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The revolving door and worker flows in banking regulation

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Abstract

Drawing on a large sample of publicly available curricula vitae, this paper traces the career transitions of federal and state U.S. banking regulators and provides basic facts on worker flows between the regulatory and private sectors resulting from the revolving door. We find strong countercyclical net worker flows into regulatory jobs, driven largely by higher gross outflows into the private sector during booms. These worker flows are also driven by state-specific banking conditions as measured by local banks? profitability, asset quality, and failure rates. The regulatory sector seems to experience a retention challenge over time, with shorter regulatory spells for workers, and especially those with higher education. Evidence from cross-state enforcement actions of regulators shows that gross inflows into regulation and gross outflows from regulation are both higher during periods of intense enforcement, though gross outflows are significantly smaller in magnitude. These results appear inconsistent with a ?quid pro quo? explanation of the revolving door but consistent with a ?regulatory schooling? hypothesis.

Suggested Citation

  • David O. Lucca & Amit Seru & Francesco Trebbi, 2014. "The revolving door and worker flows in banking regulation," Staff Reports 678, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:678
    Note: For a published version of this report, see David Lucca, Amit Seru, and Francesco Trebbi, "The Revolving Door and Worker Flows in Banking Regulation," Journal of Monetary Economics 65 (July 2014): 17-32.
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    More about this item

    Keywords

    revolving door; inter-industry worker flows; banking regulation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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