Reed's comments, made at a Brookings Institute event, also outlined concerns over banks pushing risk outside of the banking system and into private credit markets via trades known as "synthetic loan transfers," and recommended that OFR should address a dearth of information about these trades by using one of its most powerful tools.  The remarks came ahead of a meeting of the Financial Stability Oversight Council on Thursday afternoon, which has recently reinstated its ability to designate nonbank firms as systemically important, as concern over risk in private markets grows in Washington. 

"The OFR cannot see into the dark corners of the financial markets unless there is a permanent and confirmed director," he said. 

The Biden administration nominated Ron Borzekowski, a Yale economist who previously worked at the Consumer Financial Protection Bureau, to lead the OFR. The OFR is meant to collect and sift through data to spot previously unseen risks to the financial system and support FSOC, and although it has never used this ability, its director has a powerful tool in the form of subpoena power for any financial institution. 

Borzekowski's nomination advanced from the Senate Banking Committee in a 12-11 vote along partisan lines. Republicans, including Rep. Patrick McHenry, R-N.C., chairman of the House Financial Services Committee, raised concerns about his work at the CFPB.

"I'm concerned Mr. Borzekowski—an original Richard Cordray staffer—will bring the partisan, unaccountable nature of the CFPB to the important work of OFR and the Financial Stability Oversight Council," McHenry said on Borzekowski's nomination. "The Biden Administration's use of FSOC to push the radical left's social and climate policies are part of a troubling trend of rogue Democrat regulators going far beyond their congressionally granted statutory authority. Under Republican leadership, the Financial Services Committee will use aggressive and robust oversight to ensure Biden's regulators, including OFR and FSOC, focus on their core missions and stay within the bounds of Congressional intent." 

Borzekowski's nomination has stalled for months, and he hasn't yet been approved by the full Senate. Reed said that he wants to move forward with a full Senate vote, which signals that Democratic lawmakers believe they have enough votes to push him through. 

"We are going to energize the process and get him confirmed," Reed said. "And it also reflects frankly, some of the dysfunctionality of the Senate where we get very qualified people who are just caught up in the pushing and shoving between both sides without any real substantive disagreements. But we're going to move forward now." 

Reed said that he wants the OFR to use its subpoena ability to better understand what's happening as banks continue to shift risk outside of the banking system. He's previously raised concerns with synthetic risk transfers, a way for banks to push risk off their balance sheets and on to a third party's. 

"The risks in the shadow banking sector have only grown," Reed said.  "Shadow banks are now the nation's biggest insurers, biggest landlords and biggest lenders and we have very little knowledge of what they're doing." 

Reed said that the so-called "shadow banks," a term for a nonbank financial firm that critics believe mimics some of the functions of a depository taking institution, is assuming more and more risk from the banking system, including through "exotic instruments'' like synthetic risk transfers.

"Having weathered 2008 I get nervous when I hear 'risk transfers,'" Reed said. "I get paranoid when I hear synthetic." 

OFR could use its power to subpoena data from any financial company to plug this gap, he said. 

"I want to be clear this isn't about authorizing fishing expeditions or creating a pretext to rummage around the files of companies for some nuggets of information, Reed said. "The purpose of this authority is to close gaps in public and commercially available data."