American Banker, December 27, 2004
Full Financial Slate Awaits House, Senate
by Rob Blackwell
In an article about the upcoming 2005 schedule on the Hill and Fannie Mae and Freddie Mac’s continuing accounting troubles expected to dominate, Karen Shaw Petrou, managing partner at Federal Financial Analytics said, “Fannie and Freddie are signaling that the fight is going to be over new programs.”
American Banker, Tuesday, December 21, 2004
OFHEO Said to Be Ready to Seek Raines’ Exit
By Rob Blackwell
In an article about the ousting of Fannie Mae’s CEO, Franklin Raines, Karen Shaw Petrou, managing partner at Federal Financial Analytics whose customers include competitors to Fannie said, OFHEO’s position is “pretty powerful. After all the validation OFHEO has so far, one would think the board would defer.”
Inside the GSEs, December 1, 2004
OFHEO Sets GSE Loan Limits for 2005
In an article on OFHEO using its regulatory authority to set conforming loan limits used by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, researchers with Federal Financial Analytics recently noted that “A consensus was clear [on Capitol Hill] that GSE regulatory reform is needed, and we think nothing in the [OFHEO] report will change that [and] it could precipitate major management changes at OFHEO â€¦ but even that is doubtful because the longer the current team is in place, the more the special [forensic accounting] exam continues and the greater the pressure for the new regulator sought by the Bush administration.”
Daily Report for Executives, November 12, 2004
Prospects Look Strong for Restructuring Of Regulatory System for Fannie, Freddie
By Richard Cowden
In an article about the possible restructuring of Fannie Mae and Freddie Mac, Federal Financial Analytics wrote in a November 3 memo to clients that “One must wonder if Fannie Mae regrets not taking the October deal offered by House FinServ in 2003 or even the April Shelby bill … ” The memo referred to draft legislation advanced in the House Financial Services Committee by Rep. Richard Baker (R-La.) and an administration-backed Senate bill that would have created a tough, new regulator with receivership authority over the government-sponsored housing enterprise.
Dow Jones Newswires, November 3, 2004
DJ Gloves Are Off In GSE Fight As Bush Wins 2nd Term
By Dawn Kopecki
In an article about the Bush administration, emboldened by Tuesday’s victory and Republican gains in the House and Senate, Karen Shaw Petrou said in a GSE Activity Report that “With its decks cleared, the administration will use current law to put the heat on the GSEs to make them as amenable as possible to legislative reform. The Bush White House will push Congress on a tough plan, in part to address its fears about GSE risk and, we think, also to deal with Fannie’s perceived bet that it was better off waiting the election out.”
Business Week, October 11, 2004
Why Low Income Lending Won’t Take a Hit If Fannie Pulled Back, Private Lenders Would Step In
by Joseph Webber
In an article on what would happen if Fannie shrank its pool of capital available for mortgage loans, Karen Shaw Petrou of Federal Financial Analytics “will have no impact on minority and low-income homeownership.” Most experts say the risk is small and that Fannie may not have to shrink its business at all. And even if it does, others will likely step in to fill the breach.
American Banker – September 29, 2004
Fannie Agreement Leaves Management Issue in Limbo
By Rob Blackwell
In an article on Fannie Mae’s agreement with its regulator on accounting violations, Karen Shaw Petrou, managing partner of Federal Financial Analytics, whose clients include Fannie competitors said “Every single one of these estimates cannot be done in a static fashion. Fannie, in complying with all of these requirements, will be doing so in an active market. Where it can buy or sell and where the market can purchase or divest â€¦ is based on a variety of factors, and no one can control them.”
The Wall Street Journal – September 23, 2004
Regulator Details a Wide Range Of Accounting Problems at Fannie
By James R. Hagerty, John D. McKinnon and Dawn Kopecki
Fannie Mae’s regulator accused the mortgage-finance giant of a wide range of improper accounting practices — including at least one instance in which executives allegedly delayed expenses in an apparent effort to hit their bonus targets. In a 200-page report released late yesterday afternoon, the regulator, the Office of Federal Housing Enterprise Oversight, or Ofheo, said its findings “raise concerns regarding the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision and the overall safety and soundness” of the company.
BNA’s Daily Report For Executives – September 23, 2004
By Richard Cowden
Fannie’s Directors Acknowledge OFHEO Flak; Independent Review Committee Appointed
In an article about Fannie Mae’s acknowledgement that an examination report by its regulator has identified a number of findings that call into question its accounting practices and its corporate governance, Federal Financial Analytics said that OFHEO’s remarks on concerns about the company’s regulatory capital suggest Fannie Mae could slip into an “undercapitalized” status. “This would mean a mandatory hold on any dividends that might drop capital still further, but OFHEO could also mandate provisions on a ‘capital restoration plan’ that result in serious operational constraints,” FFA said. Among the more critical questions raised by the OFHEO examination, which has not yet been released publicly, may be those related to executive bonuses. FFA noted that “OFHEO does have clear supervisory power if it can credibly allege ‘unjust enrichment,’ and any problems here could thus have far reaching enforcement implications.”
Bloomberg News – August 10, 2004
FHA Opposes Bill to Raise Purchase-Price Limits for Insurance
In an article about how Fannie Mae and Freddie Mac face a setback in their core business of selling mortgage-backed bonds under a global accord altering how much capital lenders must put aside to cover their risks, Karen Shaw Petrou, a managing partner at Federal Financial Analytics said “One of the biggest advantages for Fannie Mae and Freddie Mac has been their edge in regulatory capital.” Basel II will encourage banks “to hold low risk and sell high,” creating “a big strategic difference” for Fannie Mae and Freddie Mac.
The Bond Buyer, June 17, 2004
Housing: FHA Opposes Bill to Raise Purchase-Price Limits for Insurance
By Matthew Vadum
In an article on Bush Administration’s opposition to legislation that would raise purchase-price limits for FHA mortgage insurance because it would put private-sector financial service firms at a disadvantage, Basil N. Petrou, managing partner of Federal Financial Analytics questioned whether the measure would help would-be homebuyers. Higher FHA area loan limits do nothing to help low- and moderate-income families obtain mortgages and “may well act to push up area home prices, making homeownership even further out of reach for moderate-income borrowers,” he said. In a period of falling regional house prices, the FHA could incur significant losses, Petrou said. “During a period of economic stress and falling home prices, the lack of liquidity at the higher end of the house price market will be felt to the detriment of the holder of these mortgages,” he said. If FHA insured 100% of the loan amount, it “stands to lose a great deal in this situation,” Petrou said.
Wall Street Journal, June 9, 2004
Chicago FHLB’s Pollock Is Leaving
By James R. Hagerty
In an article on the resignation of Alex Pollock as president and chief executive officer of the Federal Home Loan Bank of Chicago to accept a position as resident fellow with the American Enterprise Institute in Washington, D.C., Karen Petrou, a Washington-based consultant who closely watches the home loan banks, said it was “startling” that Mr. Pollock is leaving before the Chicago bank could name a successor. Mr. Pollack, however, said that his resignation did not reflect discord over strategy and that the bank’s financial performance remains “superb.”
American Banker, June 7, 2004
Focus: Latest on Riggs Gives Fresh Ammo to OCC Foes
By Barbara A. Rehm and Michele Heller
In an article on the turmoil at Riggs Bank escalating when news broke that the examiner in charge of Riggs National Bank retired in 2002 to take a job with the troubled $6.2 billion-asset bank, many in the industry said that they do not believe the revelations about Riggs will be enough to get the stalled preemption resolution enacted. Karen Shaw Petrou, managing partner with Federal Financial Analytics said “A bill saying that an examiner can’t go work for the examined could be easily be enacted, but it has no broader regulatory implications.”
Financial Institutions, Monday May 10, 2004
OFHEO Inquiry on Firm Footing if Focus Remains on Safety, Soundness, Report Says
By Karen L. Werner
In an article on OFHEO’s inquiry into Fannie Mae’s accounting standards, according to a report issued by Federal Financial Analytics Inc., a financial services consulting firm, even if Fannie Mae presses the Securities and Exchange Commission for an interpretation of accounting favorable to it “if OFHEO sticks to its last–safety and soundness–it can force major revaluations that lead to a restatement even if the SEC thinks GAAP technically supports the initial approach.” The inquiry could force “major revaluations” at the enterprise if it remains focused on safety and soundness and not strictly on a technical interpretation of accounting standards, a report from the consulting firm said May 7.
American Banker, Tuesday, April 20, 2004
Surprisingly Hard Fight: Preempt backers found themselves scrambling
By Michele Heller
In an article about the odds of Congress overturning the new preemption rules for national banks, Karen Shaw Petrou, the managing partner with Federal Financial Analytics said “It would be a very serious blow to the Office of the Comptroller of the Currency and undermine the preemptive nature of the National Bank Act, even in the areas where there had not previously been disagreement. Congressional disapproval â€¦ would raise questions about previous actions the OCC has taken by prior rule or order, which had never been challenged.”
American Banker, Monday, April 12, 2004
In Focus: One Potential Restatement, Countless Possibilities
By Rob Blackwell
In an article on the possibility of Fannie Mae having to restate its earnings because of accounting errors, Karen Shaw Petrou, managing partner with Federal Financial Analytics is quoted as saying “The numbers don’t have to be big if they point to an underlying internal control problem for investors. The numbers don’t have to be big if they point to more enforcement actions which concern investors.” A government finding that Fannie’s management engaged in wrongdoing could immediately revive the prospects for legislation this year or next. Such a finding would also create a serious public relations problem for Fannie, which repeatedly distanced itself from Freddie’s accounting scandal last year.
National Mortgage News, March 29, 2004
FHA Eyes Zero Down For Co-ops, Condos
By Paul Muolo
In an article about the FHA’s willingness to consider a zero down-payment mortgage for those buying co-ops and condos, Federal Financial Analytics managing partner, Basil Petrou, said that although the new program could generate over a million dollars in revenue in its first year, he doesn’t believe “this budgetary calculation robustly reflects the true risks” of the program. “If home prices fall in the neighborhood, then the borrower will be underwater in the mortgage for at least several years.”
The Bond Buyer, March 25, 2004
Housing Analyst: Zero Down-Payment Bill Could Spur More Single-Family Bonds
By Matthew Vadum
In an article discussing the Bush Administration’s Zero Down-Payment Initiative, Basil Petrou, managing partner with Federal Financial Analytics, Inc. said zero down-payment mortgages can create problems for borrowers, who have typically borrowed 103% or more of the property’s initial value, if home prices stop increasing in their neighborhoods. “FHA must make every effort to avoid placing first-time homebuyers – especially low- and moderate-income ones – in a position where their hopes of moving to accept a new job or live close to family are dashed solely because of a zero down-payment mortgage taken out years before,” Petrou said.
BNA Banking Report – Monday, January 12, 2004
Senate Banking Committee Targets March Timeline to Move GSE Regulatory Reform Bill – by Karen. L. Werner
In an article regarding the GSE Regulatory Reform Bill, a GSE Activity Report from the firm Federal Financial Analytics Inc., states that 2004 will be a critical year for the GSEs, since if Congress fails to act, they would be “invulnerable to undesired legislative changes for several years” absent more scandals. The Senate Banking Committee has set its timeline to move legislation on housing government-sponsored enterprise reform for March, a Senate Banking Committee spokesman said Jan. 8. A series of hearings begun in 2003 on regulatory reform for GSEs Freddie Mac and Fannie Mae and the Federal Home Loan Banks system will continue in the committee in early February, Senate Banking Committee spokesman Andrew Gray said. Congressional interest in regulatory reform of Freddie and Fannie has been keen since a string of resignations in 2003 at Freddie, following accounting problems.
American Banker, Monday, December 15, 2003
Why Many Say Freddie Still Needs to Get on Message: By Rob Blackwell
In a story discussing the OFHEO report on Freddie Mac last week, Karen Shaw Petrou, managing partner with Federal Financial Analytics is quoted as saying “Our advice to clients in regulatory distress is always to ask, â€˜How high?'” . Freddie Mac clearly hoped that paying a $125 million fine and agreeing to take a slew of steps to bolster internal controls would put its massive accounting scandal to rest. But Freddie’s officials ignored one key piece of the public relations puzzle: contrition. The company picked a fight with its regulator, criticized moves to make it raise its capital or limit its growth, and refused to say how much it is paying its new chief executive. Observers said, the company was publicly disputing its regulator’s recommendations. By contrast, they said, most financial institutions remain silent if their federal supervisor makes any public statement concerning them.
American Banker, Thursday, December 11, 2003
Freddie’s 185-Page Earful from Regulator
Though many policymakers have called the Office of Federal Housing Enterprise Oversight weak and ineffective, it came out with guns blazing against Freddie Mac on Wednesday. Besides extracting a $125 million fine from the government-sponsored enterprise, it issued a harsh 185-page report on Freddie’s accounting scandal. Karen Shaw Petrou, a Managing Partner with Federal Financial Analytics, said the capital and retained portfolio recommendations were two of the report’s key conclusions with “major strategic implications.” But she said she did not understand why OFHEO merely talked about issuing new requirements instead of actually issuing some. It “is unclear why OFHEO pulled its punches with regard to these,” said Ms. Petrou, whose clients include competitors to Fannie and Freddie.
American Banker, December 3, 2003
Fed Says Basel II Standards Will Stay â€” for Now
Addressing the industry’s biggest beef about impending international capital standards, Federal Reserve Board Vice Chairman Roger W. Ferguson Jr. said Tuesday that banks will be allowed to use internal models to determine regulatory capital minimums â€” eventually. But first they must use Basel II calculations drawn up by regulators. Karen Shaw Petrou, Managing Partner of Federal Financial Analytics, said publicly acknowledging a leading industry complaint is good news for bankers. “This makes the outline of Basel 3 a lot more viable,” she said.
The Bureau of National Affairs, Inc., November 24, 2003
With Earnings Restatement Freddie Mac Opens Itself, OFHEO to Investor Questions
Freddie Mac’s long-awaited restatement of past earnings Nov. 21 may have put the best face possible on what executives called numerous “errors,” but its critics, with fresh facts in hand, continued to charge that the company’s problems reside with its management, its board, and its regulatory regime. Karen Shaw Petrou, managing partner of Federal Financial Analytics Inc., a Washington, D.C., consulting firm, said the restatement was “quite stunning and wholly unexpected,” particularly Freddie Mac’s report that it had overstated its 2001 earnings. Perhaps even more disconcerting, Petrou said, was the company’s admission that it had actually experienced a loss of about $111 million during the first quarter of 2001, instead of a profit of about $800, as originally reported. Petrou added that she also was surprised that Freddie Mac did not release any quarterly earnings figures for 2003 at the time of its restatement for the previous years. “We assumed they would” announce 2003 quarterly earnings, Petrou said.
American Banker, November 21, 2003
At Freddie, 2 New Names and an Exit by Rob Blackwell
In a story discussing personnel changes and the results of the restatement at Freddie Mac, Managing Partner Karen Petrou is quoted as saying “We always thought the Doty conclusion that nothing had happened that had safety-and-soundness implications was ludicrous. (Freddie had commissioned a report on its accounting practices from James Doty of Baker Botts LLP.) “Running an institution where your numbers can go so wide of a reported mark is a really significant concern,” she said. “The need for prudential regulation is strengthened.”
The Bureau of National Affairs, Inc., November 17, 2003
Conferees to Meet Week of Nov. 17 To Resolve Major FCRA Bill Differences by Karen L. Werner
In a story about the upcoming House and Senate Conference to negotiate legislation that would reauthorize FCRA, an analysis by Federal Financial Analytics is quoted as saying “there are several other provisions that differ between the two bills, some of which could prove more costly to businesses, including lenders and credit bureaus. Senate legislation would place the burden of proof on furnishers of credit information, not on consumers by mandating that furnishers remove information that is false or that cannot be verified. By contrast, the analysis added, House legislation only requires the removal of false information.”
American Banker, November 12, 2003
Smaller Institutions Seeing Cause for Concern in Basel II by Rob Garver
In a article about the impending Basel II capital accord, and its effect on small banks, Managing Partner Karen Petrou is quoted as saying “The smaller banks are becoming more concerned as they begin to understand what the Basel Accord is going to do. I think the regulators came up with the bifurcated system because they thought the small banks wanted out, and the best way to go was to get them out. Now bifurcation is a no-go. There is a very emphatic difference between the Federal Reserve and everybody else, which is that capital matters. The odd thing about FRB Vice Chairman Ferguson’s position is the idea that capital doesn’t affect pricing or competitiveness. Everybody else thinks it does. And if it didn’t, there wouldn’t be capital arbitrage. In the end regulators face only one realistic option. Rather than split the industry between two capital standards, they must build a framework that works for the smaller banks as well.”
Wall Street Journal, November 7, 2003
Time for Revenge by Karen Shaw Petrou
In an op ed, Managing Partner Karen Petrou lays out the possible risks that the mutual fund industry faces from the investing class and lawmakers acting on election year politics. She cites the reputation risk faced by the mutual fund indsutry and what the industry can do to address it as investors look for safe places to invest and Congress debates legislation.
American Banker, November 3, 2003
Why Treasury Pushing Hard on GSE Fix by Rob Blackwell
Managing Partner Karen Petrou is quoted as saying “A lot of this depends on headline issues,” in reference to speculation on how hard the Administration will push for a tougher regulator in the ongoing debate on GSE regulatory reform.
Dow Jones, October 28, 2003
Critics Make Case To Privatize Fannie, Freddie, FHLBanks by Dawn Kopecki
A report by Federal Financial Analytics is cited in a story about a proposal to privatize the housing GSEs. The report is quoted as saying “many aspects of the proposals (to privatize the GSEs) elicited concern from the audience about political viability”.
Business Week, October 27, 2003
Fannie and Freddie Dodge a Bullet — for Now by Mike McNamee, with Paula Dwyer
In a story about the GSE reform debate that cites the upcoming release of Freddie’s accounting errors (likely to top $ 5 billion); a critical report from Congress’ watchdog, the General Accounting Office; and a criminal probe of Freddie’s accounting, Managing Partner Karen Petrou is quoted as saying ”all this news is going to come down a lot harder if Fannie and Freddie are still fighting against a credible regulator.”
American Banker, October 27, 2003
“In Focus: Stronger Words Mean Longer Odds for GSE Reform Effort” by Rob Blackwell
In a story about the ongoing debate on GSE reform, Managing Partner Karen Petrou is quoted as saying “this fight is taking place on a field with all sorts of suddenly opening trenches, quicksand puddles, and land mines, because there is a lot going on in the news. That makes the need for a credible regulator and Treasury’s ability to enforce its ‘my way or the highway’ position far greater.”
Wall Street Journal, October 21, 2003
“IRS Probes Freddie Mac 401K Plan, Derivatives Deals” by Dawn Kopecki
The story cites Federal Financial Analyics as the first to report a Labor Department and IRS investigation underway at Freddie Mac that is looking into issues surrounding the retirement plan and certain derivative transactions. The investigation could result in an additional tax bill of up to $750 million plus interest.
Bureau of National Affairs, October 09, 2003
“Oxley Cancels GSE Markup, No New Date; Senate to Move Ahead on Reform Hearings”
In a story about Congressional debate over GSE reform a report from Federal Financial Analytics is cited as saying “Oxley has had to choose between bipartisan votes and the Administration in canceling the markup. An eventual markup in the House, plus any news from pending GSE investigations, could further strengthen the administration’s hand and create a tougher tone among House Financial Services Committee members on Fannie and Freddie”.
Wall Street Journal, October 10, 2003
Managing Partner Karen Petrou is quoted as saying “This creates real concerns about who’s watching for this type of credit risk and what’s being done about it,” in a story about the risks of the Federal Home Loan Banks and GSE reform that cites the $1.7 billion of mobile-home paper held by the New York bank compared to the $45 million that the rest of the FHLB system holds.
American Banker, September 17, 2003
“Omissions From GSE Bill Are No Accident” by Rob Blackwell
In a story about GSE reform debate, Managing Partner Karen Petrou is quoted as saying “It is not on the table, because there seems to be a broad wide-scale effort to come up with a doable bill, Fannie and Freddie want one because they need a credible regulator, the Administration needs to have one because they see the need for one too. The bill would become much less doable if the line of credit and similar items were included.”
Barron’s, September 14, 2003
“Fannie Reduction?” by Jim McTague
In an article about the Treasury plan to oversee Fannie Mae and Freddie Mac, Managing Partner Karen Petrou is quoted as saying “The change would be good for bondholders of these monster government-sponsored enterprises but not the GSEs’ shareholders, Fannie Mae is unique in that the interests of the shareholders and bondholders do not parallel one another.” She goes on to say that “If the regulator treats Fannie and Freddie like banks, which many experts urge, their minimum capital might double to 5 percent, which would halve return on equity.” The story cites her calculation of the Fannie Mae leverage ratio of 53 to 1.
Reuters, September 14, 2003
“Tougher Rules May Curb Fannie Mae”
In a story about a proposal to strengthen the regulation of Fannie Mae and Freddie Mac, Managing Partner Karen Petrou is quoted as saying “If the new regulator treats Fannie Mae and Freddie Mac like banks, their minimum capital might double to 5 percent, cutting return on equity in half.”
Reuters, September 12, 2003
“JP Morgan plans new bank that may avoid local laws” by Chris Sanders
In a story about the plans of J.P. Morgan Chase & Co. to reorganize much of its retail into a federal savings bank, Managing Partner Karen Petrou is quoted as saying “A patchwork of local and state regulation does not best serve the interests of consumers or the industry and can only result in reducing the availability of credit and increasing its cost.” She went on to say “Federal regulators are best equipped to address concerns with improper mortgage practices.”
Global Risk Regulator, September 2003
“Low-risk U.S. banks may not gain from Basel II”
Managing Partner Karen Petrou is quoted as saying “when you apply the leverage ratio, nobody’s capital falls,” referring to the fact that the ANPR notes that capital may rise or fall under the proposed Basel regime and also says that the leverage ratio will be left in place. Petrou goes on to argue that “under present proposals, U.S. regulators have no way to enforce Basel II on banks that separately meet the leverage ratio and the PCA.”
BNA, September 8, 2003
Government-Sponsored Enterprises Expert Predicts Tougher Oversight, More Capital on Tap for Fannie, Freddie
A speech by Managing Partner Karen Petrou is cited as saying “Recent events have made clear that the GSEs’ regulator must have safety-and-soundness and capital powers comparable to those bank regulators deploy, and I think Treasury will propose this [the week of Sept. 8] and Congress will act on this recommendation,” referring to scheduled Sept. 10 testimony by Treasury Secretary John Snow before the House Financial Services Committee.
Reuters, August 27, 2003
“Wachovia, most states embroiled in lending lawsuit”
In a story about the question of the applicability of state law to certain units of Wachovia, Managing Partner Karen Shaw Petrou is quoted as saying “Many state standards are tougher on mortgage lending and privacy.” She goes on to say that “These battles are being fought in the courts, generally with the federal charter prevailing.” She adds that the OCC recently proposed sweeping preemption standards on many consumer and management issues “that states historically thought were in their purview. This proposal is leading the states to round up their troops.” When the OCC enacts a final proposal, she said, “that may be where the battle is ultimately fought.”
American Banker, August 27, 2003
“OFHEO Hardball Approach May Not Help Its Cause” by Rob Blackwell
A Federal Financial Analytics report is cited as giving a blistering critique of OFHEO’s actions. It said the agency had told Congress that Freddie was healthy despite an accounting scandal and a multibillion-dollar earnings restatement, then contradicted itself by openly forcing the board to fire Mr. Parseghian. Managing Partner, Karen Shaw Petrou is quoted as saying “I cannot see their image improving, especially on the Hill”
BNA, August 25, 2003
“Banking Experts Report Basel II Benefits Could Be Meager for Low-Risk Institutions” By Richard Cowden
In a story about the impact of Basel II, a report from Federal Financial Analytics is cited as saying that low risk banks won’t benefit and high risk banks may not be penalized. The story goes on to quote the report as saying “Although big U.S. banks overall won’t see [risk-based capital] drop, key lines of business in diversified banks could get a major competitive edge. This will result in consolidation in retail banking and mortgage lending, possibly putting small and mid-size banks at serious strategic risk.”
Wall Street Journal, August 25, 2003
“OFHEO Forces Out Freddie Execs, Toughest Action Yet” by Dawn Kopecki
In a story about the removal of Freddie Mac CEO Greg Parseghian, a Federal Financial Analytics GSE Activity Report is quoted as saying “OFHEO’s actions are coming, of course, at a highly sensitive time in the debate over its own future. Trying to show it is tough now may be part of an effort to retain as much of its current structure and personnel in the future.”
American Banker, August 14, 2003
“Home Loan Bank Rx: Many Proposals, Some Drastic” By Rob Garver
In story about the possiblity of increased oversight for the Federal Home Loan Banks, a report from Federal Financial Analytics is quoted as saying “the NY FHLB, of course, has been the most vocal in opposing SEC disclosure. We long wondered why, looking hard at its derivative book in hopes of figuring this out. We didn’t, though, look at old-fashioned credit risk. Of course, even if we had looked, we wouldn’t have found much – while the Federal Home Loan Bank of New York’s annual report tells us a bit about the manufactured housing book and how it will get better, the first-quarter report is silent on the entire issue,”
American Banker, August 13, 2003
“Basel II Called Less Than Ideal, Far From Assured”
by Rob Garver
A report prepared by Federal Financial Analytics is cited as showing the drop in regulatory capital under Basel II won’t be as much as some expected. The story also quotes Managing Partner Karen Shaw Petrou as saying that “low risk banks won’t benefit from Basel II, and high risk ones might not be penalized – the reverse of what regulators wanted at the outset.” It goes onto say that she raised the possibility that Basel II may never take effect here in its current form.
American Banker, June 23, 2003
“In Focus: Final? Not Quite, as Hill Finally Gets Started on Basel II Debate”
by Rob Garver
Managing Partner Karen Shaw Petrou is quoted as saying “I think it means that the regulators were put on notice â€¦ that the Hill recognizes the fundamental importance of the Basel rules, isn’t daunted by complexity, and will intervene if they see any adverse policy consequences.”
The Wall Street Journal, June 13, 2003
“The Trouble With Freddie” Review and Outlook
According to Federal Financial Analytics, more than 60% of U.S. banks with less than $100 million in assets hold Fan and Fred debt in excess of 50% of capital. For banks, with more than $1 billion in assets, 20% hold Fan and Fred debt in excess of 50%.
American Banker, June 12, 2003
“Meeting Stirs Doubts About FHLB Regulator’s Fate” by Rob Garver
In a report sent to her clients, Karen Shaw Petrou, managing partner of Federal Financial Analytics was quoted as saying, “A single regulator for Fannie, Freddie and the Federal Home Loan banks – a distant prospect at best a week ago – now could come into being this year, with all the charter implications such massive reform entails.”
American Banker, June 11, 2003
“These GSE Hearings Will Clearly Have Teeth” by Rob Garver
In response to the shake up at Freddie Mac and the impending investigative hearings, Managing Partner Karen Shaw Petrou said that many of the traditional arguments that the GSEs have used to protect themselves from increased regulatory scrutiny have now collapsed.
American Banker, May 14, 2003
“Shelby: Don’t Try Tweaking Reform Plan” by Rob Blackwell
Managing Partner Karen Shaw Petrou is quoted as saying that Sen. Shelby might give some leeway on credits and rebates in the upcoming deposit insurance reform legislation, an issue that he has otherwise said he doesn’t want changed much from the Treasury Proposal.
American Banker, April 28, 2003
“In Focus: Will Plug from Greenspan Give Baker More Ammo vs. GSEs?” by Rob Garver
In reference to a letter from FRB Chairman Greenspan to Chairman Baker regarding the importance of GSE oversight, Managing Partner Karen Shaw Petrou is quoted as saying that while Chairman Greenspan’s comments add a new element to the debate, it is still unclear what he wants.
American Banker, April 24, 2003
“In Brief: Big-Bank Examiners Urged to Get Tougher” by Rob Garver by Rob Blackwell
The Story cites a speech by Managing Partner Karen Shaw Petrou before the OCC Bank Supervision Managers’ Conference in which she asserts the need for parity in the supervision of large and small banks.
American Banker, April 7, 2003
“FDIC Bill Well on Its Way – But Will Need Maneuvering”
Managing Partner Karen Shaw Petrou is quoted regarding an amendment that would bar the FDIC from charging the best rated institutions more than 1 basis point as long as the reserve ratio is above %1.15, saying that’s where the fight is going to be.
The Economist, March 28, 2003
Managing Partner Karen Shaw Petrou is quoted in an article about the capital rules outlined in Basel II and says that the whole point of Basel II is to get rid of regulatory arbitrage.
Bureau of National Affairs, Inc, March 17, 2003
Managing Partner Karen Shaw Petrou warns that the prospect of hostilities in Iraq could complicate an already contentious effort to implement the Basel II capital standards, mentioning that the most disputed part of the accord resulted from U.S. concessions to Germany.
The Wall Street Journal, February 28, 2003
“U.S. Banks Say Risk Standards Would Favor European Rivals” by Michael Schroeder and G. Thomas Sims
The testimony of Managing Partner Karen Shaw Petrou before the House Financial Services Committee is cited regarding capital standards proposed in the Basel II Accord.
American Banker, February 26, 2003
“Basel Committee Offers Operational Risk Guide For Banks, Regulators” by Rob Garver
The Basel Committee on Banking Supervision issued guidelines for the management and supervision of operational risk which Managing Partner Karen Shaw Petrou is quoted in an interview as saying are a good start, but the committee’s approach is still flawed.
American Banker, February 21, 2003
“In Brief: House Panel to Hold Basel Hearing” by Michele Heller
The story cites Managing Partner Karen Shaw Petrou as one of the witnesses scheduled to appear before the House Financial Services Committee in their hearings to examine the Basel II accord.
American Banker, December 3, 2002, p. 1
“OCC: States’ Enforcers Subject to Preemption” by Nicole Duran
Managing Partner Karen Shaw Petrou is quoted on the subject of a letter from the OCC that affirms federal preemption for national banks confronted with local attempts at enforcement of state laws.
American Banker, November 19, 2002, p. 4
“Industry Had a Few Wins but More Losses,” by Michele Heller
In an article evaluating the 107th Congress, Managing Partner Karen Shaw Petrou is quoted as warning about political risk to diversified financial companies if they don’t make a strong case to legislators.
The Wall Street Journal, October 31, 2002, p. C1
“Bank Moves to Reduce Its Regulatory Woes, Separates Operations,” by Paul Beckett
Managing Partner Karen Petrou is quoted on Citigroup’s strategy of preempting enforcement actions by taking measures itself to avoid future conflicts of interest.
Washington Post, September 23, 2002
“Loan Refinancings Put the Squeeze on Fannie”
Managing Partner Karen Shaw Petrou is quoted regarding the interest rate risk that the duration gap at Fannie is posing and says that it could become a taxpayer problem.
Dow Jones Newswires, November 7, 2002
“Likely Senate Banking Chair Has Independent Streak”
A story on the change of leadership in the Senate quotes Managing Partner Karen Shaw Petrou on the tough position that Shelby will likely take on tying and accounting reform.