for 

overseeing its long-term success. This vital CU1Tent and future role makes Dr. Berner the most 

important and appropriate witness for the Subcommittee's April 19 hearing to examine OFR's 

budget, its ongoing activities, and its strategic plan. 

Unfortunately, despite the Subcommittee's verbal requests dating back to late March and 

an April 11 formal invitation, Treasury has declined to provide Dr. Berner as a witness for the 

April 19 hearing. The Subcommittee was informed it is against Administration policy to allow 

unconfirmed nominees to testify. 

I find Treasury's response problematic for several reasons. On ,July 14, 2011, Dr. Berner 

testified OFR wanted "to make sure ... this committee, in particular, understands that we want to 

be accountable to Congress. We want to be completely transparent in what we do .. , [and] provide 

all the information that you require in order to look at our activities." Regardless of Dr. Berner's 

official title, he has acted in a director's capacity for OFR since its inception. In that capacity, he 

made promises on behalf of OFR to be accountable to and transparent with the Subcommittee 

regarding OFR's functions. 

Dr. Berner's failure to appear only heightens my uneasiness regarding the secrecy 

sU1Tounding OFR's operations. How can Treasury's substitute witness - one of Dr. Berner's 

subordinates - responsibly answer questions that require the discretion and specific expertise of 

the individual who is in charge of OFR's activities? I further question how it is possible for OFR to 

be accountable for and transparent with its budget and strategic plan if Treasury withholds the 

testimony of OFR's most senior leader. 
53 


75090.014

Accordingly, this letter serves as the Subconunittee's formal request that, should he be 

confirmed, Dr. Berner be made inunediately available to the Subconunittee, so that he may honor 

his July 14, 2011 pledge, made under oath, of accountability and transparency regarding OFR's 

activities. 

Sincerely, 

~~~ 

cc: 

The Honorable Spencer Bachus 

The Honorable Barney Frank 

The Honorable Michael Capuano 

Chairman 

Subcommittee on Oversight and Investigations 
54 


75090.015

Strategic Framework 

Office of Financial Research 

March 2012 
55 


75090.016

C()/}lents 

Page No. 

Introduction .. . ..................... 2 

Estahlishing the OFR ... . .................... 3 

Goals and Objectives ..... . ............ 3 

Implementation Priorities .. ..6 

Boxes: 

Purpose and Duties. .. ........ 2 

Mission .. . .......... , 

Stakeholders ... . ......... 3 

Operating Principles .. . .. 6 

Table: 

Summary ofOFR Goals. Objectives and FY2()12 Implementation Priorities .......... 1 I 

Appendices: 

One: Organization and Workf()!'ce Plan ..... 

Two: Governance, Transparency, and Oversight 

. ........... 12 

.......... 16 

OfFICE Of FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

WASHINGTON, DC 20220 
56 


75090.017

Introduction 

In establishing the Oft;ce ofFinaneial Research (OFR or Office), the fi'amers of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act. Public Law 111-203 (Dodd-Frank Act) 

recognized the need le)f better data and better analysis to help the Financial Stability Oversight 

Council (Council) and market participants assess and respond to threats to financial stability. 

Of course, there will always be a fundamental uncertainty about the source of such threats. But 

better data and analysis can support the design of stronger financial shock absorbers and 

guardrails to reduce the risk of crises> They can also support carlier warning and effective 

respon~es to mitigate the effects of crises 

whcn they do occur and help draw Icssons 

for the future. 

This strategic 1Tamc\vork takes as its 

illUndation the statutory mandates from the 

Dodd-Frank Act. It outlines a mission, 

goals, objectives and implementation 

priorities that will help to ensure that the 

OFR's cl10rts and investmellls arc well 

targeted. It reflects substantial consultations 

in the period since enactment of the DoddFrank Act with a ful! range of stakeholders, 

including Council members, their agencies 

and statl members of Congress, industry 

representatives. as well as academics, 

financial authorities. and other researchers. 

An effective strategic framc\\'ork involves 

adapting to changing circumstances, and the 

OFR must be nimble to achieve its mandate. 

The financial environment will continue to 

change rapidly. partly in response to an 

evolving regulatory architecture in the 

United States and around the globe. The OFR will confront uncertainties inherent to new 

organizations undergoing rapid growih and change. Thus, this lirst articulation of the OFR 

strategic framework covers a shorter horizon than would be expected for a mature organization 

and frequent reviews and validation will be appropriate. The OFR "ill adapt this framework as 

necessary and undertake a first review in no later than two years. 

2 

OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

WASHINGTON, DC 20220 
57 


75090.018

E,lohlishing Ihe urR 

The Dodd-Frank Act established the OFR 

within the Treasury Department as part of a 

broader financial relllfJll el1011 to address 

weaknesses that the financial crisis laid bafc. 

The OFR's mission recognizes its mandate 

to provide the Financial Stability Oversight 

Council, its agencies, and the puhlic with 

more and better data and analysis to help 

identit)r. monitor. and evaluate threats to 

flnaneial stability. 

Goals ulld Objl!ciil'(!s 

Consistent with the Dodd-Frank Act. the OFR has established five strategic goals that together 

would strengthen understanding by OrR stakeholders of a rapidly changing financial landscape: 

I. Support the Council through the secure 

provision of high-quality financial data 

and analysis needed to monitor threats to 

llnaneial stability 

1. Develop and promote data-related 

standards and best practices 

J. Establish a center of excellence for 

research on financial stability and 

promote best practices iilr financial risk 

management 

4. Provide the public with key data and 

analysis. while protecting sensitive 

information 

5. Establish the OrR as an emeient 

organization and world-class workplace 

OFFICE OF FINANCIAL RESEARCH 

OEPARTMENT OF THE TREASURY 

WASHINGTON, DC 20220 
58 


75090.019

(,oul j ,\'lfj)/)()f'/ fhe ('(Jili/cil fhrollgh the ,\('Clln' jJl"()\'i\ioll of high-eil/((Ii!.l jillullciu/ data and 

mh/(\'\i\ IIceded 10 moni{or {hl'L'u{.\ to til/al/cill! \'{ohill!.1 

Specific objectives under this goa! arc to: 

Provide research and analytical support to Council members. their agencies and staff to: 

.:. Monitor and interpret how linancialmarket developments affect financial stability: and 

.:. Help them improve regulation of financial entities and markets. 

Serve as a secure Council-\vide data utility" 

.:. Collect data on behalf of the Council and provide it to Councilmcmbers. their agencies 

and staff where sllch data are essential to monitoring threats to financial stability and 

\vhere they arc not otherwise collected. Consistent with statute, this wi!! include 

collecting, in coordination \vith the primary financial regulatory agency and in 

consultation with the Council. iinancial transaction and position data . 

• :. Provide Council members. their agencies and staff with timely access to financial data 

and metrics under rigorous data sharing and security protocols . 

• :. Reduce the reporting burden on financial institutions: 

Coordinate data requests among Council member agencies vvith increasing reliance 

on standard identifiers and definitions, where possible; and 

Sponsor shared data procurement and data management among Council member 

agencies to reduce duplication . 

• :. Enhance the quality and consistency of financial data available to Council member 

agencies: 

Validate collected financial data; and 

Assist Council members. their agencies and staff through direct data services and 

technical support . 

• :. Establish and maintain a catalog orthe financial entities and instruments reported to the 

OFR. 

Goal ~ Del'e/op and j'FOfl1ote dmu-rc!afed ,~/and(fn.l\ (llld hn11lrllClit'C5, 

Specific objectives under this goal arc to: 

Facilitate, in collaboration with a broad range of stakeholders. the establishment of global 

data-related standards to improve data quality and scope, while also reducing costs of 

reporting for both financial market participants and Council member agencies. 

Assist Council member agencies in defining standards and best practices lor data collection 

and management 

4 

OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF fHE TREASURY 

WASHINGTON, DC 20220 
59 


75090.020

(;oul 3 -r\I({h/i~1i d ('eJllt'r of ('.Yet'llclle!' for l"('\{'LlI"CI! (Inti u!7(Jly\l,~ Oil tinullciu/.\/uhility (/1/(/ 

promote he,,! j1rllClicc.\ in r;\'k m(tlllf,'!,t'/l/('l7t 

Specific ohjectives under this goal mc to: 

Conduct and sponsor research to identify, monitor. and cvaluate threats to financial stability. 

allalyze disruptions as they occur. and 10 identify lessons learned thereafter. 

Evaluate and report on stress tests or othcr stability-related evaluations and provide advice 

on the impact of policies related to systemic risk. 

Promote hest practices in financial risk management through evaluation of existing methods 

and governance. as well as development and promulgation ornew methods. 

Establish forums for collaboration with outside stakeholders on these initiatives. 

Goal -/-- Prol'idc lhe plth/ic 11 ill! key dulo (lJl(1 wwl.nis. II'hi/!' pro/('clillg \,cn";!;I'/.' inforJlloli()!7 

Specific objec1i\'es under this goal arc to: 

Increase the transparency and distribution of research on the financial system. while 

safeguarding sensitive inf(xmation. by publishing financial analysis, data and information. 

Publications will include: 

.:. Analytical reports. including an Annual Report to Congress and working paper series: 

.:. A financial company· reference database: 

.:. A financial instrument reference database: and 

.:. Fomlats and standards for data required by the 0 FR. 

Testify on OFR activities and the OFR 's assessment of significant financial market 

developments and potential emerging threats to financial stability. 

(Tool5 E:',;/ob/i\/] Ihe Office of Finullt'io/ NeSCUFch (/\ (In el/1ci(,171 organi:alion und lrorld~c1ms 

11"orkpluL'c 

The key objectives under this goal are to: 

Build an etTeetivc workforce environment; 

Engage the workforce to achieve organizational success; and 

Support the OFR"s mission in a cost-effective manner. 

~ ________________________________________________________ ~O_F~Fl~CE~O~F~Fl~N~AN~C~1~Al~R~E~S~EA~R~CcH V 5 DEPARTMENT OF THE TRE.ASURY 

WASHINGTON, DC 20220 
60 


75090.021

Inlp/clf7r.!I1!a!i()!l Pri()J'ilic.'" 

Building ITom progress to date and 

consistent with a core sct of operating 

principles, the OFR is: 

Ramping up its sen"ices to 

Council members. their agencies 

and staff; 

Beginning to publish OFR data 

and analysis: 

Accelerating work to establish the 

secure in1(lnnation technology 

platl(lrmS and business systems 

critical to uchicving its mission: 

and 

Continuing to reinforce its 

institutional infrastructure. 

Progress to date and priorities J()f the 

coming period are detailed below, 

including the specific priorities f(x the 

Data Center and Research & Analysis 

Center. 

Dura Center 

Thc Dodd-Frank Aet established the Data Center within the OFR to eollect, validate, and 

maintain data 1rom Council member agencies, publically available data sources, and financial 

entities. Working together with the Research & Analysis Center. the Data Center has begun to 

provide analytical and data-related. services to the Council and its member agencies. for example. 

through support for the Council's Annual Report on linancial stahility, as well as data and 

analysis related to designation of non hank financial companies for consolidated supervision by 

the Federal Reserve Board. The OFR has also supported the establishment of the Council Data 

Commit1ee as a forum to discuss data-related issues among member agencies and is creating an 

inventory of Council data to support better coordination and reduced redundancies in data 

collection efforts. 

6 

OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

WASHINGTON, DC 20220 
61 


75090.022

A key early initiative of the OFR has been its work with policy makers. regulators. and the 

private sector on establishing a global Legal Fntity Identifier (LEI) -work that contributed to the 

l'ovember 20 II G-20 Leaders endorsement in Cannes of a Group of Experts to establish the 

govcmance for an LEI. The jnitiative -driving toward one global standard to uniquely identifY 

parties to financial transactions-- will support better understanding or true exposures and 

intcrconnectlons among and across financial institutions and markets, This should improve the 

ability of both regulators and market participants to mitigate threats to the financial system. 

An early priority for the Data Center has been to build the inf()rmational inlrastructure needed to 

deliver on the OFR's data-rciated and analytical mandates. This requires the establishment of 

secure analytical and database platforms, implementation of sound business systems, and the 

steady expansion of data acquisition-~through both shared procurement and efficient collection 

from financial institutions, consistent \\ith the need to avoid duplicative and unnecessary 

requests. The OFR recognizes both the importance of rapid progress and the need to ensure that 

investments in information technology and business processes, infrastructure. and security 

structures are well-designed and cost-effective. "10 meet these twin needs. the OFR is 

establishing a secure short-ternl data and analyticallT environment to meet immediate needs. 

while initiating the design and planning of mediulll-term information and security architecture. 

As part of these eflorts, the OFR is establishing robust controls and best-practicc procedures. 

including strong data and infonnation security protocols. 

For the remainder of FY20 12. thc focus of OFR elTorts is to: 

Develop and begin to implement a secure database and analytical computing environment 

.:. Finalize work on a short-tenn, secure computing environment that will be leveraged for 

data storage and sharing and ncar-term analytical needs. This environment will also 

serve as the foundation for a robust analytical plaiftml1 to serve longer-term needs . 

• :. Complete pilot projects on data security and high-performance computing (utilizing 

appropriate best-practice expertise) to provide input into the OFR's medium-tenn data 

and analytical infrastructure, \"hilc also ::iupporling ncar-tenn outputs . 

• :. Taking these pilots on board, complete the initial design of a secure computing and data 

storage architecture and initiate implementation as soon as late 2012. Additional 

validation including from information technology and data experts, as well as from data 

end-users~\Vill be critical both prior to implementation and al multiple stages of the 

implementation process . 

• :. Establish access, initially for Council members. their agencies and staff. to a preliminary 

set of selected tinaneial data and metrics . 

• :. As a first step in supporting data coordination among Council mcmher agencies. 

inventory financial data beld by these stakeholders. 

OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

WASHINGTON, DC 20220 
62 


75090.023

••• Continue to acquire the data necessary to suprort the Council's designations process and 

other needs of Council members, their agencies and starL and initiate secure data 

provision lor the OFR Research & Analysis Center. 

.:. Continue to support the Data Committee of the Council as a forum for collaboration on 

data-related issues, including assistance on prioritizing OFR data initiatives and 

establishment of data sharing protocols. 

Promote and strengthen standards for financial data . 

• :. Continue to play an active role in building consensus for and facilitating adoption of a 

global LEL including through the support of a Financial Stability Board e,pcrts group 

established in December 2011 to move the LEI fomard and continued work with G.S. 

financial regulators-such as the Securities and Exchange Commission and Commodity 

Futures Trading Commission ~·on incorporation of the LEI into their rulemaking . 

• :. Work with public and private partners, both domestically and internationally, to identify 

and prioritize gaps in financial dala standards beyond LEI "here standardi/.ation would 

improve data quality. the ahility to aggregate. risk management standards. and the 

exchange of data among Council members. 

Research & Al1uinis Cel7lcr 

The Research & Analysis Center was established within the OFR by the Dodd-Frank Act to 

develop and maintain independent analytical capabilities and computing resources to monitor, 

investigate, and report on risks to financial stability. As noted above, the OFR has begun to 

provide analytical support to the Council and it member agencies. In addition, it launched a 

Research Seminar Series last fall and a Working Paper Series in January. with its tirst Annual 

Report to Congress to be provided this summer. The OFR has also begun to huild a virtual 

community of researchers. academics, and practitioners that can collaborate on its research. 

Achieving the OFR's mission ,:viII ultimately require new methods for measuring. analyzing. and 

representing conditions in the financial system, with speciaJ emphasis on leverage. maturity. 

liquidity, credit transformation, and linkages within and between the financial system and 

economic activity. Advancing research in the areas highlighted below will be an iterative 

process as the OFR's analytical infrastructure is developed, data are collected, and requirements 

are refined. with activities focused on: 

For the benefit ol"the Council and broader stakeholders, proactive monitoring and reporting 

on the system-wide risk levels and patterns, through, for example, recurring narrative rcports 

that explain the state of and threats to the financial system (including the OrR's annual 

rcport), and related studies examining pm1icular risks to financial stability, risk management 

methods and tools, and relationships between financial and other economic activities: 

Contributions to rapid response analytics on significant financial events; 

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Forensic analyses of significant events afTccting 1immcial stability: 

Evaluations of stahility-related assessments and advice on the impact of policies aimed at 

promoting financial stability, looking across the entire financial system. Examples might 

include stress-testing and related capital and liquidity planning exercises, tools that iniluence 

funding and market liquidity and the connections between them, and tools to limit leverage 

and maturity mismatches: 

Promotion of best practices in risk management through the development and promulgation 

of methods to measure risks) including liquidity risk, counterparty risk, market risk and credit 

risk: the evaluation of methods in current usc, considering their effectiveness at the 

individual finn and systemic level and their potential effects on the broader financial system: 

and collaboration with regulators, industry participants, and academics to highlight and 

advance good governance of the risk management function in iinancial firms: 

Conferences, colloquia. and seminars on issues related to financial stability and risk 

management; and 

An online resource for researchers. including OFR Working Papers and tools for risk 

analytics. 

During FY20 12, key priorities include work to: 

Develop the capacity to conduct coordinate, and sponsor initial research including by: 

.:. Collaborating with the Council to develop and maintain a "dashboard"' of metrics and 

indicators related to financial stability initially drawn from previous academic research 

and supported by thc Data Center: 

.:. Responding to research requests on regulatory impact from member agencies: and 

.:. Conducting broader studies and providing advice on the impact of policies related to 

threats to financial stahility (e.g., on funding markets and in1erconnections across the 

financial system). 

Develop and disseminate analyses of risk management tools that may include such topics as 

stress testing, contingent capital, robust risk measurement, mcthods for quantifying counterparty risk in derivatives markets. and models of risk propagation through financialllnkages. 

With the OFR Data Centee launch vehicles for wllaboration and publication of data and 

analysis on financial stability: 

.:. Publish the OFR's first Annual Report on or before July 2012; 

.:. Publish additional research and data on issues related [0 threats to financial stability, 

including through the OFR Working Paper Series; 

.:. Building from the December 2011 OFR-Council Conference, "The Macroprudential 

Toolkit: Measurement and Analysis," support public-private dialogue on issues relevant 

to the OFR's mandate: and 

~ ________________________________________________________ ~O~F~F~IC~E~O~F~FI~N~A~N~CI~A~l~R~ES~E~A~RCH V 9 DEPARTMENT OF THE TREASURY 

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.:. Expand the Research Seminar Series, 

Bllilding Ihe OrR 

The OFR has made substantial progress in building the initial institutional functions to support 

its core missions. A key upfront o~iective was to define the scope of the OFR's 1111SS1011. starting 

from the foundation established in the legislation and building through outreach and broad-basco 

consultations. Establishing an initial organizational and workforce plan, as \vell as operational 

processes and controls, have also been priorities. Foundational work on the OFR's human 

resources strategy \vas articulated in the OFR's first report to Congress on these issues in 

September 2011. The OFR has made substantial progress in filling key management positions, 

made early inroads in broader staffing, and begun to build working relationships with outside 

thought leaders. In September. the Department of the Treasury. with the concurrence of the 

Office of Government Ethics, isslled an interim rule establishing post-employment restrictions 

for OFR employees with access to sensitive data. as required by the Dodd-Frank Act. Work on 

the OrR's Washington LlCility is also well advanced. 

The OFR is continuing to build the organizational structures. processes. and cDntrols needed to 

support strategic decision-making. ensure efficient use of resources. and support transparent 

pcrf()rmance measurement and responsiveness to external review. Priorities for FY2012 include: 

Attract and retain the highly trained. experienced staff needed to fulfill the OfR's mission . 

• :. Further elaborate OFR human resource plans for recruitment and retention (including 

through an OFR Fellowship Program), training and workforce development. and 

workforce flexibility. Report on progress to Congress, consistent \Vilh requirements 

under the Dodd-Frank Act. 

.:. Continue active recruitment to build expertise across the range of needed competencies. 

Creme an advisory committee of leading rescarchers~ academjcs~ data managers and 1T 

experts to help the OFR identify issues. evaluate work product. and recruit talent. 

Establish a sound strategic and operational hamework . 

• :. Fxpand initial policies and procedures to support sound and emeient operations and 

rigorous internal controls . 

• :. Link programmatic, human resources. and budgetary decision-making to the OFR's 

strategic framework. including through an OFR progmIn management function. 

••• Develop performance measurement and risk management systems appropriate to a 

maturing organi,lation. 

Continue to address OFR facilities requirements. 

Ensure that the OFR operates on a sound linancia1 footing . 

• :. Assist in preparations for a Treasury rule to establish a permanent financing source for 

the OFR through assessments on certain financial institutions. 

10 WASH!NGTON, DC 20220 
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75090.026

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66 


75090.027

Appendix Ol1e: OFR Org([l1i::ufioli 11l1d Workforce 1'1,,11 

Roles und RC1'I'onsiiJilirics 

The OPR's organizational structure takes as its starting point the requirements set out in 

the Dodd-Frank Act. including with respect to the role of the Director and the mission of 

the Data Center and Research & Analysis Center. The organization also recognizes the 

importance of a "'one-organization"' approach-\vith close coordination in the work of the 

Data and Research & Analysis Centers. 

'"Reports to OFR Director 

'" *-Reports to Treasury General Counsel 

Thc OFR Dircctor, appointed by the Prcsident with the advice and consent of the Senate, 

provides overaillcadership. direction, and representation for the OFR. The Director also 

serves as a non-voting member of the CounciL Key duties, as stipulated under the DoddFrank ACt. include: 

In consultation with the Chairperson of the Council. establishing the OFR's budget. 

as well as the size of and compensation for OFR stalT. 

Reporting to and testifying before the Committee on Ranking. Housing. and Urban 

Affairs of the Senate and the Committee on Financial Services of the lIouse of 

12 WASHINGTON, DC 20220 
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Representativcs armually on the activities of the Oftke. including the work of the 

Data Center and the Research and Analysis Center. and the assessment by thc Office 

of significant financial market developments and potential emerging threats to the 

linaneial stability of the United States. The OFR Director's testimony is not subject 

to prior review by any office or agency and shall state that the views expressed are 

those of the Director. 

Requiring from a financial company, by subpoena, the production of data not 

elsewhere available, where necessary to carry out the functions of the OFR. after 

coordinating with the relevant primary financial regulatory agency. 

Ensuring that data collected and maintained by the Data Center are kept secure and 

protected against unauthorized disclosure. 

Ensuring that all other requirements for the OFR under the Dodd-Frank Act are 

fuHilled. 

Data Center 

lli12uty Director. Data Center: 

The Deputy Director of the Data Center reports to and advises the Director of the OrR, 

liaises with stakeholders. and directs the full range of operations of the OFR' s Data 

Centee covering business operations, information technology. as weIl as OFR-wide 

program management. In this context the Deputy Director provides strategic guidance to 

prioritization of activities and investments required to fulfill the OFR's mission as it 

relates to secure data col!ection and management, data standards. and data services to the 

Council and broader stakeholders. 

Chief Business Omcer: 

The Chief Business Officer (CBO) reports to and advises the Deputy Director o[the Data 

Center. liaises \\lith stakeholders, and manages the Data Center business groups on data 

management and analytical operations. In this context, the CSO coordinates closely with 

the Deputy Director of Research & Analysis, the Chief Technology Omcer and the Chief 

Operating Officer. 

'fhe CBO directs data identification. acquisition. management and distribution to the 

Council and broader stakeholders. as appropriate. The CBO assists in the identification 

and development of data-related standards required to analyze threats to financial 

stability. 

13 

OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

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Reporting to the Deputy Director orthe Data Center, the ChiefTeehllology Ortieer 

(eTO) provides leadership and advice to senior management of the OFR on the usc and 

management of information technology to support achievement oCthe OrR's mission. 

This i[ll1etion directs and manages the technical build of the Data Center and the 

maintenance of information security policies and control mechanisms. 

The ero function includes the governance and management or IT services through a 

sound. secure. and integrated information technology architecture anu road map for the 

OFR. The road map ensures that systems architecture, standards and protocols provide an 

erticjenL innovative. and secure environment to house and disseminate the OrRIs 

information assets as appropriate to support the OFR mission. 

Research & Analysis Center 

Deputy Director, Research & Analvsis: 

The Deputy Director of Research & Analysis reports to and advises the Director orthe 

OrR, liaises with stakeholders, and directs the full range of ore rations "fthe OFR·s 

Research and Analysis Center. 

The Deputy Director of Research & Analysis sets out the strategic priorities and overall 

direction for the Research and Analysis Center. in close consultation with the Director. 

The Deputy Director is also responsible for oversight of research staff and of programs 

for collaboration with the outside research community, 

Chief of Analytical Strategy: 

The Chief of Analytical Strategy (CAS) reports to and advises 1he Director of the OFR 

and supports a broad range of analytical and operational timetions related to the OFR's 

research function, in coordination with the Deputy Director of Research & Analysis and 

the Deputy Director of the Data Center. 

The CAS directs the design. development and delivery of comprehensive, integrated 

analytical strategies and implementation plans on critical issues having broad impact on 

research programs and activities. The CAS also supports. in close collahoration with the 

Deputy Director of Research & Analysis. the management of the OFWs research 

functions, including de1inition of strategic analytical priorities and resulting data 

acquisition requirements. as well as plans for recruitment, outreach and collaboration 

with outside experts. 

14 

OFFICE OF FtNANCtAl RESEARCH 

DEPARTMENT OF THE TREASURY 

WASHINGTON, DC 20220 
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Support omccs 

Chier Openllin12 Qrticer 

The Chief Operating Ofticcr (COO). reporting to and advising the Director of the OFR. is 

responsible for overall allocation, munagcment, and oversight of resources to achieve the 

OFR's mission and. in collaboration with OJ:R senior management for the establishment 

of programs supporting the stand-up of the OFR. 

The COO oversees OFR-wide communIcations. strategic planning and performance 

measurement and has broad responsibilities lor cstahlishing and overseeing 

implementation or1hc OFR's governance framework. including internal OFR operational 

policies, procedures. and controls. The COO oversees, in collaboration \vith the Treasury 

Department's Assistant Secretary for Management, the human resources. procurement 

facilities. and financial management of the OFR. 

The Chief Counsel serves as chief legal advisor to the Director of the OFR and directs all 

legal activities of thc OI:R. repol1ing to Treasury's Office of the General Counsel. In this 

capacity. the Chief Counsel coordinates legal issues with the legal counsellor the 

Council as related to the OFR' s work and data collection performed for the Council. 

Workforce Ploll 

The OrR has put in place an 

initial workforce plan to build 

the capabilities needed to 

achieve its mission. The plan 

recognizes the broad range of 

core competencies required 

by the oftice, including data 

management and analytics. 

data standardization and best 

practices. infonnation 

technology, macroeconomics, 

financial market and 

institution analysis, statistics 

and risk management. and applied sciences, as \vell as program management. legal 

services. communications, strategy, and resource management. The Dodd-frank Act 

emphasized usc of efficient and innovative structures to attract and retain needed talent, 

including fellowships and partnerships "ith outside experts. The OFR has put in place an 

ambitious but achievable plan to build to steady state staffing levels (approximately 275-

300 staff) within the next twenty-Itmr to thirty-six months. 

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The OFR was established within the Department orthe Treasury, Departmental Offices. 

In this context Treasury's Assistant Secretary Jor Management supports the OFR through 

operational controls and procedures related to, infer olia. financial management. 

procurement. and human resources. 

The OFR consults closely \,-,ith the Treasury Secretary, including in his role as Council 

Chairperson. and other senior Treasury officials on strategic issues related to the OFR 

stand~up, including through participation in regular meetings on the Dodd-Fran!.. Act's 

implementation chaired by the Deputy Secretary of the Treasury. The OFR also consuits 

closely with the Council. as detailed helow. 

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OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

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Financial !\1anagement and Human Resources 

The OFR budget is set by the Director. in consultation \vith the Chairperson or the 

Council. OFR financial management l()l!o\\:s Treasury protocols~ and thc OFR's 

financial activities and controls are reviewed as part of the broader audit of Departmental 

Oftices within the Treasury. Ini(JrJ1lation on the OFR budget is published as part of the 

President's Budget. The OFR is also assisted in the preparation of a Treasury rule to 

establish a pcnnanent financing source for the OFR through assessments on certain 

financial institutlollS. 

Internal OFR budget formulation, execution and control procedures. including rcgular 

reporting and review, have been established and are being further refined to reinforce 

sound fiscal mBnagement and to control costs. Speci fic policies and procedures relevant 

to resource allocation (e.g., training) arc being further elaborated. building Il'om existing 

Treasury guidance, where appropriate. 

Initial human reSOllrces policies have been established j()r the OFR, building [rom 

existing Treasury guidance. as amended to reflect statu lory requirements for the OrR. 

Treasury-based controls for OFR hiring arc being executed to support sound 

implementation. and tracking systems for hiring and staffing (based on the OFR's 

workforce plan) have been established and arc being illfther relined to support internal 

OrR monitoring. 

Program Management 

The OfR is committed to establishing and maintaining strict and transparent processes 

for ensuring its resources are effectively assigned and its acti"vities are \vell directed to 

support achievement of its strategic goals and requirements under the Dodd-Frank Act 

An initial framework for project-related decision making. tracking and review has been 

established, whieh will help to maintain strong links betwcen OFR investments and 

activities and its strategic goals and Dodd-Frank Act requirements. 

The OFR Program Management Oflice (PMO) administers the project management 

function. To facilitate project tracking through all stages of implementation, the PMO is 

building and maintaining a comprehensive inventory of programs. projects, and activities. 

During FY20 12, the OFR will also create initial operational metrics to measure the 

organization's pcrfornlancc. 

Information Security 

Eftectivc execution of the OFR"s mission depends on the development and 

implementation of best-practice information and data management systems, including 

strong security controls and well-detlned data distribution protocols. EstablishJ1lent of 

17 

OFFICE OF FINANCIAL RESEARCH 

DEPARTMENT OF THE TREASURY 

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robust access control systems and policics. as well as data-sharing protocols with Council 

members and other OFR stakeholders. arc priorities for FY2012. 

Transparency & External Evaluations 

[he OFR recognizes the need for transparency in ilS operations and tinsncing. As noted. 

infonnation on the OFR budget is published as part of the President" s Budget. and 

infonnation regarding the OFR's strategic framework and performance monitoring \\ill 

also be published. Publications related to the OFR's core operations. including the OFR 

AnnuaJ Report and required reports 10 Congress on OFR human resources, will proyide 

additional visibility into the OFR' s operations. 

The OFR is also subject to external oversight ano receives external input on its programs 

and procedures through three distinct channels: 

Of lice o(the ]mpector General (()fG)' The OIG conducts reviews ofOFR 

operations. providing valuable input into the OFR strategic management process. 

A first engagement was initiated in June 201 ). 

Government Accountability Office (CiAO), The GAO will conduct periodic 

rev iews of the OFR. A lirst review covering the orR's stand-up was initiated in 

Novemher 2011. 

• Annual Testimony: Under the Dodd-Frank Act. the OFR Director testifies before 

Congress annually on the activities orthe Olliee. 

18 

o 

OFFICE OF FINANCIAL RESEARCH 

OEPARl M[NT OF THE TREASURY 

WASHINGTON, DC 20220