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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

American Banker, Monday, July 26, 2021

July 26th, 2021|

Will states lead the way on expanding CRA to nonbanks? By Hannah Lang After decades of calls to expand the Community Reinvestment Act’s anti-redlining obligations to nonbanks, the idea is going mainstream thanks to key endorsements from states and even the chairman of the Federal Reserve....Many acknowledge that the impact [...]

Yahoo! Finance, Saturday, July 17, 2021

July 17th, 2021|

How the Federal Reserve can really help America Andy Serwer with Max Zahn 1913 was a big year for America. On October 7, Henry Ford introduced the world’s first moving car assembly line in Highland Park, Michigan. Then two months later, on ​​December 23, Congress passed the Federal Reserve Act [...]

PBS Frontline: Tuesday, July 13, 2021

July 13th, 2021|

The Power of the Fed When COVID-19 struck, the Federal Reserve stepped in to try to avert economic crisis. As the country’s central bank continues to pump billions of dollars into the financial system daily, who is benefiting and at what cost? Watch FedFin's managing partner, Karen Petrou in this [...]

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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: The Trillion-Dollar Price Tag for Treasury-Market Stability

In its semiannual report to Congress earlier this month, the Federal Reserve said that, "No notable effect on Treasury market functioning followed the expiration in March 2021 of temporary changes to the supplementary leverage ratio, which were implemented to ease strains in Treasury market intermediation in the initial weeks of the pandemic."  This is technically correct, but substantively misleading.  While it's certainly true that nothing untoward has since befallen the Treasury [...]

July 23rd, 2021|Categories: The Vault|

FedFin on: Third-Party Risk Management, Compliance Standards

The banking agencies have proposed sweeping standards that would hold all of the banking organizations they govern responsible for the safety and soundness, consumer compliance, and perhaps even diversity of a wide range of third-party business arrangements that now expressly bring in affiliates, subsidiaries, and parent holding companies along with the full scope of outsourced product and service relationships, marketing partnerships, joint offerings, and even use of a third-party mobile [...]

July 21st, 2021|Categories: The Vault|

Karen Petrou: How Powell Went Wrong on the Fed’s Inequality Impact

On Wednesday, Rep. Ritchie Torres pressed Chairman Powell on several key points in my Monday New York Times opinion piece on the Fed's unintended, but important, economic-inequality impact.  The chairman stoutly defended the Fed, at one point complaining that it could not be true that low rates increase wealth inequality because no low-income people have said so to the Fed.  This is new – the Fed has never before announced [...]

July 16th, 2021|Categories: The Vault|
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