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Systemic Risk Circumvented
Ideal State of Regulation
Patent # 6.144,947
Transparent Benefits
Letter to Timothy Geithner 7/17/09
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                         " If Deceit is The Absence of Truth, 

           Simply Supply Truth to The Regulator Electronically "


       An Ideal State of Regulation protects the Investor all of the time with the Investors sleeping peacefully at night. The current state of Regulation has the victims of Bernie Madoff on the streets protesting the SEC.  If the Regulators had access to Madoff's books in real time, then Madoff could not of put out fallacious earnings without fear of the Regulators stepping in at the time of the crime, and not years afterward.


     Consequently, the forthcoming "Regulatory Overhaul" should include a  comprehensive transmission of raw data from the Financial Institutions to the various Regulatory Bodies on a a real time basis for the purpose of preventing damages to the investor and the purpose of circumventing Systemic Risk which would ultimately further indebt the taxpayer. The basic data to be transmitted would be the following:

  • General Ledger Balances and Activity
  • Stock Record Balances and Activity
  • General Books and Records
  • Details of Open Contracts of Material Counterparty Risk

         If Data if transmitted in a standardized format such as XBRL could then be used to calculate the Firm's Net Capital independently.  If then any two counterparties execute a transaction (such as credit default swaps) above a specific material threshold, then the counterparty risk upon Net Capital can be determined systemically, and such transactions which would potentially "Break the Bank" would be discernable to the Regulators at the point of transaction. Furthermore, the consequences of a domino effect of counterparty failure to settle such transactions would then be quantifiable.  

        The Electronic Bridge between the Financial Institutions and Regulators can be considered Regulatory Infrastructure. The aforementioned  data acts as the traffic on that bridge.  Absence of Regulatory Infrastructure allows tolerance for further risk to the Investor or Taxpayer.  The Hundreds of  Billions of Tax Dollars which have been allocated to cover the losses of Banks and Insurance Companies is already intolerable and prevention of potential of more tax dollars justifies the cost of such infrastructure.

          Basically the Regulator can not monitor in real time if the Regulator does not access to the data in real time.  If "figures do not lie", simply transmit the figures in the Regulator in their most basic and untainted form so the Regulator may circumvent excessive risk taking at the point of trade.   Systemic Risk is best contained with Systemic Regulation:  to not allow excessive risk at the time of transaction. 

                                Value is Fleeting Upon The Absence of Vigilance