Financial Stability Oversight Council and Office of Financial Research

Program Summary by Budget Activity

Dollars in Thousands

FY 2010 FY 2011 FY 2012

Actual Estimated Estimated $ Change % Change

 Financial Stability Oversight Council $0 $7,435 $7,885 $450 6%

 Office of Financial Research $0 $33,890 $74,468 $40,578 120%

Total Resources $0 $41,325 $82,353 $41,028 99%

Total FTE 0 50 192 142 284%
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Table of Contents

Overview ...................................................................................................................................1

 Program Summary by Budget Activity..................................................................................1

Section 1 – Purpose ..................................................................................................................3

 1A – Description of Bureau Vision and Priorities.................................................................3

 1B – Program History and Future Outlook............................................................................6

Section 2 – Budget Adjustments and Appropriation Language..........................................7

 2.2 – Operating Levels Table.................................................................................................7

 2.3 – Resource Detail Table...................................................................................................7

 2B – Appropriations Language and Explanation of Changes................................................8

Section 3 – Budget and Performance Plan ............................................................................9

 3.1 – Budget by Strategic Outcome .......................................................................................9

 3A – Financial Stability Oversight Council..........................................................................9

 3.2.1 – Financial Stability Oversight Council Budget and Performance Plan.......................9

 3B – Office of Financial Research........................................................................................9

 3.2.2 – Office of Financial Research Budget and Performance Plan.....................................9
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Section 1 – Purpose 

1A – Description of Bureau Vision and Priorities 

Financial Stability Oversight Council

Prior to the financial crisis of 2008-2009, the existing regulatory framework focused narrowly on 

individual institutions and markets, which allowed supervisory gaps to grow and regulatory 

inconsistencies to emerge – in turn, allowing arbitrage and weakened standards. The DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) established 

the Financial Stability Oversight Council (FSOC) with a clear statutory mandate that created for 

the first time collective accountability for identifying and responding to emerging threats to 

financial stability. FSOC is a collaborative body chaired by the Secretary of the Treasury that 

brings together the expertise of the federal financial regulators, an insurance expert appointed by 

the President, and state regulators. 

The FSOC has important new authorities under the Dodd-Frank Act to:

 Collect information across the system: The FSOC has a duty to collect information 

across the U.S. financial system, drawing first from its member agencies, and to direct the 

Office of Financial Research (OFR) to collect additional information to assess risks to the 

financial system. The collection and analysis of that information will aid the FSOC and 

OFR in their shared goal of removing blind spots in the financial system so that 

regulators will be better able to see the entire landscape and be better equipped to identify 

systemic risks and other emerging threats.

 Designate nonbank financial companies for consolidated supervision: In the run-up to 

the financial crisis, some of the firms that posed the greatest risk to the financial system 

were not subject to tough consolidated supervision. The Dodd-Frank Act gives the FSOC 

the authority to require consolidated supervision of nonbank financial companies, 

regardless of their corporate form.

 Designate systemic financial market utilities and systemic payment, clearing, or 

settlement activities: The Dodd-Frank Act authorizes the FSOC to designate certain 

financial market utilities and payment, clearing, or settlement activities as systemically 

important, requiring them to meet prescribed risk management standards and submit to 

heightened oversight by the Federal Reserve, the Securities and Exchange Commission, 

or the Commodities Futures Trading Commission.

 Recommend stricter standards: The FSOC has the authority to recommend stricter 

standards for the largest, most interconnected firms, including nonbank financial 

institutions designated by the FSOC for Federal Reserve supervision. Moreover, where 

the FSOC determines that certain practices or activities pose a threat to financial stability, 

the FSOC may make recommendations to the primary federal financial regulatory agency 

to establish new or heightened standards.
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 Limit the activities of firms that pose a “grave threat” to financial stability: The FSOC 

has a significant role in determining whether action should be taken to break up those 

firms that pose a “grave threat” to the financial stability of the United States.

 Facilitate regulatory coordination: The FSOC has a statutory duty to facilitate 

information sharing and coordination among the member agencies regarding domestic 

financial services policy development, rulemaking, examinations, reporting requirements, 

and enforcement actions. Through this role, the FSOC will help eliminate gaps and 

weaknesses within the regulatory structure, to promote a safer and more stable system.

The FSOC is an executive agency of Government and is not an office or bureau of the 

Department of the Treasury. However, under the Dodd-Frank Act, FSOC administrative 

expenses are considered expenses of the OFR and are paid for by the OFR’s Financial Research 

Fund. The OFR is an office within the Department of the Treasury.

Office of Financial Research

The Office of Financial Research (OFR) was established by the Dodd-Frank Act to support the 

FSOC and its members in its identification and analysis of risks in the financial system. To 

accomplish this, OFR will collect and standardize financial data, develop and publish key 

reference databases, and conduct research on financial market activities to identify potential 

sources of systemic risk. OFR’s principal tasks are to:

 Standardize the types and formats of data reported and collected by the OFR to assist the 

FSOC in analyzing systemic risk;

 Develop data collection, processing, and distribution capabilities to ensure that the Federal 

Government has the information it needs to identify risks in the financial system, being 

mindful to coordinate with regulators, mitigate reporting burden by utilizing existing data 

where possible, seek input from industry, and protect confidentiality and privacy rights;

 Develop and publish reference databases of financial companies and instruments, which can 

be used by regulators, private firms, and academics to assess risk, inform policy, and promote 

market discipline;

 Conduct analysis for FSOC and its member agencies to help identify concentrations of risk in 

the financial system and enable appropriate and timely Government response to emerging 

threats;

 Submit to Congress regular reports on significant market developments and potential 

emerging threats to financial stability; and

 Provide certain data to financial industry participants and to the general public to increase 

market transparency and facilitate research on the financial system, being mindful to respect 

intellectual property rights and to protect business confidential information, privacy rights, 

and the stability of the U.S. financial system.
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OFR has two primary divisions: a Data Center and a Research and Analysis Center. The Data 

Center will in part set standards for financial reporting and work to improve the quality of 

financial data that is collected so it can be organized in ways that are more meaningful for 

identifying vulnerabilities in the system as a whole. The Research and Analysis Center will in 

part monitor, investigate, and report on systemic risk.

One of the OFR’s first priorities is improving data standards. The problem of monitoring 

systemic risk is closely related to the risk management challenges that individual firms face. To 

monitor systemic risk, positions in thousands of diverse financial products, involving thousands 

of individual financial firms, have to be aggregated across the entire financial system. 

Standardizing the way financial transactions are reported, and the consistent use of robust 

reference data, can greatly facilitate this process for regulators and individual firms. The OFR 

will, in consultation with relevant stakeholders, develop standards for financial data and publish 

reference databases of financial entities and instruments that will be made available to the public. 

These industry-wide standards will help FSOC monitor systemic risk and improve risk 

management, reporting and other business functions at individual financial firms.
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1B – Program History and Future Outlook 

Financial Stability Oversight Council

The FSOC held its first meeting on October 1, 2010, and successive meetings on November 23, 

2010 and January 18, 2011. Future meetings will be held on at least a quarterly basis. An 

integrated roadmap was released following the first meeting combining member agencies

internal implementation plans, including timeframes for key deliverables. Over the next year, 

the FSOC is working to establish processes for designating nonbank financial companies and 

financial market utilities, to develop recommendations for stricter standards for monitoring and 

reporting on systemic risk, and to develop tools for monitoring the financial system for emerging 

risks. In the near term, the staffs of FSOC member agencies are focused on fulfilling its 

statutory mandate to complete required reports related to the impact of regulatory policy 

changes. Transparency on FSOC decisions will be provided through annual reports to Congress 

and the public and testimony by the Chairperson on FSOC activities and emerging threats to 

financial stability. 

Office of Financial Research

The OFR’s initial efforts have focused on facilitating development of data standards. OFR 

published its first policy statement in the Federal Register related to legal entity identifiers on 

November 30, 2010. The intent of the policy statement was to promote industry to develop by 

consensus a universal standard for identifying parties to financial contracts. Defining a common 

legal entity identifier for financial transactions will not only improve financial regulators’ ability 

to track market activity and an individual financial firm’s ability to manage market information, 

but will also provide market participants greater visibility into the risks that individual firms 

take.
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Section 2 – Budget Adjustments and Appropriation Language

2.2 – Operating Levels Table

Dollars in Thousands

FY 2010 

Estimated

FY 2011 

Estimated

FY 2012 

Estimated

FTE 

- 

 

50 

 

192 

Object Classification:

11.1 Full-Time Permanent Positions..................................... $0 $6,284 $21,549 

12.0 Personnel Benefits......................................................... 0 3,042 11,190 

21.0 Travel............................................................................. 0 260 773 

23.1 Rental Payments to GSA............................................... 0 4,672 4,772 

23.3 Communications, Utilities, & Mi.................................. 0 1,260 3,262 

25.0 Contractual Services...................................................... 0 14,671 25,167

26.0 Supplies and Materials.................................................. 0 7,049 14,111 

31.0 Equipment..................................................................... 0 4,087 1,529 

Total Operating......................................................... $0 $41,325 $82,353

Budget Activities:

Financial Stability Oversight Council 0 7,435 7,885

Office of Financial Research 0 33,890 74,468

Total Budget Authority................................................ $0 $41,325 $82,353
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2.3 – Resource Detail Table

Dollars in Thousands

% Change

FY 2010 FY 2011 FY 2012 FY 2011

Estimated Estimated Estimated to FY 2012

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting 

Collections

Assessments $0 $0 $20,588 N/A

Transfers-in $0 $41,325 $61,765 49.46%

Total Revenue / Offsetting Collections $0 $41,325 $82,353 99.28%

Unobligated balances, Start of year $0 $0 $0 0.00%

Recoveries of prior year obligations 0 0 0 0.00%

Net transfers (includes capital transfers) 0 0 0 0.00%

Total Budgetary Resources Available $0 $41,325 $82,353 99.28%

Expenses/Obligations

Financial Stability Oversight 

Council 0 $0 17 $7,435 24 $7,885 41.18% 6.05%

Office of Financial Research 0 $0 33 $33,890 168 $74,468 409.09% 119.73%

Total Expenses / Obligations 0 $0 50 $41,325 192 $82,353 284.00% 99.28%
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Section 3 – Budget and Performance Plan

This table lists FYs 2011-2012 resources by strategic goal, objective and outcome outlined in the 

FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a corporate 

level plan for the Department that provides a description of what the agency intends to 

accomplish over the next five years.

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome

Dollars in Thousands

Treasury Strategic Goal FY 2011 FY 2012 Percent 

Estimated Estimated Change

 U.S. and World Economies Perform at Full Economic

Potential $41,325 $82,353 99.28%

Total $41,325 $82,353 99.28%

3A – Financial Stability Oversight Council ($7,885,000 from mandatory programs): FSOC 

has a clear statutory mandate to improve coordination among financial regulators and identify 

risks and respond to emerging threats to financial stability. FSOC has ten voting members, 

including nine federal financial regulatory agencies and an independent member with insurance 

expertise, and five non-voting members. As a coordinative body, FSOC is an executive agency 

of the Federal Government and is not a bureau or office of the Department of the Treasury. 

There are no measures specified for managing FSOC performance at this time. Information on 

FSOC is provided on www.treasury.gov, www.financialstability.gov, and member agency 

websites to provide transparency and accountability.

3B – Office of Financial Research ($74,468,000 from mandatory programs): The Dodd-Frank 

Act established OFR within the Treasury Department to support the FSOC and its members by 

improving the quality of financial data available to policymakers and by facilitating more robust 

and sophisticated analysis of the financial system. The data and analysis provided by OFR will 

enhance the FSOC’s ability to identify emerging threats in financial markets.

There are no measures specified for managing OFR operations at this time. OFR is currently 

working on developing a performance plan for office operations.