To accelerate the development of these markets, however, some key issues will need to be addressed. First, how will the CDFI industry organize itself to generate and collect this data? Second, who is poised to lead efforts in setting standards for industry data? Finally, who and how will the intellectual capital be developed to model and structure these new instruments?
One of my predecessors at the Federal Reserve Board, Donald Kohn, has noted the seeming herd-like behavior of financial markets in the pre-crisis period that generated this situation—an “underpricing of risk.” 24 The financial crisis, and the deep recession that followed it, prompted changes in the United States’ regulatory framework.