EDGAReView

“If bar codes can track down bad peanuts on store shelves, shouldn’t we be able to use technology to track details of mortgages and other debt instruments?” Wall Street Journal’s L. Gordon argues that Washington should focus less on regulatory powers and more on better transparency, which XBRL makes possible.

We are delighted to see how quickly the mainstream media is catching on to XBRL, calling for its use by the government. A March 11 Congressional hearing attracted a lot of attention when US XBRL organization president Mark Bolgiano explained how XBRL could produce consistent, comparable reporting on the existing pool of securitized assets for public access, and could also help regulators track the disbursement and use of TARP funds. Read the full XBRL US press release.

In fact, the idea of using XBRL to track loans is catching on so fast that within days of the hearing where many legislators firsts heard of XBRL, we came across a financial blog accusing the “inept” Obama administration of inaction in having not already implemented it!

Implementation could begin quickly. Just how XBRL can be used to separate good loans from bad is described in a white paper by EDGAR Online CEO Philip Moyer. Called Bringing Transparency to the Mortgage-backed Securities Market, the paper was a key resource for the XBRL US testimony and it is also attracting mainstream interest. The white paper is open for public comment.

We agree with the premise of the Wall Street Journal article by Crovitz, who argues that while XBRL solves the technical problem, the political problem is Washington’s focus on increasing regulatory powers instead of increasing transparency: “…markets are too complex for even the most powerful regulators to dictate. Better transparency is the surest way to make markets more efficient and less volatile. Market wisdom results when more people access better information.” Read the full Wall Street Journal article.
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