The financial world doesn’t need new regulations; it needs “Radical Transparency, Now!” according to Wired Magazine’s feature story on what can happen when the public has access to better data. As a result of their inquiry, Wired Magazine has put forth a “Transparency Now” manifesto for a revolution powered by flexible, more useful data that is “unshackled from the pages of regulatory filings.” The three part-manifesto reads “Set the data free. Empower all investors. Create an army of citizen-regulators.”
In Wired’s story titled “Road Map for Financial Recovery” EDGAR Online’s CEO Phil Moyer describes how his company was able to create “a Rosetta stone” to analyze data on mortgage backed securities, and deliver “spreadsheets that clearly spelled out the risks in each of the pools, giving the financiers the ability to evaluate every aspect of the loans, exposing a nationwide crisis in the making.”
XBRL pioneer Charlie Hoffman explains how interactive data from company reports can be used by all investors, leveling the playing field. (EDGAR Online fully promotes the goals of XBRL International in global adoption of this open-standard for business reporting.)
And for a perfect example of what can happen when people have access to the right data, the article explains how Harvard PhD student Kevin Bartz, was stymied in his attempt to get better information about the mortgage business and figured out how to assess credit risk and beat the banks at their own game. All borrower data is transparent at his LendingClub www.lendingclub.com site, which matches individual lenders with borrowers who need loans. He reports a “staggeringly” low 2.7 percent default rate (versus nearly 5.5 percent for prime credit cards).
It is great to see that the general public is becoming more aware of what the XBRL community has made possible: an open-standard for business reporting and a data format that is more transparent and data that is flexible and instantly useable.
March 26th, 2009 at 5:23 am
Contrary to what you read in the headlines, the United States did NOT lose any money in the subprime mortgage meltdown. Leveraged money created by a keystroke never evaporates into nothing—it is transferred to another bank and is indistinguishable from real dollars. If we shut down the Iraq war and invade the secretive offshore banks we will probably find trillions and trillions of dollars hiding out in Bermuda, Cayman Islands, Malta, Switzerland, Malta, Andorra, Dubai, Grenada, Andorra, Aruba, Belize, Barbados and Lichtenstein. The war profiteers’ dirty money will be cleaned up and spendable when it’s electronically transferred back to small US neighborhood banks—enough to pay off everyone’s mortgage, send everyones’ kids to college and restore everyone’s retirement funds. Don’t fight ‘em, hack ‘em! We want a refund!
Carla Hein
March 29th, 2009 at 11:56 am
This article gets five stars.