Study finds increased possibility of information leaking around Fed meetings

https://news.uchicago.edu/article/2018/03/06/nyc-taxi-ride-data-suggest-cozy-relationship-between-big-banks-and-fed

by walterbell • 8 years ago

211 24 8 years ago

news.uchicago.edu

ne9xt• 8 years ago

what a surprise!

ISL• 8 years ago

This is a nice example of "anonymous" data being used to draw de-anonymized conclusions.

samstave• 8 years ago

Correct me if I’m wrong - but isn’t this more like ‘inference of intent’?

So there were so many routes taken between agency x and agency y - could we infer that the intent between agents of such are z?

sethc2• 8 years ago

Is that even meant to be a secret?

wallace_f2• 8 years ago

It is certainly meant to be. But when you print money equal to 1/3 the economic output of the country to bail out Wall St banks, it's no secret.

xenogis• 8 years ago

No. The banks are board members of the fed, that is how the system is designed. It's not a conspiracy theory.

lopmotr• 8 years ago

This sounds like people are following the blackout correctly, doesn't it? Where's the indication of insider trading or bankers influencing policy before it's public?

" increase in rides from the commercial banks to the New York Fed almost immediately after the midnight lifting of the communications blackout."

"Coincidences are elevated from approximately the day before the announcement through a week afterward."

danmaz74• 8 years ago

Is the idea behind the conclusions of this analysis that central banks should make decisions in a void? That's, at best, naive.

wallace_f2• 8 years ago

Arguably, if you can't just get rid of the scourge of central banks, they should at least make decisions via an algorithm. At least one Nobel prize winner believed that.

chillydawg• 8 years ago

More interesting things to do with such data:

* Spot when traffic between banks or hedge funds and some new, single location starts up or increases a lot. Acquisition/IPO/other M&A?

* Spot rides between DoJ/regulators and big companies. Impending fines?

* Spot decrease in rides from a bank or office to party districts. Reduced profit?

If you're Uber, this is even easier as you can just make lists of key people and spy on then far more effectively.

jpalomaki• 8 years ago

From 1998: "With Capital in Panic, Pizza Deliveries Soar" [1]

http://www.washingtonpost.com/wp-srv/politics/special/clinto...

politician• 8 years ago

If you're Uber...

...you've already thought of it, weaponized it, and got caught for doing it!

https://www.nytimes.com/2017/03/03/technology/uber-greyball-...

chronolitus• 8 years ago

The research paper in question, titled "What Insights Do Taxi Rides Offer into Federal Reserve Leakage?":

https://research.chicagobooth.edu/-/media/research/stigler/p...

spodek• 8 years ago

With Facebook selling everyone's data, they could have gotten a lot more data from them.

ordinaryperson• 8 years ago

The HN headline is deceptive. You want your Federal Reserve bank to be close to the big banks, there are trillions of dollars at stake. The real question is: are FOMC staffers leaking Fed moves before the general public knows?

From the article:

"The data show a striking increase in rides from the commercial banks to the New York Fed almost immediately after the midnight lifting of the communications blackout. Tight restrictions on Federal Reserve staff communications are in force until midnight the day after an FOMC announcement, and rides to the New York Fed are elevated between 1 and 4 a.m. thereafter."

Unless I'm reading this wrong, staffers meet with bankers after the embargo is lifted -- which is normal.

Also from the article:

"Analysis of nearly coincidental drop-offs suggests that offsite lunchtime meetings between New York Fed insiders and commercial bankers increase around FOMC announcements."

Are they leaking FOMC moves or not? This just says they had lunch. What if it's Fed regulators plying bankers for market conditions? The authors assume it's the regulators dishing info but it's probably the reverse: before making a call on raising interest rates Fed regulators probably want a qualitative assessment from people in the trenches, a picture beyond what the raw numbers say.

Unless the authors have evidence that banks consistently profited from timed bets on interested rates after meeting with FOMC staff before a public announcement I'm skeptical this is anything dastardly.

I'm not defending Wall Street, I'd just like more evidence accusing people of law-breaking then "they met after the embargo was lifted" and "they had lunch around times of announcements."

amerine• 8 years ago

I don’t want a close relationship. I want the federal reserve to treat banks like soulless corporations that must adhere to every single law or face removal from the relationship and business.

We absolutely do not want a cozy relationship here. It needs to be black and white, transparent and bound by our law.

brown9-2• 8 years ago

This all depends on what you mean by cozy. To regulate and monitor the banks closely, the regulators must be in close contact with the bank and its employees.

Keep in mind also that the Fed has employees that work at desks inside some banks.

ryanmarsh• 8 years ago

What the Fed does is complex and can have unintended consequences for hundreds of millions of Americans. We don’t like the idea of cronyism but you also cannot solve problems as complex as the US (and world) economy without collaboration.

sctb• 8 years ago

Thanks, we've updated the headline to a more specific subtitle from the article.

gesman• 8 years ago

I suspect there maybe less malicious explanation of this specific traffic spike.

Have study been made which other routes experiencing similar correlations around selected dates?

deepGem• 8 years ago

"The data yield evidence that rides from commercial banks directly to the New York Fed and offsite meetings involving insiders of the New York Fed and commercial banks increased around the time of FOMC meetings"

Well, wait a minute. The data is anonymized so how is the author inferring that the trips were taken by insiders ? It could be anyone dropping off at the Federal reserve. There is high likelihood that these are insiders. Did the same insiders have any say in the meetings, were they even present in the meetings is hard to determine.

What can be safely inferred from this analysis is that there is an explosion of physical interactions between the NY Fed officials and the banks once the embargo is lifted. Nothing wrong with that I suppose.

Symmetry• 8 years ago

No need for this data, the Fed is happy to talk about the ways it sometimes coordinates with banks in pursuing economic stability. I was just reading The Power and Independence of the Federal Reserve and that goes into this a bit.

My problem with the system is that we have the same organization charged with regulating the banking system and macroeconomic stabilization. These are obviously related but that means it's very tempting to see the later entirely in terms of the former, which I think is part of the reason for the Fed's misjudgments in the financial crisis.

I go into detail a bit more here:

http://hopefullyintersting.blogspot.com/2015/12/economic-reg...

tzahola• 8 years ago

Sounds like the Strava heatmap fiasco, but local to New York.

crb002• 8 years ago

Big leak used to be Greenspan carrying a thin or fat briefcase.

Study finds increased possibility of information leaking around Fed meetings

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