Thoughts on budget proposals to defund the Office of Financial Research
A negatively convex budget proposal (downside > upside)
Sharing with M-FAB subscribers a letter that several colleagues and I helped co-author and a number of colleagues co-signed expressing concern about the BBB defunding the Office of Financial Research (OFR).
Yep — I did work at the OFR, but that also means I do have an understanding of its abilities and value proposition.
Among other things, Treasury needs OFR data, IT capabilities to work with very large transactional data sets and authorities for SOFR and the new non-centrally cleared bilateral repo data collections to maintain SOFR and Treasury market monitoring abilities
The US Treasury does not want OFR zeroed out. Treasury put in a budget request to Congress to maintain the agency.
FSOC and the OFR are key tools for Administrations to have both if a financial crisis arises and as part of levering data as part of ongoing decision/policy making. These kind of data on repo markets are important given Treasury market fragility concerns.
OFR’s unique data and analytics are like a nuclear reactor -- easy to shutoff and hard to restart if you need it.
Defunding OFR would, in my view, be an error.
Hello Jill
Many thanks for your time and hard work in bringing awareness to the important work done by OFR.