Issa’s new MADOFF Transparency Act for financial reporting would affect municipalities 

It can’t have been easy to come up with an acronym for the bill U.S. Representative Darrell Issa is introducing today in Congress that would create “…a broad mandate for open data throughout U.S. financial regulatory reporting.” But someone got clever and did and poof, we have the Making All Data Open for Financial* Transparency Act, or MADOFF Transparency Act.

According to materials from the Data Transparency Coalition, the Act

would require each of the nine main financial regulators to adopt standardized data fields and formats for the information they collect under the securities, commodities, and banking laws.

Those nine are:

  1. Treasury Department
  2. Securities and Exchange Commission (SEC), and the other seven member agencies of the Financial Stability Oversight Council (created by the Dodd-Frank law in 2010 after the financial crisis of 2008)
  3. Federal Deposit Insurance Corporation
  4. Office of the Comptroller of the Currency
  5. Consumer Financial Protection Bureau
  6. Federal Reserve
  7. Commodity Futures Trading Commission
  8. National Credit Union Administration
  9. Federal Housing Finance Agency

I found this pdf (ironic it’s a pdf given the MADOFF bill’s emphasis on machine-readable) that provides layperson language to explain what each section of the bill seeks to accomplish.  From that document, Governing magazine picked up why local and state governments need to pay attention:

The section of the act that would affect state and local governments requires the Municipal Securities Rulemaking Board to adopt a standard data format in which a municipality would have to submit their financial information. “So instead of submitting a PDF document,” says Hudson Hollister, “they submit a data file.”

Liz Farmer, author of the Governing article, does a great job at the beginning of the piece describing the real-world frustrations when it comes to pdfs versus data files. But she also doesn’t let Hollister off easily from his assertion that local governments, “wouldn’t necessarily require any additional tech-savviness” in order to comply with the bill’s mandates. Here’s what she writes, and I completely agree:

All this stuff is great in theory, but in reality there’s the practical matter that state and local governments are incredibly diverse in their size, operations and capabilities. That’s why mandating financial reporting standards to governments can be difficult, says Lynnette Kelly, executive director of the Municipal Securities Rulemaking Board. Many wouldn’t have a problem conforming; many more would. Usually the better route for these things, she says, is for governments to voluntarily adopt changes.

Here in Ohio, even the state Treasurer’s efforts and the Ohio legislation under consideration now for the Data Ohio Board (HB 130) are all discretionary at this time, no doubt in recognition of the challenges and lack of fertile ground in many Ohio locales.

Another big question mark with Issa’s bill is: what appropriations are going to come with the Act’s mandates? There will be upgrades needed to meet them. Will there be appropriations forthcoming, or will it become an unfunded mandate?

The pursuit of open data is a cost of doing business – government or private – in 2015 and beyond. Figuring out how to pay for it, and how much it pays for itself, remains difficult and the aspirations in Issa’s legislation place no different a question out there than any other data transparency effort, especially when we’re talking local. Congress has indeed shown a lot of support for many transparency efforts, including those from Mr. Issa. We look forward to following the progress of this bill.

NB: Who and what exactly is the Data Transparency Coalition? A very interesting organization for many reasons:

The Data Transparency Coalition is the only trade association pursuing the publication of government information as standardized, machine-readable data. Through advocacy, education, and collaboration, the Coalition supports policy reforms that require consistent data standardization and publication. Data transparency enhances accountability, improves government management, reduces compliance costs, and stimulates innovation. Representing a cross-section of the technology industry, the Data Transparency Coalition membership includes market leaders such as Teradata Corporation, Workiva, RR Donnelley, Booz Allen Hamilton, and CGI Federal and growing start-ups such as Enigma.io, and Level One Technologies.

The partnership between the public and private sector is intriguing and could be, in many ways, helpful, as we heard from, Doug Cutting, the co-creator of Hadoop (a platform for big data) say yesterday. Let’s hope in this case it is and remains so.

*The clever folks kind of punted with the two “F”s but whatever. Sounds the same no matter how it’s spelled. And we know exactly who they’re talking about.

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