Common standard could highlight financial problems sooner and give the public and financial sector greater insight into markets.
House members negotiating with the Senate on the financial overhaul bill are weighing whether to offer amendments that would mandate federal regulators use a uniform format to collect data from industry, a move that would increase transparency, House staffers said.
Rep. Darrell Issa, R-Calif., a member of the conference committee for H.R. 4173, on Tuesday presented -- and later pulled back to rework -- a proposal that would demand agencies dealing with finance-related topics adopt a single data standard such as Extensible Business Reporting Language to collect information, an Issa aide said.
The format would be imposed on banks, investment advisers, insurers and credit rating agencies. XBRL, which is currently the most widely used financial electronic format, consists of a common set of data fields that ensure proper accounting and make comparing figures easier.
Last week, conferees in both chambers began resolving differences between the House version of the overhaul, which passed in December, and the Senate version, which was agreed to in May. House Financial Services Committee Chairman Barney Frank, D-Mass., has agreed to work with Issa on a more comprehensive proposal for the Senate conferees, the Issa staffer said.
"He got a verbal commitment from Chairman Frank that his amendments were acceptable and that Frank's staff and ours would work together to add transparency amendments throughout the bill and put them into a single [amendment] at the end of the process," Issa spokesman Kurt Bardella said.
Frank's spokesman, Steven Adamske, confirmed Issa withdrew his amendment to work on it with Frank's staff but said, "Until he offers it again, we will withhold judgment."
Uniform formatting would allow federal overseers, the public and the financial sector greater insight into markets, advocates say. This is partly because a document coded in XBRL, or a similar business language, can be searched for and read online by any computer.
"We have the technology and the means available to show the taxpayers how their money is being used, while providing measurable results to ensure that money spent is directed toward what it is intended to achieve," Issa said. "By instituting the highest threshold of transparency and disclosure, we are better prepared to recognize a future financial crisis and hopefully be better armed to intervene and prevent it."
Issa, who is the ranking Republican on the Oversight and Government Reform Committee, also co-sponsored a bipartisan, House-passed measure that calls for agencies to use the same kind of standard for sharing federal spending information. Several administration officials and senators have voiced concerns that changing business processes to implement a uniform standard could be difficult and expensive for some agencies.
The language Issa offered on Tuesday does not specify XBRL, but that is the most popular data standard now in use throughout the financial sector and by the Securities and Exchange Commission. Issa aides said the relevant agencies can choose another format if they find a more appropriate one. In addition, agencies would be permitted to impose the standard on companies in stages so smaller businesses have time to comply, they said.
Issa's proposal would require SEC to adopt a data standard for financial information, including hedge funds, that investment advisers submit. The new format would have to be compatible with the standard that SEC uses for public companies' financial statements, which presently is XBRL. SEC also would have to require credit agencies use the same standard for publishing or submitting numerical information, such as rating histories.
In addition, the Issa amendments would mandate the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System rely on a common standard for information that financial institutions submit, and make the information public when not sensitive. Another item in the amendments would require the new Office of National Insurance, which would be established under the overhaul, adopt a standard for data from insurers and make that data publicly available when possible.