elizabeth a duke : opening remarks at the public hearing on potential revisions to the home mortgage disclosure act opening remarks by ms elizabeth a duke, member of the board of governors of the federal reserve system, at the public hearing on potential revisions to the home mortgage disclosure act, atlanta, 15 july 2010. * * * on behalf of the board of governors of the federal reserve system, i ’ d like to welcome the participants to today ’ s hearing. i ’ d also like to express my appreciation to president lockhart and our colleagues at the federal reserve bank of atlanta for hosting us today. i am pleased to be here at the first in a series of public hearings regarding changes to the home mortgage disclosure act ( hmda ). the board has scheduled these hearings to assess the adequacy of the current mortgage data requirements and examine the need to collect additional data from lenders. i would point out that since we began planning these hearings, changes to the hmda data requirements have been included in the regulatory reform bill currently being considered by the congress. we look forward to hearing your comments regarding the implementation of the changes specified in that legislation, as well as changes you might recommend based on your experience. the proposed legislation also would transfer authority for hmda rulemaking from the board of governors to the new consumer financial protection bureau ( cfpb ). all information gleaned from these hearings will inform our rulewriting work. when rulemaking authority transfers to the cfpb, be assured that we will hand over the most current thinking about changes to regulation c. over the course of four public hearings, held throughout the country, we will hear from key players in the home mortgage market : lenders and other market participants, academics and researchers, consumer advocacy and community development organizations, data experts, regulators, and other public officials. although they play different roles, all share a common goal : to ensure that the mortgage market is responsible, transparent, efficient, and serves the needs of consumers and market participants alike. clearly, the recent mortgage crisis has highlighted the potential ramifications of a mortgage market that is not functioning well. data do not create the market, but they do help us understand what is happening in the market. hmda data cannot solve all market problems, but the time is ripe for reviewing and revising the data elements, standards, and reporting formats. with the benefit of hindsight, we can now answer the question : do policymakers have adequate and reliable data sufficient to assess market

of judgement call. people may have some general sense of this, but because iba does not release data on the transactions that actually underlie libor, many may not be aware of how truly thin these markets have become. at the last roundtable, jay powell showed data on the volume of borrowing in wholesale unsecured u. s. dollar markets. that chart can be found in the arrc ’ s second report, which estimated that on a typical day the volume of three - month funding transactions was about $ 500 million. on many days there is much less. by way of comparison, we estimate that there are roughly $ 200 trillion of financial securities referencing u. s. dollar libor. to help provide some further transparency, i will show data that we have on the number of transactions involved. these data are based on the information available to the federal reserve, which is fairly comprehensive but still may differ in some respects from that available to iba, so i should caution that this is merely an informed estimate of the number of transactions underlying u. s. dollar libor and may not be exact. as you can see in the slide, there are a few more transactions at the shorter libor maturities. on average, we observe six or seven transactions per day at market rates that could underpin one - and three - month libor across all of the panel banks. the longer maturities have even fewer transactions. there are two to three transactions each day for six - month libor. on average, there is only one transaction that we see underlying one - year libor, and many days there are no transactions at all. the secured overnight financing rate ( sofr ) has only been in existence three months, and sofr futures have only been trading for two months, but on a daily basis there are already more transactions underlying them than there are underpinning libor. and sofr itself reflects over $ 700 billion in overnight repurchase agreement ( repo ) transactions every day. one of the many benefits of using a rate so firmly anchored in a market of this depth is that no one can question whether sofr is representative. it clearly is. with libor reliant on expert judgment rather than direct transactions, many banks increasingly uncomfortable providing that judgment, and the official sector unable to compel them to do so indefinitely, it was obvious to us that this structure — which bases so many trillions of financial instruments on such a small number of underlying transactions —