The Warning Bell at the Federal Agency Created to Monitor Systemic Bank Risk Failed to Ring

April 26, 2023

by Pam Martens and Russ Martens Wall Street on Parade

For years Wall Street On Parade saluted the work of the Office of Financial Research (OFR) in sounding the alarms about the risks building up in the U.S. banking system – even when it was politically unpalatable for the OFR to do so. Then the Trump/Koch administration took over and gutted OFR and put a crony in charge.

It does not appear that the damage to staffing and talent under the former Trump/Koch administration has been adequately repaired under the Biden administration.

The OFR was created after the near collapse of the U.S. financial system in 2008. It derives its statutory role from the Dodd-Frank financial reform legislation of 2010. Its key job is to issue timely alerts and research reports to keep the Financial Stability Oversight Council (F-SOC) informed of emerging financial threats or weaknesses that have the potential to crater the U.S. financial system again.