There’s a suspicious burst of taxi rides to and from Wall Street banks and the New York Fed around the time of key Fed meetings


  • A Chicago Booth doctoral candidate who looked at New York City taxi-cab data found increased activity around the Federal Reserve Bank of New York and major commercial banks around the Fed’s eight yearly policy meetings.
  • The data is the latest evidence of conflicts of interest at one of the regional Fed banks whose principal role is supposed to be supervising Wall Street.
  • Cozy ties between bankers and regulators have led to public calls for a New York Fed president with fewer financial links. Its current president, William Dudley, is a former Goldman Sachs banker.

The Federal Reserve Bank of New York is increasingly facing public pressure to name a new president who, unlike all 10 leaders in the regional central bank’s history, is not a white man with ties to Wall Street.

And a new study published by the University of Chicago’s Booth School of Business offers new evidence that, as has often been reported, New York Fed officials are way too close to the bankers they are supposed to be supervising.

The paper’s author, David Andrew Finer, a doctoral candidate at the school, tracked anonymous New York City taxi data “to infer variation in interactions” between New York Fed insiders and those “of major commercial banks around Federal Open Market Committee (FOMC) meetings.”

Even small bits of insight into the Fed’s deliberations on monetary policy can be worth millions of dollars to Wall Street investors, as most financial markets are highly sensitive to changes in expectations for the Federal Reserve’s interest-rate moves. The recent spike in volatility in stocks and bonds has been linked to rising expectations for aggressive interest-rate increases from the central bank, which has raised rates five times since December 2015.

Yellow-cab proxies

Taxi rides between the New York Fed’s immediate surroundings and major commercial bank buildings “serve as indicators of meetings at those institutions, and coincidental drop-offs of passengers picked up around those institutions serve as indicators of offsite meetings,” Finer says.

“I find highly statistically significant evidence of increases in meetings at the New York Fed late at night and in offsite meetings during typical lunch hours,” he added.

He says that finding is in line with the hypothesis of a 2016 paper that posited “systematic leakage from the Federal Reserve around FOMC meetings along unofficial channels.”

(My own reporting has found extensive evidence of such information sharing not just at the New York Fed but also at the Fed’s powerful board based in Washington.)

Finer identified a spike in “late-night rides from the major commercial banks to the New York Fed soon after the end of the FOMC communications blackout.” Fed officials are barred from speaking publicly until midnight on the Friday after midweek policy meetings.

In addition, he looked at the volume of “coincidental drop-offs of passengers who depart from the vicinities of the New York Fed and the major commercial banks” and found that “coincidences around noon are consistently and strikingly elevated in the days around FOMC meetings.”

For the Fed Up coalition, a group of community organizations led by the Center for Popular Democracy in Washington, the first step in addressing such egregious conflicts is a change in leadership.

The New York Fed’s outgoing president is William Dudley, a former Goldman Sachs partner.

“The New York Federal Reserve must select a new President who will put the interests of the public before Wall Street,” Fed Up said in a recent report. “This would be one of the most immediate and direct steps to mitigate conflict of interest risks and promote a culture of transparency and accountability at the New York Fed.”