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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.

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“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

The Hill, Wednesday, April 14, 2021

April 14th, 2021|

Dimon's $500 billion proposal opens the door to equitable mortgages By Karen Petrou, opinion contributor In his recent note to shareholders, Jamie Dimon includes a startling number: $500 billion more mortgage credit a year would flow if the rules recognized that many lower-income borrowers aren’t also high-risk borrowers. JPMorgan Chase [...]

Marketplace Morning Report: Tuesday, April 13, 2021

April 13th, 2021|

Banks earnings expected to reflect an economy that is reopening By Mitchell Hartman Spring corporate earnings season kicks off this week with a lot of reports from big banks, starting Wednesday with JPMorgan Chase, Wells Fargo and Goldman Sachs. ...or starters, financial markets are riding high, and Karen Petrou at [...]

American Banker, Wednesday, April 7, 2021

April 7th, 2021|

Partisan battle brewing over regulators' ESG focus By Neil Haggerty For months, regulators and Democratic policymakers have shined a brighter spotlight on social disparities in the financial system and banks' climate-change risks. But GOP objections to that focus are also getting louder....“That's really the heart of the debate, which is: [...]

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Economic Equality Blog

Economic Equality Blog is aimed at showing central banks and financial regulators how to put their formidable thumbs on the equality scale in favor of those whose income and wealth suffer so much in the wake of the great financial crisis.

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The Vault

Karen Petrou: How to Short-Circuit Procyclical Capital Rules

Earlier today, we sent you our analysis of a consequential Fed study showing how well U.S. banks weathered the pandemic and how post-2008 rules made this possible.  In short, one more notch in the Fed’s own belt signifying its banking-system success under not just a severely-acute stress scenario, but also the near-miss of the real thing.  However, as the Fed readily acknowledges and this study convincingly demonstrates, the rules governing [...]

April 16th, 2021|Categories: The Vault|

Karen Petrou: Basil Petrou’s Equitable-Finance Legacy and What to Do About It

Earlier this week, I told the American Banker that the political battle over social-welfare finance is a fundamental question about the purpose of private capital.  We each confront a similar dilemma as we try to do well to ensure our own and our family’s financial security while seeking also to do good for those outside our immediate circle.  We usually meet the “be good” obligation associated with doing well through [...]

April 9th, 2021|Categories: The Vault|

FedFin: AI/ML Regulation

Advancing their efforts to ensure “responsible innovation,” federal agencies have taken an initial, cautious step into assessing the prudential, compliance, risk-management, and fairness implications of artificial intelligence (AI) and machine learning (ML).  Posing only very general questions on matters most clearly within their purview, the agencies appear open and perhaps in some ways even eager to govern AI/ML use, but most uncertain about how to do so. The full report [...]

April 5th, 2021|Categories: The Vault|
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