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Senators Critical of OFR Report on Asset Management Industry

In a letter to Treasury Secretary Jacob Lew dated January 23, 2014, five Senators expressed their concern over the September 2013 study on the asset management industry published by the Office of Financial Research (OFR).  The Senators stated that “the OFR study mischaracterizes the asset management industry and the risks asset managers pose, makes speculative assertions with little or no empirical evidence, and in some places, predicates claims on misused or faulty information.”  One example given in the letter is the failure of the study to properly consider that asset managers act primarily as agents for their clients.  The letter also states that the study “fails to appreciate the extensive existing regulation of the activities, advisers, funds and markets that comprise the asset management industry, all of which mitigate risk to individual investors and the broader financial markets.”

In addition to specific problems with the study itself, the Senators also are critical of the lack of transparency and accountability with the OFR’s activities and the FSOC’s designation of systemically important financial institutions, citing the fact that only the SEC published the study for public comment.  The Senators state “[t]he absence of process, transparency, and accountability may help explain the alarming dearth of accurate data, information, modeling, and metrics to substantiate the OFR Study’s sweeping conclusions and broad assumptions.”  The Senators provided several examples for inaccuracies and mischaracterizations in the study, saying that the errors “raise serious concerns not only about the legitimacy of this study, but also about whether OFR is capable of fulfilling its missions to provide independent and sophisticated analytical support to the FSOC and the member agencies.”


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