The Wall Street journal reported it as the “Speech of the year“.
In a speech with the intriguing title “The dog and the frisbee“, Andrew Haldane, the Bank of England Director of Financial Stability has questioned whether the Emporer (in the form of ever increasing, ever more complex regulations such as Solvency II, BASEL III and Dodd Frank) is naked. He points out that the BASEL regulations, which have increased from 30 pages to over 600 pages completely failed to identify banks that were at risk of collapse, while a simple measure of the bank’s leverage ratio did identify them.
He also points out “Dodd-Frank makes Glass-Steagall look like throat-clearing.” The Glass-Steagall act of 1933, which separated commercial and investment banking, ran to a mere 37 pages; the Dodd-Frank act of 2010 ran to 848, and may spawn a further 30,000 pages of detailed rule-making by various agencies.
I recommend you read the speech yourself – his arguments, together with his wit are superb. I include a brief extract below:
‘In the UK, regulatory reporting was introduced in 1974. Returns could have around 150 entries. In the Bank of England archives is a memo to George Blunden, who was to become Deputy Governor, on these proposed regulatory returns. Blunden’s handwritten comment reads: “I confess that I fear we are in danger of becoming excessively complicated and that if so we may miss the wood from the trees”.
Today, UK banks are required to fill in more than 7,500 separate cells of data – a fifty-fold rise. Forthcoming European legislation will cause a further multiplication. Banks across Europe could in future be required to fill in 30–50,000 data cells spread across 60 different regulatory forms. There will be less risk of regulators missing the wood from the trees, but only because most will have needed to be chopped down.’
Andrew Haldene is calling for more simple, basic rules. I agree with him,
I have worked in data management for over 30 years. The challenges I see today are the same challenges that arise time and time again. They are not Solvency II specific, BASEL specific, or Dodd Frank specific. They are universal. They apply to all critical data within all businesses.
The fundamental truth is “The data is unique, but the data management principles are universal”
It is time to stop writing specific data management and data quality management requirements into specific legislation. They should all seek to refer to a common sense universal standard, such as that proposed by the Clear Information Framework – and put the effort into improving such a standard.
What do you think? I welcome your comments.