Good News for Some Banks

Bankers are directors of Federal Reserve Banks. I document that a) banker directors of the New York Fed attend more meetings about the financial sector; b) elections for Reserve Bank directorships are more contested for bankers, but less so for large banks and American Banking Association directors; c) the market reaction to bankers’ elections to Reserve Bank boards is 1%; d) the market reaction to insider purchases is 1.3% higher when banker directors are on a Reserve Bank board; e) Fed enforcement actions appear more moderate for banker directors. Reserve Bank directorships appear to be good news for some banks.