WASHINGTON — Though much of the attention to the recently enacted regulatory reform law has focused on its creation of a consumer protection bureau, the Dodd-Frank Act also created an Office of Financial Research with an ambitious mandate — one many doubt it can accomplish.

The office is tasked with collecting data on behalf of the Financial Stability Oversight Board and analyzing it to spot risks to the economy. Though observers praise the effort, many pointed to challenges, including who the agency will target, how much information it will collect and whether it can successfully analyze the data.

"We have no reason to believe they would succeed where others have failed," said Wayne Abernathy, the executive director of financial institutions policy and regulatory affairs at the American Bankers Association. "There's nothing in the creation of this that overcomes the bubbles you've seen all along. The problem with bubbles is, no one sees it."

Under the law, the OFR is an independent unit within the Treasury Department that is designed to be a data collection, research and analysis arm of the systemic-risk board. The agency will be run by a presidentially appointed, Senate-confirmed director with a term of six years and have a nonvoting seat on the oversight board.

The data office must report to Congress on the state of the financial system two years after the law's enactment and annually thereafter. Its director must also report to Congress annually on the office's activities and its assessment of systemic risk.

To accomplish its mission, the OFR was given authority to issue regulations and collect data, including subpoena power to gather information from any financial company, not just those deemed systemically important. The agency may also require companies periodically to submit additional data.

But it is unclear what companies the agency will target and how far down it will drill to collect data. Observers said that, despite its mandate to collect information, the OFR will not necessarily be able to detect systemic risks beneath its tons of data.

"The whole issue of a magic solution by gathering more data is just suspect," said Chris Whalen, managing director at Lord, Whalen LLC's Institutional Risk Analytics.

Satish Kini, co-chairman of Debevoise & Plimpton LLP's banking group, agreed that more data does not necessarily produce better threat detection.

"Particularly to the extent the office is looking for emerging systemic problems, that may be difficult to do," he said. "No matter how much data you collect, that is difficult."

He also warned that the agency could collect too much data and compared it to similar problems faced in national security.

"To some degree, there is concern in the national security arena that we have tremendous amounts of data flowing in but not enough of being able to discern what is the real risk," he said. "The information may be 'death by a thousand cuts.' "

Several others agreed, saying that too much data may only overwhelm regulators.

"There is such a thing as too much information, and such a thing as having so much data [that] one thing starts to cancel out another," said Ralph Sharpe, a partner at Venable LLP. "They are going to have to be focused on what they are looking at, and they are going to have to have some really good people look at the data and make some predictions what it all means. There are a lot of academics, bankers and people on Wall Street who supposedly thought they were doing that sort of thing leading up to the crisis, and most of them guessed wrong."

Phil Swagel, a visiting professor at Georgetown University and a former Treasury economist, said sifting through the information to find usable data will be tough.

"It's hard to sort out and sift what is the key information," Swagel said. "It's a hard task of not just getting all information but the right information. It's going to take some time. At first we may ask for too much, and pare it down."

Josh Rosner, a managing director at the research firm Graham Fisher & Co., questioned the premise behind the agency's creation. Regulators already had the authority to collect significant amounts of data and analyze it, he argued. "Unfortunately, I do think it ends up being more of the same," he said.

Observers compared the OFR's mission to the Federal Reserve Board's history of research and spotting risk.

"Is this going to replicate what the Fed does so [that] you have independent eyes looking at the system?" asked Oliver Ireland, a former Fed official who is a partner at Morrison & Foerster LLP. "The question is, why would you go there instead of [to] the Fed, wh[ich] already has economists and established experts doing this?"

But some said the Fed has many different missions and potential distractions. The new office will focus exclusively on data collection and systemic risk.

"The Office of Financial Research — that's their mission; basically their only mission is to collect data, analyze it and make recommendations," Sharpe said. "The Fed had other hats to wear. You could argue whether the data collection and analysis took a back seat to some of the other things the Fed was charged with doing."

Bankers are also worried that the new office will demand the same information regulators are already collecting but ask for it in a different format, adding to the compliance burden.

"Our worry [is], they may ask for the same information we [are] already providing but in a different way so it's duplicative," Abernathy said.

Treasury Department officials have already begun outreach to financial institutions to assess how they collect information and use it for analysis. Their aim is to avoid duplicative information requests and to coordinate collections among regulators, creating a standardized way of obtaining data.

Also unclear is how the OFR will be funded. Under the law, the Fed is to fund it for two years but then it is to set its own budget and charge fees to systemically important institutions.

Cornelius Hurley, a professor at the Morin Center for Banking and Financial Law at Boston University School of Law, said the funding setup is limited.

"It assumes all the systemic risk is in the $50 billion-and-over institutions," Hurley said. "A lot of us think the risk of the next crisis will be marbled throughout the system rather than targeted in the largest institutions."

He argued that, since the OFR can target companies that are not considered systemic threats, it should be free to charge them as well.

Some argue that these challenges can be overcome and the OFR could prove a valuable asset.

Andrew Freeman, the executive director of the Deloitte Center for Financial Services, said the OFR will be a game changer for spotting risk. Those who doubt its success are taking a "pessimistic and defeatist position," he said.

"It's not more of the same," Freeman said. "I do think it represents a change in how U.S. regulators are thinking about systemic risk and the breadth and range of indicators they will be monitoring."

The data office should "provide policymakers and decision-makers with a better information sense and a better sense of what's going on," he said. "The judgment of the policymakers would be more informed and more capable of taking action."

Doug Elliott, a fellow at the Brookings Institution, said the OFR will be a powerful office.

"It's going to be quite important because it's going to be gathering the information others make decisions on," he said. "When you control the information, you have a significant effect on the outcome."