# Nobel Laureate Prof. Robert Engle Testifies Before Senate on Monitoring Systemic Risk

1 Press Releases February 12, 2010 ![](/sites/default/files/styles/246w/public/assets/images/uat_024153.jpg?itok=O-u0PIXO)>

On February 12, 2010, Stern Nobel Laureate [Robert Engle](http://w4.stern.nyu.edu/faculty/bio/robert-engle) testified before the US Senate Committee on Banking, Housing and Urban Affairs during a hearing on “Equipping Financial Regulators with the Tools Necessary to Monitor Systemic Risk.”

Professor Engle shared several key findings from a report that he co-authored for the National Research Council on the regulation of systemic risk:

- Better data and analytical tools are necessary to measure, monitor and mitigate systemic risk
- Research in this area is underway but more is needed
- Additional data across asset classes would be helpful to researchers
- Standardization and classification of data would be valuable for the industry and regulators
- Research is needed to develop models that incorporate the four Ls: leverage, linkages, liquidity and losses

He also supported pending legislation to establish the National Institute of Finance (NIF), commenting on strengths and weaknesses of the current proposal. He stressed the following:

- OTC contracts have the greatest chance of creating systemic risk, so collecting OTC position and transaction data should be a top priority
- Careful analysis is necessary in the selection of entities to be monitored
- Embedding the NIF within a regulatory agency would help ensure the organization’s independence, insulating it from corporate or government pressures
- The NIF should coordinate with international agencies to collect and analyze data
- Security of data is key to assuring compliance
- OTC data should be made public so that firms can better price and manage risk

[Read Prof. Engle’s full testimony](/sites/default/files/assets/documents/uat_024606.pdf)