FRF – 1

Financial Research Fund

FY 2013

President’s Budget

Submission
FRF – 2

Table of Contents

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

1A – Mission Statement.............................................................................................................. 3

Office of Financial Research .................................................................................................. 3

Financial Stability Oversight Council .................................................................................... 4

Federal Deposit Insurance Corporation Payments................................................................ 5

1.1 Program Account Summary .............................................................................................. 5

1B – Mission, Priorities and Context.......................................................................................... 6

Office of Financial Research .................................................................................................. 6

Financial Stability Oversight Council .................................................................................... 7

Section 2 – Budget Adjustments and Appropriation Language............................................... 8

2.1 Operating Levels................................................................................................................. 8

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

2C – Legislative Proposals.......................................................................................................... 8

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

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

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

3C – Federal Deposit Insurance Corporation Payments............................................................. 9
FRF – 3

Section 1 – Purpose

1A – Mission Statement

Office of Financial Research

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Act) established 

the Office of Financial Research (OFR) within the Treasury Department 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 information, conducting and 

sponsoring research related to financial stability, and promoting best practices in risk 

management. OFR supports the Treasury strategic goal to Repair and Reform the Financial 

System and Accelerate the Recovery of the Housing Market. Consistent with the guidance 

provided by the Act, the OFR will: 

 Support Council coordination through the provision of financial data and analysis needed to 

monitor threats to financial stability: This includes collecting data on behalf of the Council 

and providing it to the Council and its member agencies where such data are essential to 

monitoring threats to financial stability and are not otherwise collected, and enhancing the 

quality and consistency of financial data available to Council member agencies. In this 

context, the OFR is expected to support efficiency in data acquisition by Council members. 

 Develop and promote data-related standards and best practices: This includes facilitating 

the establishment of global data-related standards to improve data quality and scope, while 

also reducing the cost to financial market participants of reporting, and assisting Council 

members in defining standards and best practices for data collection and management that 

will increase efficiencies. 

 Establish a center of excellence for research and analysis on financial stability and promote 

best practices in risk management: The OFR will conduct and sponsor research to identify, 

monitor, and evaluate threats to financial stability, and to analyze disruptions both when and 

after they occur. The OFR will also promote best practices in financial risk management, 

through evaluation of existing methods and governance, as well as development and 

promulgation of new methods.

 Provide the public with key data and analysis: Increase the transparency and distribution of 

research on the financial system, while safeguarding sensitive information, by publishing 

financial analysis, data and information. 

 Establish the OFR as an efficient organization and world-class workplace: The OFR will 

manage human, information, and financial capital to support achievement of the OFR’s 

mission in a cost-effective manner.
FRF – 4

Financial Stability Oversight Council

Prior to the 2008 financial crisis, 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 Act

established the Financial Stability Oversight Council (Council) with a clear statutory mandate 

that created for the first time collective accountability for identifying and responding to emerging 

threats to financial stability. The Council 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 Council has important new authorities under the Act to: 

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

information across the financial system, drawing first from its member agencies, and to direct 

the OFR to collect additional information to assess risks to the financial system. The 

collection and analysis of that information will aid the Council and OFR in their shared goal 

of filling gaps in our knowledge so that regulators will be better equipped to identify risks 

and emerging threats across the financial system.

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

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

not subject to adequate consolidated supervision. The Act gives the Council the authority to 

require consolidated supervision of nonbank financial companies, regardless of their 

corporate form.

 Designate financial market utilities and payment, clearing, or settlement activities as 

systemically important: The Act authorizes the Council 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 Council has the authority to recommend stricter 

standards for the large, interconnected bank holding companies and nonbank financial 

companies designated for enhanced supervision. Moreover, where the Council determines 

that certain practices or activities pose a threat to financial stability, the Council may make 

recommendations to the primary financial regulatory agencies for new or heightened 

standards.

 Limit the activities of firms that pose a ―grave threat‖ to financial stability: The Council 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 Council 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 
FRF – 5

actions. Through this role, the Council will help eliminate gaps and weaknesses within the 

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

The Council is an executive agency of government and is not an office or bureau of the 

Department of the Treasury. However, under the Act the Council’s administrative expenses are 

considered expenses of the Office of Financial Research, an office within the Department of the 

Treasury. 

Federal Deposit Insurance Corporation Payments

Section 210(n)(10) of the Act provides that certain reasonable implementation expenses of the 

FDIC incurred after the date of enactment of the Act shall be treated as expenses of the Council. 

The FDIC must periodically submit requests for reimbursement for implementation expenses to 

the Chairperson of the Council, who shall arrange for prompt reimbursement to the FDIC of 

reasonable implementation expenses. The expenses estimated are for rulewriting and resolution 

planning consistent with the FDIC's implementation of its responsibilities under Title II of the 

Act.

1.1 Program Account Summary 

% 

Change

FY 2011 FY 2012 FY 2013 FY 2012

Actual Estimated Estimated to FY 

2013

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue/Offsetting Collections

Assessments $0 $119,000 $168,000 41.18%

Transfers-in $20,516 $91,742 $0 -100.00%

Total Revenue/Offsetting 

Collections $20,516 $210,742 $168,000 -20.28%

Unobligated balances, Start of year** $6,258 $94,374 

Total Budgetary Resources 

Available* $20,516 $217,000 $262,374 20.91%

Expenses/Obligations

Office of Financial Research 13 $11,338 154 $109,660 284 $138,220 84.42% 26.04%

Direct FTE 6 128 254 98.44%

Reimbursable FTE 7 26 30 15.38%

Financial Stability Oversight Council 6 $2,921 25 $8,250 28 $8,800 12.00% 6.67%

FDIC Payments 0 $0 0 $4,716 0 $10,725 0.00% 127.42%

Total Expenses/Obligations 19 $14,259 179 $122,626 312 $157,745 74.30% 28.64%

*The budgetary resources available are greater than the estimated obligations/expenses as a result of funds collected 

in advanced of the next fiscal year. 

**Due to a data entry error related to the carrying forward of prior-year unobligated balances, estimates of total 

budgetary resources available for 2012 and 2013 do not match those presented in the President’s Budget. The 

budgetary resource totals for those years have been corrected in this table.
FRF – 6

1B – Mission, Priorities and Context

Office of Financial Research

Under the Act, the Director for OFR is appointed by the President and confirmed by the Senate. 

Prior to confirmation, Treasury, under the Secretary’s authority, is managing OFR with all of the 

Director’s statutory authority.

Over the next year, the OFR will expand its services to the Council and broader stakeholders 

while continuing to build its institutional infrastructure. Priorities include:

 Support for the Council: The OFR will expand services to the Council and its member 

agencies. including: data services that support the Council’s analysis on, for example, 

designation of systemically important nonbank financial companies for FRB supervision and 

enhanced prudential standards; an initial set of metrics and indicators related to financial 

stability from previous academic research; support for the FSOC Data Committee as a forum 

to discuss data-related issues among the Council’s member agencies; and an ongoing 

inventory of Council data—which will support better coordination of Council data sharing 

and acquisition, reducing redundancies and costs. 

 Data-related standards: A key initiative of the OFR will be its continued work with 

policymakers, regulators, and the private sector on data-related standards, including the 

adoption of a Legal Entity Identifier—a global standard to uniquely identify parties to 

financial transactions—that will support better understanding of true exposures and 

interconnections among and across financial institution.

 Research and Analysis Center: The OFR will expand its core analytic outputs, including 

through cooperation with a virtual community of researchers, academics, and practitioners on 

financial stability and risk management. In addition, the OFR will establish an advisory 

committee of leading researchers, academics, data managers, and IT experts to help the OFR 

identify issues, evaluate work product, and recruit talent.

 Publications: The OFR will publish its second annual report in FY 2013 (the first report is to 

be provided by July 2012), as well as other research and data related to threats to financial 

stability. This will include continued publication of an OFR Working Paper Series launched 

in FY 2012. 
FRF – 7

Financial Stability Oversight Council

The Council’s three primary purposes under the Act are:

1. To identify risks to the financial stability of the United States that could arise from the 

material financial distress or failure, or ongoing activities, of large, interconnected bank 

holding companies or nonbank financial companies, or that could arise outside the financial 

services marketplace.

2. To promote market discipline, by eliminating expectations on the part of shareholders, 

creditors, and counterparties of such companies that the U.S. government will shield them 

from losses in the event of failure.

3. To respond to emerging threats to the stability of the U.S. financial system.

Over the next year, the Council will be: working to establish processes for the designation of 

nonbank financial companies; considering whether to designate financial market utilities as 

systemically important; developing and implementing tools for monitoring the financial system 

for emerging risks. In the near term, the staffs of Council member agencies will continue to 

facilitate coordination and information sharing with respect to various regulatory initiatives. 

Transparency on Council decisions will be provided through an annual report to Congress and 

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

financial stability.
FRF – 8

Section 2 – Budget Adjustments and Appropriation Language

2.1 Operating Levels

 FY 2011 FY 2012 FY 2013

Financial Research Fund Actual Estimated Estimated

Direct FTE 12 153 282

Reimbursable FTE 7 26 30

Object Classification

11.1 Full-Time Permanent Positions..................................... $1,390 $21,161 $33,868 

12.0 Personnel Benefits......................................................... $363 $7,149 $11,567 

21.0 Travel............................................................................. $151 $1,015 $1,048 

23.1 Rental Payments to GSA............................................... $579 $5,835 $6,316 

23.3 Communications, Utilities, & Mi.................................. $36 $85 $88 

25.0 Contractual Services...................................................... $9,453 $60,658 $72,270 

26.0 Supplies and Materials.................................................. $244 $5,153 $10,196 

31.0 Equipment..................................................................... $2,043 $21,570 $22,392 

Total Operating...................................................... $14,259 $122,626 $157,745

Budget Activities:

Office of Financial Research................................................... $11,338 $109,660 $138,220 

Financial Stability Oversight Council..................................... $2,921 $8,250 $8,800 

FDIC Paymemts...................................................................... $0 $4,716 $10,725 

Total Budget Authority............................................. $14,259 $122,626 $157,745

*Due to a data entry error related to the carrying forward of prior-year unobligated balances, estimates of total budgetary resources available for 

2012 and 2013 do not match those presented in the President’s Budget. The budgetary resource totals for those years have been corrected in this 

table.

2B – Appropriations Language and Explanation of Changes

The Financial Research Fund programs do not receive any discretionary appropriation authority 

from the Congress. Therefore, no appropriations language is proposed.

2C – Legislative Proposals

There are no current proposals for amending the authorizing legislation.
FRF – 9

Section 3 – Budget and Performance Plan

3A – Office of Financial Research 

($138,220,000 from mandatory programs): 

The Act established the OFR within the Treasury Department to serve the Council, its member 

agencies, and the public by improving the quality, transparency, and accessibility of financial 

data and information, conducting and sponsoring research related to financial stability, and 

promoting best practices in risk management.

There are currently no performance measures in place for the Office of Financial Research. OFR 

will develop measures in FY 2012.

3B – Financial Stability Oversight Council 

($8,800,000 from mandatory programs): 

The Council has a clear statutory mandate to facilitate coordination among financial regulators 

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

members, the Secretary of the Treasury as Chair, the heads of eight federal financial regulatory 

agencies, an independent member with insurance expertise, and five non-voting members. The 

Council 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 Council performance at this time. Information on 

the Council is provided on www.treasury.gov, www.fsoc.gov, and member agency websites to 

provide transparency and accountability.

3C – Federal Deposit Insurance Corporation Payments

($10,725,000 from mandatory programs): 

The Council has a clear statutory mandate to pay certain FDIC expenses related to FDIC’s 

orderly liquidation of non-bank financial institutions as provided in Section 210(n)10 of the Act.