Bank Lobbying Research Articles

Lobbying on Regulatory Enforcement Actions: Evidence from U.S. Commercial and Savings Banks

This paper analyzes the relationship between bank lobbying and supervisory decisions of regulators and documents its moral hazard implications. Exploiting bank-level information on the universe of commercial and savings banks in the United States, I find that regulators are 44.7% less likely to initiate enforcement actions against lobbying banks. This result is robust across measures of lobbying and accounts for endogeneity concerns by employing instrumental variables strategies. In addition, I show that lobbying banks are riskier and reliably underperform their nonlobbying peers. Overall, these results appear rather inconsistent with an information-based explanation of bank lobbying, but consistent with the theory of regulatory capture.This paper was accepted by Amit Seru, finance.

Bank Lobbying, Risk Control and Risk Taking: Evidence from U.S. Bank Holding Companies

Bank Lobbying, Risk Control and Risk Taking: Evidence from U.S. Bank Holding Companies

The Efficacy of Humor in Sherman Alexie's Flight: Violence, Vulnerability, and the Post-9/11 World

Sherman Alexie’s novel Flight (2007) explores the origins, contexts, and consequences of violence and terrorism in the post-9/11 world. Narrated by a fifteen-year-old foster child who calls himself Zits, Flight invites readers into the mind of a disaffected youth who uses both humor and violence to cope with an unjust world. When Zits opens fire in a bank lobby, he becomes unstuck in time— like Kurt Vonnegut’s character Billy Pilgrim in Slaughterhouse-Five (1969)—and is transported into the minds of other people also caught in violent circumstances at different historical moments. Alexie uses this body-jumping tactic to widen the social and political framework for understanding the attacks of September 11, 2001, as well as to examine Zits’s personal effort to cope with the violence that threatens to envelop him. Flight juxtaposes individualized and historical parallels to 9/11 in order to challenge simplistic responses to terrorist attacks—responses more likely to escalate than to prevent violence. As in so many of his narratives, Alexie infuses Flight with humor. Zits uses humor in a variety of ways, primarily to protect and define himself in a dangerous world. For Zits, humor serves as a defense strategy against an onslaught of physical, emotional, and rhetorical threats exacerbated by his marginal status as an “unofficial” Indian (he is not tribally enrolled) and his mistreatment within a broken foster care system. In this respect, Alexie conforms to a common treatment of humor by Native American writers: humor as a sign of strength and survival. In Custer Died for Your Sins (1969), for example, Vine Deloria, Jr., argues that humor allows individual and group survival (167). Kenneth Lincoln describes “the ethnic glue of Indi’n humor” (23), asserting that laughter is good for “exorcising the pain, redirecting their suffering, [and] drawing together against the common enemy” (5). Native American humor is often employed to unify resistance to intercultural violence. In Flight, however, Alexie departs from the notion that humor primarily demonstrates solidarity and strength in the face of racism, signaling a significant shift from his previous uses of humor. In a 2006 interview,

Saving the Banks

How much leeway did governments have in designing bank bailouts and deciding on the height of intervention during the 2007-2009 financial crisis? By analyzing the variety of bailouts in Europe and North America, we will show that the strategies governments use to cope with the instability of financial markets does not depend on economic conditions alone. Rather, they take root in the institutional and political setting of each country and vary in particular according to the different types of business–government relations banks were able to entertain with public decision makers. Still, “crony capitalism” accounts overstate the role of bank lobbying. With four case studies of the Irish, Danish, British, and French bank bailout, we show that countries with close one-on-one relationships between policy makers and bank management tended to develop unbalanced bailout packages, while countries where banks negotiated collectively developed solutions with a greater burden-sharing from private institutions.

“Goldilocks” Liberalization: The Uneven Path Toward Interest Rate Reform in China

Nearly two decades after central bankers began to call for interest rate liberalization, the central bank continues to impose stringent rules on the fluctuation of deposit interest rates. This seems an unlikely outcome given widespread endorsement of liberalization by technocrats and experts both in and out of the government, China's accession to the World Trade Organization, and the technocrats' insulation from popular pressure. To be sure, local interests and central bank lobbying have driven gradual liberalization of interest rates. However, senior Chinese technocrats held on to control over interest rates because of their need to maintain state banks' dominance and to mobilize bank funds in times of economic downturns. As such, progress toward interest rate liberalization only took place during “Goldilocks” phases when the economy enjoyed healthy growth without high inflation.

From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle

This paper examines how financial reporting regulations affect, and respond to, macroeconomic cycles by exploring a positive framework in which regulators subject to political pressures respond to cyclical demands by borrowers and lenders. We establish that, as economic conditions initially decline, political power shifts toward interest groups favoring less financial transparency. What follows is a counter-cyclical increase in economic activity, as more non-reporting loans are financed, possibly coincidental with more aggregate uncertainty. During a recession, reporting quality is increased, potentially causing a crisis-like adjustment of economic activity to the cycle. We also discuss implications for event studies, bank lobbying, mark-to-market and cost of capital.

Intellectual Underpinnings

A few family snapshots:1.One day, my father and I stood, chatting, in a bank lobby. “I just don't get it,” he said. “You've got more brains in your head than you have in your feet.”2.My husband sings in an a cappella chorus, and for one Mother's Day concert we all wore necklaces emblazoned with words our mothers had never said. “Choreography and dance,” mine proclaimed. “What a wonderful career choice!”3.After watching me perform some years ago, one of my children offered the following critical précis: “Your bra was sticking out.”I could go on with tales of familial, as well as fraternal and collegial, disinterest and disappointment, not to mention resentment and the occasional frisson linked to artist children and parents, associated with a career that seemingly joins the extremes of narcissism, the temporal and physical limitations mandated by the life cycle of the human body, and the apparent separation from the left-brain activities supported by other fields and disciplines.

The Political Economy of Nullification: Ohio and the Bank of the United States, 1818-1824

The Political Economy of NullificationOhio and the Bank of the United States, 1818-1824 Kevin M. Gannon (bio) Between twelve and one o'clock on the afternoon of September 17, 1819, a wagon pulled up in front of the Chillicothe Office of Discount and Deposit, one of the two branch offices of the Bank of the United States in Ohio. Dismounting from the wagon, John Harper and his companions James McCollister and Thomas Orr burst into the bank's lobby. McCollister and Orr, "in a ruffian-like manner," quickly jumped the counter and made their way to the bank's vault. The bank's cashier, Abraham Claypoole, attempted to block McCollister and Orr and protect the vault, but was "forcibly prevented" from doing so by Harper, who had roughly "intruded himself behind the counter." Claypoole remonstrated with the men and repeatedly tried to detain them, but he was again "forcibly repulsed" as Harper and his companions made off with more than $120,000 from the bank's vault. Frustrated in their efforts to apprehend the "ruffians," Claypoole and the bank's president, William Creighton, could only give a deposition of the afternoon's events to Chillicothe's mayor and hurriedly write the central office of the Bank of the United States for further instructions.1 The events of the seventeenth would have been sensational enough if they were a simple bank robbery. But this episode was much more complex. Harper and his cohorts were not mere "ruffians"; they were state officials operating under a commission from the Auditor of Ohio. Their confrontation with Claypoole and the forcible removal of funds from the Chillicothe branch's vault were actually efforts to collect a tax—a levy mandated by Ohio's legislature with the intent of driving the branch offices of the Bank of the United States out of the state altogether. In collecting the tax, Ohio's leadership firmly asserted what [End Page 79] it saw as the state's inviolable sovereignty against the perceived abuse of federal powers represented by the Bank. In addition, the day's proceedings were in direct defiance of the United States Supreme Court's ruling in the case of McCulloch v. MaryMaryland, handed down earlier that year, which held that taxation of the Bank or any of its branches was outside the purview of a state's powers. Ohio's decision to ignore the ruling and proceed with its attempts to tax the Bank out of existence represented an intensification of a larger struggle against not only the Bank but against what Ohioans saw as the corrupt and despotic national authority that lay behind the its actions. With its defiance of that national authority, and espousal of states' rights ideology and nullification, Ohio's battle against the Bank of the United States became a larger conflict over the locus of sovereignty. The leadership of Ohio's anti-Bank forces was determined to preserve a particular vision of the ideal polity, a vision that it saw as fundamentally threatened by the operations of the national Bank within the state. In their use of the ideals of states' rights and nullifi cation, Ohioans tapped into a wider tradition in antebellum political culture—a tradition that sought to preserve republican virtues against the forces of corruption and arbitrary despotism and which placed the idea of Union distinctly second to this preservation.2 Ohio had not always been a hotbed of anti-Bank sentiment. In fact, the years immediately following the War of 1812 were a period of heady economic prosperity for the state—prosperity that owed a large part of its existence to a rapid expansion of banking. Ohio was caught up in an economic boom experienced to some degree by most of the country after the war's conclusion in 1815. A continuing agricultural surplus that fed a high European demand, as well as the proliferation of salable land and easy credit, however, made Ohio a singular example of economic growth. Financing this boom was a rapidly expanding armada of state-chartered banks. Before the War of 1812, there were four of these state-sanctioned banks operating in Ohio, with a total capitalization of just under...

On selecting a process with the smallest number of unfortunate events

Managers often desire to assign resources to minimize balking in service systems. Discrete event simulations are often used to study alternative assignments. When the distribution of the number of balking events in a business day is approximated by a Poisson distribution, the objective becomes that of selecting a population corresponding to the smallest mean number of unfortunate events. A procedure for selecting a Poisson population with the smallest mean is described in which the selection is carried out based on a random sample of size n from each population. Examples of a bank lobby and manufacturing process are used to illustrate this procedure.

In Brief: Scale model

Here's one for Guinness or maybe Ripley: The Worlds's largest scale model of the solar system begins at a museum in Peoria, Ill., and extends geographically as far away as Ecuador and the South Pole. In the model, which was developed by the museum's deputy director Sheldon Schafer, 42 feet equal about 1 million miles. The Sun, which is 36‐feet wide, is painted on the dome of the Lakeview Museum's planetarium in Peoria. Mercury, which is 1.5 inches across, can be found at a nearby store; Venus sits in a local bank lobby; Earth is lodged at a gas station; and Mars at a radio station. “The idea is that people will encounter a little bit of astronomy in the walks of their daily lives,” Schafer says.

An Assessment of the Relationship Between Customer Satisfaction and Service Friendliness

Service friendliness has often been assumed to increase customer satisfaction, but that relationship has seldom been experimentally analyzed due to the difficulty of obtaining high customer satisfaction response rates. Consequently, a customer satisfaction data collection system, designed to yield a high customer response rate, was employed in a branch of Shawmut Bank where the relation between process-bank teller service friendlienss, and outcome-customer satisfaction was examined. Additionally, the effect of feedback on service friendliness was examined. Subjects were three tellers whose rates of greeting and smiling and looking at their customers during the first three seconds of the service interaction were obtained by direct observation. Satisfaction data were gathered by asking customers to rate teller service immediately following the interaction by depositing chips into a survey box located in the bank lobby. A customer satisfaction response rate of 99% was obtained using the chips method. Additio...

Welfare Waiting Rooms

Waiting rooms of welfare bureaucracies are considered as physical enclosures that embrace the citizen with behavioral cues when seeking human services. Twenty-eight rooms across the country were directly observed and inductively grouped into five metaphoric categories: "Dog Kennel," "Pool Hall," "Business Office," "Bank Lobby," and "Circus Tent." In addition, waiting times as perceived by 240 clients using 12 of the rooms were noted. It is concluded that welfare waiting rooms differ far more than the literature suggests, with some degrading and others quite the opposite.