Road Map for Financial Recovery: Radical Transparency Now (XBRL) | Hacker News Reader

Road Map for Financial Recovery: Radical Transparency Now (XBRL)

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10 pointsarjunlall3 comments

I don't think that this article is really telling the whole story. The implication seems to be that things just need to be reported in XBRL and that all the information people doing analysis need is there (just not in a consumable format).

My side project is an SEC search site (http://edgarest.com) so I've spent a huge amount of time looking through what is available. The disclosure is just not there -- I'm pretty confident that you couldn't have seen the Bear collapse from the filings they made. You can look at a huge proportion of the filings here: http://edgarest.com/company/name/777001/BEAR_STEARNS_COMPANI... for Bear itself and http://edgarest.com/search?q=bear+stearns for associated entities. Too much of the trading they do and the assets they hold are still opaque to SEC reporting. Along with getting people to file using XBRL we'd have to force companies to increase disclosure (and you'd get a huge amount of pushback on that).

I am not an expert on financials or the SEC, but from reading that story it is clear to me that there is more at play than the story directly states. Doing your SEC disclosures in XML is a good start but there's definitely the suggestion that much, much more should be available; for instance, it sounded an awful lot like they think securities should have some sort of scheme for indicating exactly what they contain, which, presumably, should then be something that could easily be looked up.

I don't know what's in the specific XML format (and I'm not looking it up right now), but I bet it's URI based, where the URI could back to a real document that further specifies the nature of that security. Then, the problem of determining exactly what is in a security reduces from today's effectively unsolvable problem (!) to, quite likely, a junior or senior level college homework problem. This seems like a valuable idea.

So I think there's more to this proposal than just annotating SEC disclosures; I believe the proposal is to convert the entire financial system to using publicly-available XML formats for pretty much everything they do.

I like it. I don't think it solves all problems, but it solves enough to be worthwhile. I also think we've got the technology to do it. There are many nuances I can think of (which would blow this message out too far), but I think it's a fundamentally sound idea.

Let's see if Obama's administration is half as tech savvy as they've been advertised as, and sees the merit of this proposal. It'll take time, but it should be done.

(My only criticism is that this really isn't the road to financial recovery, it's a road to make the next financial crisis of this nature that much harder to happen. If a magical switch could be flipped and this was suddenly implemented today, it would be just as likely to instantly crash the economy as the full truth comes out. As much as I don't like it, given our current situation, a bit of hobbling along may be necessary... although the risk of that approach is extremely high too, really. No easy way out. But, once we've opened up, staying open should be superior to returning to a closed economy.)

Today, public companies and financial institutions disclose their activities in endless documents stuffed with figures and stats. Instead, they should be forced to file using universal tags that make the data easy to explore.

Semantic web to the rescue.

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