Within its 2,300 pages of banking and market reforms, the Dodd-Frank Act of 2010 assigned two new bodies to guard against recurring systemic crises: the Financial Stability Oversight Council, a deliberative and information-sharing panel consisting of top-ranking regulatory officials; and the Office of Financial Research, which defines its mission as “delivering high-quality financial data, standards and analysis principally to support [the FSOC] and its member agencies.”
Both the FSOC, which is chaired by the secretary of the Treasury, and the OFR, which resides in the Treasury Department, over a decade and a half have evolved, course-corrected, and weathered sometimes partisan criticisms. In February, in congressional testimony presenting the FSOC’s annual report, Treasury Secretary Scott Bessent stressed the Trump administration’s departure from “regulation by reflex” and from “a regulatory myopia that has undermined safety and soundness,” because bank regulation became preoccupied “with reputation risk, climate-related financial risks and other risks with no clear nexus to safety and soundness.”
With “fostering economic growth and security” as an overriding theme, Bessent enumerated as FSOC priorities: strengthening the U.S. Treasury [securities] market against future shocks; protecting the financial system from increasingly sophisticated cyberattacks; supporting modernization of bank and credit union regulatory frameworks with an emphasis on material risks and enhancing transparency; and “prioritizing the responsible use of artificial intelligence to strengthen financial stability. The council is working with public- and private-sector partners, including international counterparts, to enhance system resilience while closely monitoring emerging risks.”
Part One of the OFR’s annual report for the 2025 fiscal year (through last September 30) was similar to FSOC’s report in outlining risks to the financial system.
But Part Two, “Status of the Office of Financial Research,” looked inward on eroding resources:
“The OFR started the fiscal year with 188 employees and grew to 205 by January 2025 as the OFR increased its service offerings to the council and its member agencies.” But amid administration efforts to reduce the government workforce, 30% of OFR staff voluntarily participated in federal Deferred Resignation Programs, which, with “natural attrition,” left 109 employees at the fiscal year-end. The annual budget contracted to $110.7 million from $124.6 million the year before.
OFR fiscal year budget comparisons ($ millions), from 2025 annual report, Figure P2-1.
Fiscal 2025 “was a year of significant change for the Office of Financial Research,” James D. Martin, the office’s principal deputy director, wrote in the report’s introductory letter. “We sharpened our focus on core mission activities and reduced our workforce to align with the administration’s goals. We also successfully leveraged recent artificial intelligence advances to improve organizational efficiency.
“As in past years, we continued to collect and provide data to further financial stability research and analysis, enabling collaboration and research among the Financial Stability Oversight Council and its member agencies.”
Looking ahead, the report concluded, “The OFR will continue to adapt to any future reductions in its workforce and innovate to maintain core operations within budget.”
There was more handwriting on the wall this spring.
Federal News Network reported in late March reduction-in-force notices from Treasury along with a further 23% budget cut that would leave 72 employees in place. That followed an attempt last year to close the OFR entirely through a provision in the One Big Beautiful Bill Act. Senator Tim Scott, Republican of South Carolina and chairman of the Senate Banking Committee, took a party-line position that the OFR’s work was duplicative of other agencies’, but the proposal was disallowed by the Senate parliamentarian.
Among legislators coming to OFR’s defense, Representative Bill Foster, Democrat of Illinois and ranking member of the House Financial Services Committee’s Financial Institutions subcommittee, introduced a bill in January to “establish minimum budget and staffing levels” for the OFR and FSOC.
Senator Elizabeth Warren of Massachusetts, the Senate Banking Committee’s ranking Democrat, said in a statement to Politico: “As risks emerge in the financial system and cracks in credit markets spread, the Trump administration is gutting the office designed to evaluate financial risks in a giveaway to Wall Street. This is just the latest move by President Trump and his financial regulators to undermine financial stability and pave the way for another crash.”
Warren has decried staff cuts and what she views as looser enforcement across the regulatory landscape, particularly at the Consumer Financial Protection Bureau, a Dodd-Frank-authorized agency that she championed,
The OFR never lacked for support from a cadre of academic and policymaking thought leaders who pressed for its inclusion in Dodd-Frank. The crisis loomed large at that point in the Obama administration, with reform-minded Democrats setting the legislative agenda.
Richard Berner
Richard Berner, a former Morgan Stanley chief U.S. economist, worked to set up the OFR, initially serving as a counselor to Treasury Secretary Timothy Geithner. After being confirmed by the Senate, Berner was the OFR’s first director, from 2013 to 2017. Today, Berner is co-director, with Professor Emeritus Robert Engle, of the NYU Stern School of Business Volatility and Risk Institute, which is holding its annual conference on April 24.
Aside from the OFR and entities like the VRI and the Yale School of Management’s Program on Financial Stability, financial stability gets regular analytical treatment from central banks. The U.S. Federal Reserve, for one, issues two reports per year.
The multinational Financial Stability Board, on which the Fed, Treasury and Securities and Exchange Commission are represented, and whose current chairman is Bank of England Governor Andrew Bailey, published its annual report on March 24. The International Monetary Fund released its latest global financial stability publication on April 14.
The SEC in 2009 established the Division of Economic and Risk Analysis (DERA), headed by the agency’s chief economist. The division in 2014 formed an Office of Risk Assessment in part to “support the SEC’s ongoing work related to the Financial Stability Oversight Council.”
The first three OFR working papers, in 2012, were A Survey of Systemic Risk Analytics, by co-authors including MIT Sloan School finance professor Andrew W. Lo; Forging Best Practices in Risk Management, by professors Mark J. Flannery, Paul Glasserman, Clifford Rossi and David K.A. Mordecai; and Using Agent-Based Models for Analyzing Threats to Financial Stability, by Richard Bookstaber, who predicted the 2008 meltdown in A Demon of Our Own Design and recently warned in the New York Times that “what is coming may be worse.”
Research briefs currently highlighted on the OFR website include Measuring Counterparty Exposures to Private Credit and Sizing the U.S. Cross-Border Repo Market.
OFR remained productive despite ups and downs. Berner had to answer Republican allegations that the office was exceeding its authority in gathering data from financial institutions and exposing it to privacy and cyber risks.
After Berner stepped down, early in the first Trump administration, Kenneth Phelan, a veteran risk manager serving as both the Treasury Department’s chief risk officer and acting OFR director, clarified that the OFR “refocused its mission to primarily support the Financial Stability Oversight Council and its member agencies.” (Phelan left Treasury in 2019 and is an Oliver Wyman senior advisor and Huntington Bancshares director.)
According to a February 2019 GARP article, “The workforce was reduced during fiscal year 2018 to 152 from 210, and another 40 positions were cut shortly thereafter. The budget, which peaked at $94.9 million in fiscal 2016, was $75.9 million two years later.”
Principal Deputy Director James Martin
Further underscoring the role assigned to the OFR was the “Joint Analysis Data Environment (JADE) for FSOC,” a platform launched in 2023 to “enable collaborative, interdisciplinary research on financial stability by providing FSOC member agencies with access to analysis-ready data, analytical software, and high-performance computing in a secure, cloud-based environment.”
OFR’s annual report described JADE as transforming regulators’ collaboration, streamlining their “access and providing the platform for more comprehensive risk measurement and monitoring.”
“Risks to financial stability do not adhere to regulatory boundaries,” then Acting Director James Martin stated in July 2023. “Risks travel from one regulated space to another. It is important to look across the financial system to see where risks to the financial system are developing and where they may spread. This requires access to a cross-section of data and the tools to jointly analyze it.”
An August 2025 article by Emily Araujo and David Wessel of the Brookings Institution Hutchins Center on Fiscal and Monetary Policy reached back to the OFR’s original mandate, quoting Senator Jeff Merkley, Democrat of Oregon, in 2014: “OFR is supposed to be a kind of National Institute of Finance, to cure gaps in data and analysis, to engage in and support cutting-edge research, and to look through the complexity of our financial system and provide Congress and the public with independent and transparent assessment of what risks we face and what can be done about it.”
The article cited as “significant” OFR accomplishments collecting previously unavailable data on the centrally cleared repo market, data contributed to the Federal Reserve Bank of New York for the Secured Overnight Financing Rate (SOFR) benchmark, the Hedge Fund Monitor and other risk gauges, and the annual-report risk roundups.
The office is funded through assessments on systemically important financial institutions, and it has not had a confirmed permanent director since 2022.
In June 2025, “dozens of former senior government officials, academics and business leaders” –
including former Federal Reserve Chairs Ben Bernanke and Janet Yellen, Nobel laureates Robert Engle and Simon Johnson, former Treasury Under Secretary for Domestic Finance Nellie Liang, Richard Berner and Andrew Lo – signed a letter to congressional leaders arguing that eliminating the OFR “would undermine America’s capacity to maintain a stable financial system.”
“Its research and analysis have made important contributions to FSOC member agencies’ and the public’s understanding of risks to financial stability,” they asserted. “History shows that financial crises have high socioeconomic costs and that the economic recovery from such crises tends to be protracted. Defunding or significantly downsizing the OFR and its financial data and analytics would be a mistake, particularly so given today’s elevated macro-financial uncertainties.”