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Engine of Inequality, by Karen Petrou
The first book to reveal how the Federal Reserve holds the key to making us more economically equal, written by an author with unparalleled expertise in the real world of financial policy.
Following the 2008 financial crisis, the Federal Reserve’s monetary policy placed much greater focus on stabilizing the market than on helping struggling Americans. As a result, the richest Americans got a lot richer while the middle class shrank and economic and wealth inequality skyrocketed. In Engine of Inequality, Karen Petrou offers pragmatic solutions for creating more inclusive monetary policy and equality-enhancing financial regulation as quickly and painlessly as possible.
“Petrou’s book uncovers a hidden engine of our skyrocketing inequality: financial-policy. In an accessible and engaging prose, Petrou takes us through the inner workings of monetary policy at the Fed and financial regulations, how they’ve made inequality worse and how they could instead be retooled to take us to a more equitable future. A novel look at the problem of inequality and bold ideas to help resolve it. A must read.”—Emmanuel Saez, Professor of Economics at the University of California Berkeley and author of The Triumph of Injustice
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Industry Expert
Federal Financial Analytics (FedFin) is a Washington-based financial services-consulting firm that has for decades attracted a high-powered clientele in Washington, on Wall Street, and among global central bankers. Since 1985 FedFin has provided a unique blend of analysis and strategic advice on public policy, regulatory, and legislative issues for industry and governmental clients doing business in the U.S. and abroad.
A proprietary think-tank for its clients, FedFin reviews critical federal and global policy developments in banking, insurance, asset management, and mortgage finance, analyzes them in great depth, and then advises clients on whether what they want can be made to work for them, within the policy environment and for the financial system. It is FedFin’s guiding principle to be an honest broker, and clients depend on the fact that the firm does not offer lobbying or any other services that could compromise its objectivity and independence.
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In the News
American Banker, BankThink, Friday, March , 5, 2021
Write banking rules that withstand political winds By Karen Petrou Leveling the financial-regulatory playing field requires a complete rewrite of U.S. financial services law, action that would be stoutly and effectively resisted by battalions of well-paid lobbyists. A politically plausible approach to reducing many of the regulatory hills and raising [...]
Podcast: Banking With Interest, Wednesday, March 3, 2021
How the Fed Created the “Engine of Inequality” — And How We Can Fix It By Rob Blackwell Conversation with Karen Petrou, bank analyst and author of the new book “Engine of Inequality,” on how the Federal Reserve’s monetary policy and overaggressive bank regulation following the financial crisis have worsened [...]
Barron’s, Wednesday, March 3, 2021
How the Fed Found Itself at the Heart of America’s Inequality Crisis By Matt Peterson Karen Petrou has for decades played the quiet role of consultant and adviser to banks, central banks, and large investors, helping them slash through the confusion of constantly evolving monetary and regulatory policy. It’s a [...]
Issues in Focus
October 26, 2020: FedFin Issues Brief: Going Green: The Future of U.S. Climate Risk Financial Policy
June 25, 2019: FedFin Policy Paper: Do Credit Unions Truly Advance Economic Equality?
The Vault
Karen Petrou: Systemic Risk and the U.S. Payment System
Although there are many things about the Chinese financial system not to like, its regulatory approach to fintech and BigTech shows that U.S. financial regulation is even more antediluvian than you think. Earlier this week, the Chinese government announced that like-kind lending and payment services will come under like-kind capital regulation. At about the same time, Square opened its new bank and, while the insured depository comes under regulatory-capital standards, [...]
FedFin: Pop Goes the PSPA?
Critics of FHFA policy are finding still more affordable-housing ammunition to add to their anti-PSPA armament. A new Urban Institute paper takes aim at the revisions to the agreement struck at the last minute in January by Steven Mnuchin and Mark Calabria, honing in on restrictions on higher-risk, second, and investor mortgages in ways sure also to delight key industry groups hoping to get this business back. The full report [...]
Karen Petrou: Sen. Brown’s Five-Point Mandate for the Federal Reserve
The profound differences between the Trump and Biden Administrations obscure a still more fundamental shift in the power balance: many Democrats have abandoned the centrist – some would say corporatist – policies of the Clinton and Obama Administrations. No one epitomizes this transformation better than Senate Banking Chairman Brown and thus no institution is under more political pressure than the Federal Reserve. Sen. Brown has a five-point mandate for the [...]