Todd A. Vermilyea

Deliberation and Learning in Monetary Policy Committees

We use records from Federal Open Market Committee (FOMC) meetings to investigate the importance of deliberation and learning in monetary policy decision making in the period from 1970 to 1978 when Arthur Burns served as Chairman. We first propose a model of Bayesian learning in which FOMC members learn from each other as they sequentially reveal their policy preferences in a committee meeting. Then, as an alternative, we investigate a model in which members defer to an emerging consensus. Neither model is supported by the data, suggesting that within‐meeting deliberation might have had little effect on the quality of monetary policy decisions in the Burns era.

Competitive effects of Basel II on U.S. bank credit card lending

We analyze the potential competitive effects of the proposed Basel II capital regulations on U.S. bank credit card lending. We find that Basel II is not likely to have a competitive effect on community banks and most regional banks. Bank issuers that operate under Basel II will face higher regulatory capital minimums than Basel I banks. During periods of normal economic conditions, this is not likely to have a competitive effect; however, during periods of substantial stress in credit card portfolios, Basel II banks could face a significant competitive disadvantage relative to Basel I banks and nonbank issuers. JEL classification: G210, G280, D430

Potential Competitive Effects on U.S. Bank Credit Card Lending from the Proposed Bifurcated Application of Basel II

This paper analyzes the potential competitive effects of the proposed bifurcated application of Basel II capital regulations in the United States on bank credit card lending activities. For this purpose, the authors consider the Basel II regulations as stated in the June 2004 Basel Committee Framework Agreement. ; Also issued as Payment Cards Center Discussion Paper No. 05-21 ; Superseded by Working Paper 07-09