Who Could Be Director of the Office of Financial Research?

Any candidates suggested yet for the position?” These are the types of emails and questions I’ve been receiving this month.

The position everyone wants to know about is the director of the Office of Financial Research (OFR). The OFR is the proposed new data collection and analysis center, which will be set up in the US following the passing of the Dodd-Frank Wall Street Reform Act. The new center will sit within the US Treasury, and the idea is that by collecting data from firms, the OFR will have the information necessary to monitor systemic risk.

So far, it is unclear exactly what data will be required, and in what format this data will have to be reported. This is why talks about the first director of the OFR are seen as so important. This is the person who will be tasked with translating legislation into action. And to do that, the consensus in the data management community is that this person must have a good understanding of financial information. Most want to see a senior industry practitioner as opposed to a theoretician taking the reins.

Industry groups have already started mobilizing candidates. It seems as though most count on finding someone who has an appreciation for data, but also the experience in running and building a large organization in the financial services space. The list of skills and knowledge can go on and on, and it may seem like there will be a very limited selection of people who will actually be seen as fit for the job by members of the community.

Looking Outside

Yet, I’ve also heard some suggesting looking outside the financial services industry, mainly for academics, and potentially, also politicians. The upside for these types of candidates would be that someone from a pure banking background may come across as being too close to the problem, at least in the view of the public. But the critics are concerned that someone from outside the industry will struggle to understand data management and history of standards-setting. In an Inside Reference Data LinkedIn Group discussion, market participants suggested that the ideal candidate would have close academic links, but also experience in running businesses.

The take-away is that this is such an important position. It is always going to be important, but it is the first director who will have the biggest influence on how the OFR will work in practice. There needs to be someone with the right level of authority to succeed here. The person will not only be in charge of building a new organization, but also reporting on the data to President Obama.

Government Position

In fact, this appears to be the ideal opportunity for someone senior in the financial services industry, who has always wanted a top government position. The chosen candidate, who will serve for a six-year term, will be part of the US executive schedule, listing the highest ranking appointments in the US government. The new director will be compensated at Level III of the executive schedule, which, as of January 2010, means the basic pay will be $165,300. This puts the director of the OFR at the same level as the solicitor general of the US, undersecretaries of commerce, undersecretaries of state, undersecretaries of the treasury, and a list of other executives.

It is clear that the OFR director position will be seen as a key appointment following the implementation of the Dodd-Frank Act. Industry groups appear to be spot-on in trying to influence the selection process, as the choice of director can have a big impact on shaping future requirements. Now is definitely the time to get the data message across.