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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
Banking With Interest, Tuesday, March 18, 2025
How Treasury’s Bessent Is Upending Bank Regulation Not that long ago, the Treasury secretary mostly took a back seat to the banking agencies in crafting policy, stepping in only during times of crisis. Not anymore. Karen Shaw Petrou, managing partner of Federal Financial Analytics, discusses Treasury Secretary Scott Bessent’s expansive [...]
Politico, Friday, February 21, 2025
Trump’s plan to rein in agencies sparks alarm for the Fed By Victoria Guida and Sam Sutton 02/21/2025 The Trump administration has made clear it will not directly interfere with the Federal Reserve’s ability to set interest rates. Almost everything else at the central bank is potentially on the table....“There [...]
Marketplace, Wednesday, January 15, 2025
Big banks are raking in cash By Caleigh Wells The end of 2024 was a great time for big banks. Goldman Sachs, Citigroup, BlackRock — a bunch of financial institutions posted their calendar fourth-quarter earnings Wednesday. And a lot of them exceeded investors’ already rosy expectations. JPMorgan Chase and Wells [...]
Issues in Focus
The Vault
FedFin on: Antitrust Policy
As required by an executive order (EO) from President Trump mandating both review and then repeal of any rules that adversely affect competition, the FTC is seeking public comment on which rules to target and whether these standards could be modified or must be rescinded to meet the President’s goals. This process will clearly invite new scrutiny of the bank-merger process, also likely to lead to comment from banking organizations [...]
Karen Petrou: The Fed Has Given Itself Nothing But Bad Choices
Much has been written of late about the pickle in which the Fed finds itself due to the President’s quixotic trade war. The Fed is indeed facing a dilemma setting monetary policy, but it confronts a Rubik’s Cube trying also to ensure financial stability. The reason: the more the Fed fights inflation, the less it can secure the financial system and the more it is forced to secure the financial [...]
Karen Petrou: Why Regulators Will be Flat-Footed if Bad Now Turns Soon to Worse
One of the comforts with which bank regulators will doubtless console themselves after last week’s market rout is that the largest U.S. banks have the capital not only to withstand this, but also the probable, profound consequences of the President’s punitive tariffs. However, because U.S. regulators mismeasure capital resilience, this confidence is misplaced. Using the economic-capital approach I recently endorsed shows that, while U.S. banks still are strong, they are [...]