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New article published in Competition and Change
Ciarán O'Flynn, a Visiting Research Fellow at PAIS has just has his paper, "Too big to ignore: The Federal Advisory Council, monetary policy, and the interest rate preferences of banks," published in the journal Competition and Change. The research explores whether banks actually influence the Federal Reserve's interest rate decisions, challenging the common idea that banks don't lobby on this because the Fed already knows their position. It specifically looks at the role of the Federal Advisory Council (FAC), a group of bankers who directly advise the Fed.
The study finds that banks do lobby, but their interest rate goals differ based on their business models. Using data from FAC member banks between 2003 and 2019, the key finding is that only the very largest banks sitting on the council appear to influence the Fed's monetary policy, potentially pushing rates up or down. Interestingly, this influence is most potent when financial regulation isn't a major public focus, highlighting how the biggest players can significantly shape policy during times of 'quiet politics'.
Read the full article on https://journals.sagepub.com/doi/10.1177/10245294251336519