How IT could have prevented the financial meltdown

In the coming weeks the feds and the surviving financial services institutions will have the daunting task of unraveling all the securitized loans and other instruments that are hiding the toxic investments. But does the technology exist to do that? And if so, could it have been used to prevent the bad debt from hitting the fan in the first place? The fact is that despite government regulations like Sarbanes-Oxley, there is little visibility mandated by current regulations into the origination of loans and how they are broken up, resold, and resold again. Not only could those mortgages be sold to other banks, but they could be divided into five, 10, or 20 slices and resold to five to 10 different organizations, making it difficult to track who was involved and who ended up taking the risk. Had these financial services companies and banks established business intelligence metrics as to the ratios of what kind of debt they were holding versus the cash reserves they held, their analytics systems might have driven alerts earlier in the process, says Michael Corcoran, a product manager at the BI provider Information Builders. But as anyone in business already knows, consolidating that kind of data to get those answers more often than not is a slow process that typically ends up being done manually in an Excel spreadsheet well after the fact.