Feds need better IT to oversee financial reforms

If Congress approves legislation to overhaul the financial regulatory system and tighten oversight, it may also beef up the information technology services needed to do the job. A House Financial Services subcommittee examined legislation last week that would establish IT systems to oversee financial rescue funds, including a comprehensive database on the allocation of bailout funds, location-based systems to predict where foreclosures might occur and software for so-called stress tests of major banks' financial stability.

In short, the regulators need the same sort of analytical tools to better analyze the information they are receiving.

The Treasury Department now subscribes to many different sources of data, but much of it exists in incompatible formats that cannot be compared or combined to uncover anomalies and other usable information. Susan Marlow, founder and chief executive officer of Smart Data Strategies, a geographic information services company, testified that an early warning system based on the location of foreclosed properties could have prevented the global financial crisis.

"If you have the right tools and the right data in place you could build predictive models using very basic statistical analysis that accurately forecast where foreclosure and delinquency hot spots are likely to occur, thus providing an early warning system," Marlow said.

Rep. Carolyn Maloney (D-NY) is the sponsor of a regulatory reform bill that would require greater transparency of the bank bailout program with a continuously updated database containing information on the distribution of funds.

For more on financial reform and IT:
- see this nextgov.com article