The Partisanship of Financial Regulators

Abstract

We analyze the partisanship of Securities and Exchange Commissioners (SEC) and members of the Federal Reserve Board of Governors (Fed). Using the language-based approach of Gentzkow, Shapiro, and Taddy (Econometrica, 2019), we identify partisan phrases in Congress, such as “red tape” and “climate change,” and observe their usage among regulators. Throughout our sample period, 1930-2016, we find that the Fed has remained relatively non-partisan. However, partisanship among SEC Commissioners is rising and is at an all-time high in the most recent period. The partisanship trend among SEC Commissioners mirrors a more general trend in Congress and the American public.

Keywords: Partisanship, Financial Regulation, Textual Analysis

JEL Classification: G1, G2