
Study finds increased possibility of information leaking around Fed meetings - walterbell
https://news.uchicago.edu/article/2018/03/06/nyc-taxi-ride-data-suggest-cozy-relationship-between-big-banks-and-fed
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lopmotr
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."

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

[https://research.chicagobooth.edu/-/media/research/stigler/p...](https://research.chicagobooth.edu/-/media/research/stigler/pdfs/workingpapers/18whatinsightsdotaxiridesofferintofederalreserveleakage.pdf)

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Symmetry
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...](http://hopefullyintersting.blogspot.com/2015/12/economic-regulation-
and-insitution.html)

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

[http://www.washingtonpost.com/wp-
srv/politics/special/clinto...](http://www.washingtonpost.com/wp-
srv/politics/special/clinton/stories/pizza121998.htm)

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ordinaryperson
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
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
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.

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

~~~
samstave
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?

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deepGem
"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.

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danmaz74
Is the idea behind the conclusions of this analysis that central banks should
make decisions in a void? That's, at best, naive.

~~~
wallace_f
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.

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gesman
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?

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sethc2
Is that even meant to be a secret?

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

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

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crb002
Big leak used to be Greenspan carrying a thin or fat briefcase.

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

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ne9xt
what a surprise!

