Map the Banks
mapthebanks.com
mapthebanks.com
Financial institutions only have to disclose the highest, most superficial levels of information to the public when it comes to the breakdown/allocation of their assets and liabilities. If you open up central bank data or the notes to a FI's financial statements, you will not find a meaningful delineation of where a banks assets are or what risk profiles they have.
Having worked in a very large commercial/investment bank and directly with the CFO, I know first hand that although banks avoid doing anything illegal, they will have no qualms with bending the rules in their favour. Most well run banks know exactly which rules are being bent and they will know exactly how to classify it in any public submission to prevent any smell. They have large finance and investor relations teams who pore over every decimal point in any report and have prepared answers to virtually all regulator questions.
The information you need to properly regulate banks are not in the public domain.
Take the last financial crisis for example. I don't think any publicly available financial statement or report would have told you that banks were holding onto a tremendous volume subprime mortgages classed as 'AAA'. This only emerged when huge holes appeared in balance sheets when the US economy slowed and a whole bunch of assets had to be written off.
The kind of remedy required to mitigate the chance of another crisis is a systemic overhaul of how banks are allowed to operate and how they are regulated. I'm sorry, but holding them to account with data provided by banks themselves will not yield much result.
EDIT: Sorry for being a jerk/cynic about this effort. I'm actually a big fan of OpenCorporates. But I'm still a bit disillusioned having quit in 2011.
Anyways, the regulators now will have a pretty complete picture of what each bank holds, at least for a single asset-class.
Though, I suspect information on exchange traded stocks, and centrally cleared swaps are also available to the regulators, via the respective exchanges and execution facilities.
In reality, the swap data repositories are finding the data submitted by each institution very difficult to reconcile - it's a step in the right direction but the goal of constructing a full representation of each financial institution's derivatives exposure is still a way off.
Defining a swap: the OTC market is complex and there is no standard representation for many of the products - this makes reconciling data submitted by each of the firms complex. A simple interest rate swap report could contain up to 1,000 elements to fully describe a trade.
Volume: the 2 major OTC reporting regimes, Dodd-Frank and ESMA, both generate tens of millions of trade reports daily. This data needs to be correct; needs to be both ingested and retrieved quickly and needs to support complex post-reporting processing and queries.
Complex workflow: each swap undergoes many changes during it's lifetime, which complicates the workflow and data for reporting. For example, you may trade a block CDS, which is split into 20 allocations, some of which are new trades and some that alter existing trades (step ins; step outs; terminations; reductions...). Each of the allocations may require different reporting treatments.
And yes, the 'too much data, not enough scientists' problem with interpreting the submissions. Bear in mind that the SEC reporting hasn't started yet - that's 2015...
But that doesn't make it useless. Merely having lists is an important step.
For example, I do a lot of work with unstructured text (eg, news reports, transcripts). Having a list of names of financial entities means it is possible to link statements made by office holders to their entities much easier.
But again, this doesn't fix the financial disclosure problem..
Banks are inherently opaque -- in many cases their own management doesn't understand their own balance sheet.
One of the great changes over the past few decades has been the migration of investment banks from partnerships to public equity structures. When an investment bank was a partnership, its "shareholders" were bankers and former bankers, with a deep understanding of the assets and liabilities _and_ of the ways in which management could manipulate their accounting. Those owners were highly incentivized to make sure the bank was properly run, as much of their wealth was tied up in that equity, which was in an illiquid form that couldn't easily be sold or hedged.
The commercial banks were always public equity, but until a few decades ago generally took considerably less risk.
Investment bank managements have since discovered that the public markets were willing to provide plenty of capital, with much less rigorous and careful oversight. So they've migrated those partnership structures to public equity, which enables much larger and riskier balance sheets.
If we were seriously interested in regulating these institutions, we'd require them to be partnerships in the old form. Nothing unconstitutional about it, the Fed could make such structure a requirement for access to its desk. Yes, we'd have much smaller banks, and less liquid markets, but their self-regulation would be far better.
And how many billions of dollars in fines and settlements have all those big banks paid in the past year for all those legal acts they've committed?
At the end, many of the "AAA" mortgage-backed securities were fraudulent: backed by "liars' loans" backed by fraudulently inflated appraisals, and fraudulent statements of buyers' ability to pay.
In my brief and painful experience, FIs genuinely do avoid breaking the law. But they don't mind breaking the spirit of the law by finding a way around it.
I've seen some argue that the sheer volume and complexity of financial law actually makes it easier for bankers to find loop-holes and insulate themselves. I'm not familiar enough to truly judge the truth in that theory.
Just google about the very recent case of Rodrigo Rato and Bankia. That man was our Minister for Economy for 8 years and also head of the FMI for a smaller period. Bankia faked its own accounts prior stock listing at IBEX, among other beautys. It's a comic read if you are into that kind of stuff.
I understand what you ment, it just doesn't apply here. In fact, i think there is a market with reclamations to banks on behalf of clients.
It seems the sub prime mortgage problem was an industry open secret, it's just that short of regulator action it was not clear what to do. And as we prosecuted nobody the next crises will have fewer whistleblowers.
But I am interested in what might be solutions to regulation - should global financial transparency be a goal? Should removing excess profit from banking be a goal?
I look forward to Lord Turners book.
Really really interesting, and quite disheartening.
Imagine if in the future there is leaked dataset. That can then be analyzed using the subsidiary and location information assembled here. Or to note what the public financial statements were and to notice anomalies compared to the leaked dataset.
Its really about keeping track of who all the players in the game are and tracing connections between them.
More forward-looking is the following. Make it easy for the public to formulate queries and datamine against a structured dataset and unstructured data to accrete competing, evolving intelligence analysis models (that square off in prediction markets for rankings) of market entities (including individual executive participants).
This could be a far more powerful deterrent against activities that have bad optics than any regulatory framework. It can also drive a useful feedback mechanism to tell the regulators (via a mass of competing models all screaming for it) what objective data is needed to refine the models' predictive capabilities when backtesting revealed data in the aftermath of market failures like 2008.
OpenCorporates could get some funds by running the exchange services for the prediction markets, and/or setting a small fixed cut for supplying the platform to intelligence analyst teams that use the system for selling competitive intelligence analysis services to anyone who wants them to focus on a specific detail using their specific model (perhaps through metering API access to the data and processing instead of only GUI-level notebook-style access).
If we don't try to make financial institutions accountable, one thing is certain : it will not happen.
I like this attempt to disinfect this mess with some sunlight, though at the end of the day the only way to truly solve these problems (as they may exist) will be for all of us to stop being willing participants in the system. I believe strongly that technology will offer solutions for this in the near future.
However, it also allows the financial industry to become commoditiesed and lowers the barriers to entry. You only need to walk down the City of London to see the sheer number of banks form all over the world. They all compete (except when they collude) and drive down prices. Secondly, you also start seeing large corporates doing their own banking - what does a bank to that BP can't do on their own?
Also the idea of a level playing-field on competition doesn't exist IMHO. It's a corrupt area that needs squashing.
This is a hugely popular sentiment in the wake of the financial crisis, but do you actually have some examples of rent seeking activity by banks in 2014 that is emblematic of this? Your modern megabank takes in billions of dollars in profits per quarter and I'm just curious where the rent seeking shakes out in all of that.
The Goldman LME aluminium warehousing, where they paid people to deposit aluminium with them to inflate the length of the queue to get aluminium out, so that the queue was longer and they could charge more (literal!) rent before people eventually got their aluminium out.
> Your modern megabank takes in billions of dollars in profits per quarter and I'm just curious where the rent seeking shakes out in all of that.
I have a thesis that every megacorp turns to rent seeking, because they're too rigid to innovate. But yeah, I suspect it's a small proportion of the profit of the financial industry as a whole. A lot of people want to buy and sell stuff, so there's a lot of money to be made in even a slim margin there.
It's certainly conceivable that the risk management Wall Street provides has led to economic growth, but considering the systemic instability that led to the 2008 crash, I take that claim with a grain of salt.
[0]: http://en.wikipedia.org/wiki/Financialization [1]: http://tcf.org/blog/detail/graph-how-the-financial-sector-co...
These are just the ones I'm familiar with. I believe it's 80-20. 20% of banks profits are rent-seeking behavior. If we compare this with megacorps in general I'm sure some of their bottom-line is also from rent-seeking behavior.
Edit: additional thought: Rent-seeking is child's play when you consider too-big-to-fail, too-big-to-jail.
Some people will argue for just about any absurd personal opinion. It doesn't mean it's correct or that it has any merit.
> I think a case can be made that a substantial percentage of profits earned by the financial industry derive from economic "rent seeking" and are not materially contributing to productivity in society.
Even if this is true so what? What's your point? A lot of businesses don't contribute to productivity nor do they need to.
If you object and say "but they deserve these profits!" then you're arguing that they are contributing to productivity (and then the profits would be fine)
If you take, for example, pharmaceuticals or the food industry, you'd find a lot more f'ed up things, with people massively taken for a ride. But apparently it's not hip to hate on those industries yet.
But the shadow banking sector is already on the regulators radars so I am not sure what this is going to achieve.
This is a bizarre statement that simply isn't true. Historically, the state has just as frequently encouraged lenders to lend to people who couldn't otherwise afford what they were purchasing. This has been done through legislation like the Community Reinvestment Act, as well as government-sponsored entities such as Fannie Mae and Freddie Mac. And the state is still doing it[1].
[1] http://www.marketwatch.com/story/feds-hope-3-down-mortgages-...
Most often that person was the state itself . . .
I work for OpenCorporates, the team behind this, and we were planning to do a "Show HN" in the next couple of days, once we'd got a few wrinkles sorted out.
In the meantime, I'll be around for a bit and try to answer any questions.
[1]This is not an authoritative list, and I have never read this particular site, but its one of the first on google: http://www.hangthebankers.com/48-suspicious-banking-deaths/
Furthermore, dedicated crawler isn't needed in many smaller (or more centralised/regulated?) markets where there are only a few players. E.g. in Latvia there are less than 30 credit institutions, and as the published data is freeform, not machine readable (http://fktk.lv/en/market/credit_institutions/banks1/ etc), then simply copy/pasting the info would be much quicker than testing a scraper.
>>It's transparency, it all helps
Sorta pedantic and not picking on that comment so much as the CA Prop 65/label GMOs/Citizens United world that we live in: transparency might not be a real solution or means of achieving some goal. Increasing transparency and generating more data when there is already a very low signal to noise ratio and an even lower impetus to act on actual signal feels like a waste of time and energy. For example, we don't need any more data about NSA privacy invasions or CIA torture or effective criminal wrongdoing on the part of the financial industry; we know there is willing, flagrant illegal activity, yet modern society (not just American society, mind you) is unwilling or incapable of doing anything about it.
So what will more data get us? Seems like a waste of time if the desired outcome is change.
Now, that does depends on the level of "change" as revolution can simply ignore the current state and wipe the slate clean, but I would imagine that understanding how the system operates is not a waste of time if you want to change the system (and not remove it).
A more conceptual map showing, for instance, the players in the mortgage space, their relative size, and how they generally interact would actually be a step towards solving the problem. Now how to gather information like THAT is a whole other question.
As a concrete example: Most of the major home insurers have offices in Florida, but don't actually write policies. Who is actually writing these policies? If we have everything tracing back to a single policy writer, then we have a major problem.
> Governments and regulators are releasing huge amounts of data. Collecting, publishing & linking it to company data will give us the global picture of the finance sector.
> OpenCorporates' mission is to bring this data into the open. This is a gargantuan task, so we thought we'd start with a single step: gather data about which companies are permitted to carry out what financial activities, where.
* industry players & interactions
* political donations
* relationships between corporate executives, K street (lobbyists), congress critters, legislative staffers, interns
* relationships between regulatory agency executives, K street, congress critters, legislative staffers, interns
* former (and potential) primary candidates in the congress critters' districts
* a scatterplot of how a given congress critter voted on various related issues, as well as which of their votes (related or not) are out of sync with the voters in their district
Now that's a useful tool right there. Probably a pipe dream ... ah well.
Edits: Here is the blog post announcing the project:
http://blog.opencorporates.com/2014/12/10/launching-map-the-...
From the post:
* Which companies have debt collection operations in other jurisdictions? Even with the small amount of data already collected, we know there are at least 178 financial services companies from India that operate in the US.
* Which countries have the most financial services outsourced to them?
* What companies are licenced to operate in the largest number of countries worldwide?
* Which US bank has the most consumer credit licences in Asia?
* Which organisations appear to operate like financial services companies, yet aren’t regulated as such?
* Where are credit unions being dissolved or created the fastest?
Just don't expect it make a whit of difference to the "Social Contract" that is mentioned.
As long as "Too-Big-to-Fail" and the like exists, Banks & other financial institutions have incredible (almost unimaginable) power & influence over the state [1] at least in the USA. There is revolving door between Federal officials in Treasury and the Federal Reserve etc and big banks such as Citigroup & Goldman Sachs.
My recommendation is to use calc along with vh:
.map-application { height: 100vh; }
#map { height: calc(100% - 13em); //100% - height of .info-bar }
Anybody know if there's a plan to use the more available Federal regulatory data for places such as the United States? Example: https://www2.fdic.gov/idasp/warp_download_all.asp
However, if you think there's a company-related government dataset that should be scraped, please do go ahead and use turbot.opencorporates.com for that -- it's already been used for everything from civil aircraft registrations to mining licences to NHS Providers.
For example, it looks from the bottom of the map that they're classifying institutions as:
* Consumer Credit
* Other
* Mortgage
* Debt Collection
* Bank/Trust
* Insurer
* Authorized Agent
* Mutual/Co-op/Credit Union
What is the rationale for this classification scheme? Are there going to be second level classifications? For example, most large commercial bank/trusts have mortgage arms, consumer credit arms (credit cards and other lines of credit), consumer debt, wealth management, etc.
Hell, take just one sub-industry: wealth management. A large bank will have a trust department ("private wealth" or "private banking"), a Registered Investment Advisor (RIA), and a Broker/Dealer. They're sometimes completely separately managed. They're different legal entities and regulated by different government organs (FINRA for the broker/dealer and the OCC/SEC for the other two). And that's just wealth management.
Just getting a zoology of financial institutions would be a great start.
The only thing I'll add is that there are very useful classifications beyond how the regulators see it. That data are much harder to get, but very useful. For example, RIAs are a world unto themselves, but they can be reasonably segmented in a few different ways: subadvisors vs direct advisors, asset gatherers vs. asset managers, use open architecture vs. not.
first time I've seen CSS3 columns in the wild, pretty neat.
In other words: "Follow the money"
The banking industry won't be "disrupted" until the financial system collapses.
This might be another data source (thought I think the OP knows ;) )
* even when I found the data to be scraped, I did not what/where to scrape
* if you are Czech, I just submitted a mission: https://www.cnb.cz/cnb/jerrs_en
is there any source for this?
Better Market estimated at 12.8 trillion: http://bettermarkets.com/sites/default/files/Cost%20Of%20The...
IMF said $4 trillion dollar: http://www.imf.org/external/pubs/ft/weo/2009/01/pdf/text.pdf
On reflection, Perhps we should perhaps have gone with a higher figure, but chose the conservative figure'. So, we are thinking of increasing the "4 trillion" to "over 10 trillion" to reflect a mid-point between the variation in estimates. Thanks for pointing it out!
Here's the irony, banks needed to be bailed out because they were sitting on bad assets. The bad assets typically were mortgages which were not being paid. But the loans had been made -- that money was sloshing around the economy all though 2004-2007. That isn't to say people who took vacations on cash-out mortgage refi's are the bad guy. I don't think they are.
My take is the large financial crisis, that is the giant asset bubble which burst in 2008 was ultimate caused by many players, both small and large, making (in retrospect) imprudent decisions in good faith.
I am all for outing fraud and market rigging, and all sorts of other illicit shenanigans, but the crisis itself was brought on by credit and leverage, like every other crisis before it.
I don't think they need to be so perfect, however. Teasing out this sort of information ('mapping it') is not going to be a panacea that can detect all fraud. But it will probably be a useful tool to human experts who can combine knowledge from a partial map with information from other sources and a generally mature understanding of the industry.
I am thinking about it, as a lot of job ads want to see some examples of your work, and my stuff is all in house. If the code is going to a good cause, why not.
They do claim on the legal page that "we agree to make it available via the world wide web or analogous means under a licence with at most share-alike and attribution restrictions" but I haven't actually managed to find any of the code for the completed missions.
Am I missing something?
We've got a ticket to add to the manifest and option public_repo field, so that the location of the public repo is easily discoverable, and hope to implement in the next week or so.
The share-alike refers to the underlying data, but again, if you want to make it available to the world under a CC0 licence we have no problem with that.
Hope this clears things up. C