Committee to Establish the
 
National Institute of Finance 		Providing the data and analytic tools needed to safeguard the U.S. financial system
Home
Nobel Laureates Come Together to Endorse the National Institute of Finance E-mail

In letters delivered to Sen. Dodd and Sen. Shelby, respectively the Chairman and Ranking Member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, six recipients of the Nobel Memorial Prize in Economic Sciences have come together to endorse the proposal to establish the National Institute of Finance.  Among them, Profs. H. Markowitz, R. Engle, R. Merton, M. Scholes, W. Sharpe, and V. Smith represent all four of the Nobel Memorial Prizes in Economic Sciences that have been awarded for work focused on financial markets or financial economics. Here is an excerpt from their endorsement:

... We strongly urge you to include in the U.S. Senate’s financial regulatory reform legislation the authorities and resources needed to assure that the U.S. government will have the understanding, data and analytical capabilities proposed by the CE-NIF that are necessary if government regulators are to have the tools needed to safeguard the U.S. financial system. Enclosed is a summary of Key Legislative Objectives we consider essential for an independent, effective and self-financing National Institute of Finance. ...

The full letter to Sen. Dodd is available here.

The full letter to Sen. Shelby is available here.
 
Sen. Jack Reed Introduces S.3005: The National Institute of Finance Act E-mail

On Thursday, February 4th, Sen. Jack Reed of Rhode Island introduced S.3005:

The National Institute of Finance Act of 2010

A BILL To create an independent research institute, to be known as the "National Institute of Finance", that will oversee the collection and standardization of data on financial entities and activities, and conduct monitoring and other research and analytical activities to support the work of the Federal financial regulatory agencies and the Congress.

Sen. Reed's statement of introduction for S.3005 is available here.
 
Senate Hearing, Feb. 12th, 2010: Equipping Financial Regulators with the Tools Necessary to Monitor Systemic Risk E-mail

NOTE: DUE TO WEATHER IN WASHINGTON, DC, THE SENATE HEARING WAS RESCHEDULED FOR FRIDAY, FEBRUARY 12TH.

On Friday, February 12th, the Subcommittee on Security and International Trade and Finance of the U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on Equipping Financial Regulators with the Tools Necessary to Monitor Systemic Risk. The Hon. Allan Mendelowitz and Prof. John Liechty of the Committee to Establish the National Institute of Finance served as two of the witnesses at this hearing.

Video of the hearing is available online via C-Span Archives (program #292071-1).
 
A CALL TO CREATE A NATIONAL INSTITUTE OF FINANCE E-mail

The danger of systemic financial risk requires a new approach to long-established and deeply ingrained financial regulation practices.  The National Institute of Finance (NIF) would be a new technical agency with the mission to provide regulators with the tools they need to mitigate financial crises, prevent future catastrophes and keep pace with innovations in the financial marketplace.

Read more...
 
The National Research Council of the National Academies Examines the Issues of Data and Research Needed to Regulate Systemic Risk E-mail

To inform the ongoing discussions of financial reform plans in the United States Congress and elsewhere, the National Research Council of the National Academies held a workshop on November 3, 2009, in response to a written request from Senator Reed of the Senate Banking Committee. The goal was to identify the major technical challenges to building the capability for monitoring and regulating systemic risk in the financial sector. The workshop is summarized in a recently released workshop report, available from the National Academies Press, Technical Capabilities Necessary for Systemic Risk Regulation: Summary of a Workshop. Among other things, the report addresses the following questions:

  • What data and analytical tools are currently available to regulators to address this challenge?
  • What further data-collection and data-analysis capabilities are needed?
  • What specific resource needs are required to accomplish the task?
  • What are the major technical challenges associated with systemic risk regulation?
  • What are various options for building these capabilities?

Among the conclusions:

  • "It was widely acknowledged at the workshop that the United States currently lacks the technical tools to monitor and manage systemic financial risk with sufficient comprehensiveness and precision."
  • "Market efficiency will be enhanced by improved intelligence about what is going on in the system as a whole."
  • "Existing capabilities to value individual instruments and manage firm-specific risks and capture system-wide exposures are not a sufficient foundation for systemic risk management."

We encourage you to download and read the full report.
 
ENDORSEMENT: Nobel Laureate Harry Markowitz Endorses the NIF Proposal E-mail

Harry M. Markowitz, recipient of the John von Neumann Theory Prize and the 1990 Nobel Memorial Prize in Economic Sciences, has added his voice to the call for the creation of a National Institute of Finance. Professor Markowitz recently published his own Proposals Concerning the Current Financial Crisis in the January/February 2009 edition of the Financial Analysts Journal.
 
More Articles...