Financial Stability Plan Aims for Transparency

The policy laid out by Treasury Secretary Timothy Geithner in the Financial Stability Plan:

"... will help restart the flow of credit, clean up and strengthen our banks, and provide critical aid for homeowners and for small businesses. As we do each of these things, we will impose new, higher standards for transparency and accountability."

The "stress tests" that financial institutions with over $100 billion in assets will undergo in order for the Treasury to determine whether they are adequately capitalized are not fully defined, blogs the Los Angeles Times, nor are the consequences of an unsatisfactory test score. Gartner's David Furlonger observes that the Treasury's efforts to take the pulse of these financial institutions will uncover and be severely hampered by inadequate data management and reporting:

"The requirement to increase the transparency and disclosure of banking activities, while laudable, will place significant "stress" on banks enterprise data management and reporting capabilities. The continued lack of robust, enterprise-wide data integration plagues the effective assessment and management of risk. Multiple databases, treatments of accounting logic, differing interest rate curves, historical gaps in information, data format problems, multiple application platforms etc will undermine the ability to meet this requirement and thence could have a significant impact on a banks lending business. Even if regulators have the capacity to absorb, interpret and audit the substantial increase in received information."


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