A Mortgage Securities Fix: Instant Online Financial Data

By Michael Barone, Thomas Jefferson Street blog

Another interesting article from Wired presents a proposal I have been trying to come up with. The problem with mortgage-based securities is that no one can value them because no one knows what's in them. My idea has been that in order to have transparency, we should regulate the markets the way the Chicago Board of Trade started regulating the grain futures market years ago--separating grain into four (or some similarly low number) grades of grain and declaring all grain within that category fungible. In Wired Daniel Roth has a far better idea:

We must require public companies and all financial firms to report more granular data online--and in real time, not just quarterly--uniformly tagged and exportable into any spreadsheet, database, widget, or Web page. The era of sunlight has to give way to the era of pixelization; only when we give everyone the tools to see each point of data will the picture become clear. Just as epidemiologists crunch massive data sets to predict disease outbreaks, so will investors parse the trove of publicly available financial information to foresee the next economic disasters and opportunities.

In other words, don't leave the data in dusty files at the SEC, where no one will ever look at most of it, but put it on line, in machine-readable form, where everyone can look at it instantly. Smart!

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By Michael Barone