" 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."
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:
* 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.
...you've already thought of it, weaponized it, and got caught for doing it!
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."
We absolutely do not want a cozy relationship here. It needs to be black and white, transparent and bound by our law.
Keep in mind also that the Fed has employees that work at desks inside some banks.
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?
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.
Have study been made which other routes experiencing similar correlations around selected dates?