Committee to Establish the
 
National Institute of Finance
Providing the data and analytic tools needed to safeguard the U.S. financial system
Home FAQs: Role of the NIF Functionality
Functionality
Can the government really do this?  E-mail

The effort and level of expertise required to establish and maintain the National Institute of Finance will be comparable to those needed for existing large-scale federal entities such as the National Weather Service, Oak Ridge National Laboratory, or Lawrence Livermore National Laboratory. The capacity to develop and maintain the NIF lie well inside the demonstrated capabilities of the U.S. Federal government.

 
How large would the National Institute of Finance become?  E-mail
The National Institute of Finance must have the analytic and computational resources needed to measure and monitor systemic risk throughout the financial system, investigate disruptions and changes in risk patterns, and conduct the long-term research needed to support effective systemic risk regulation. The only definitive way to gain a clear picture of system-wide risk will be through large-scale scenario analysis of the financial system and by modeling, at a fine level, how the system responds to a wide-range of shocks. The computational resources needed would be roughly in line with the current, non-classified, high performance computing facility at the Oak Ridge National Laboratory. The staffing and budget for the NIF, when it is fully functioning, would be a substantial fraction of those at existing financial regulatory agencies, such as the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, or the Securities and Exchange Commission.
 
Which functions of the NIF would be outsourced to third parties? Which functions would be maintained in-house?  E-mail
Every operating organization – whether government agencies, businesses, and not-for-profit entities—faces the question of whether to perform an activity “in-house” or whether to “outsource” it. The federal government has well established policies and procedures for making such decisions. The one key distinction for the federal government is that certain things which are “inherently government functions” may not be outsourced. These established policies and procedures would be applied by the NIF to determine the most efficient way to perform its responsibilities and which things should be done “in-house” and which, if any, would be “outsourced.”
 
Why would the NIF need a strong analytic capacity?  E-mail
An analytic capacity is required because data on its own does not constitute useful information.  In order for the systemic regulator to be effective, the NIF will need to develop appropriate metrics, and monitor and report changes in system-wide risk levels and patterns.  The analytic part of the NIF would also engage in fundamental research to support the systemic regulator.  In addition, the NIF would provide analytic tools to regulators who oversee individual institutions. The analytic capacity of the NIF would provide essential tools to regulators so they would no longer need to outsource critical activities, such as running a stress test or determining the health of a financial institution.
 
What is the National Institute of Finance?  E-mail

The National Institute of Finance (NIF) is a proposed U.S. Government entity that would serve as a resource to gather and provide appropriate data for the financial regulatory community. The NIF would also provide the analytical capabilities to monitor systemic risk, perform independent risk assessments of individual financial entities, and provide advice to the Federal regulatory agencies tasked with ensuring the health of the financial system.

 
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