The Federal Deposit Insurance Corp. (FDIC) is considering nixing its quarterly reports of banks in an attempt to modernize the way data is handled.
The reports have been a fixture of the way the government monitors for risk for 150 years, The Wall Street Journal (WSJ) reported, but they could now be scrapped in favor of a more timely, accurate approach to better reflect new technology available and better report on credit exposures and deposit information.
To do so, the FDIC is going about a new competition among 20 data and technology firms to try and find the best way to move forward, WSJ reported. Part of the overhaul could focus on replacing the "call" reports that banks are required to file within 30 days after each quarter, which result in copious 60-page reports with thousands of data fields.
The idea is to modernize the ways watchdogs look out for risk on the market, which proponents say could boost crime detection and inclusivity in bank customers. Officials say keeping track of the smaller institutions can be particularly slow, likening it to waiting months to get lab results back from a doctor's visit, according to WSJ.
And while the effort predates the coronavirus, the pandemic has shown some of the cracks in the old ways of reporting. The quarterly report, not released until earlier this month, only went up to early March and was unable to show the full breadth of how the economy had changed.
Jo Ann Barefoot, a former banking regulator who now heads the Alliance for Innovative Regulation, said the new rules would "transform" financial regulation.
"They can’t see most of what’s going on in the financial system in real time because they don’t have good enough data," she said, according to WSJ.
Recently, the FDIC also eased up the Volcker Rule. Financial institutions will now be allowed to invest tens of billions into venture capital funds. Proponents say the move will stimulate economic growth.