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So far Arezou Rafikian has created 1670 blog entries.
6 06, 2023

FedFin on: Compensation Clawbacks

2023-06-06T16:43:15-04:00June 6th, 2023|The Vault|

Sen. Warren (D-MA) has introduced a revised version of legislation to ensure that both the FDIC and other federal banking agencies can demand that executives and others governing failed banks refund direct and indirect compensation to the federal government.  As with Sen. Warren’s prior bill to do so, this bill is bipartisan, now also containing compromise language on several points from the prior bill to increase the odds of enactment.  For example, the bill would apply only to those at failed banks with assets over $10 billion, making it more difficult to claw back compensation at smaller banks regardless of the level of compensation or nature of the actions of covered persons….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

2 06, 2023


2023-06-02T15:03:46-04:00June 2nd, 2023|Speeches & Testimony|

Rising Rates, Failing Banks, and Rigorous Rules:
The future of Mortgage Finance in the New Policy Paradigm
Karen Petrou
Managing Partner
Federal Financial Analytics, Inc.
Prepared for Mortgage Bankers Association-Chairman’s Conference
Palm Beach, Florida
June 5, 2023

Read remarks


30 05, 2023

FedFin on: Enforcement Policy

2023-05-30T17:09:49-04:00May 30th, 2023|The Vault|

Following a speech earlier this year by the Acting Comptroller arguing that some banks are “too big to manage” and the furor caused by recent failures, the OCC has significantly revised its enforcement policy.  The new framework requires examiners promptly to intervene if any of a bank’s CAMELS scores slips to 3 for unsatisfactory or if the bank is what CFPB Director Chopra would call a “repeat offender” of law, rule, or express supervisory actions or found deficient in practices necessary to ensuring safety and soundness.

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

26 05, 2023

American Banker, Friday, May 26, 2023

2023-05-30T11:54:36-04:00May 26th, 2023|Press Clips, Uncategorized|

What’s next for Fed supervision? Basel’s Pillar 2 may hold the key

By Kyle Campbell

Regulatory changes are coming to the Federal Reserve in response to this spring’s three large bank failures, and while some will take years to hash out, others can be implemented much more quickly…Karen Petrou, managing partner of Federal Financial Analytics, said Pillar 2 was created to address safety and soundness concerns that are difficult to control uniformly via top-down, standardized capital or liquidity requirements. It grants supervisors broad jurisdiction over concerns not explicitly addressed in Pillar 1 capital framework — namely credit risk, market risk and operational risk. “When the Basel Committee was figuring out how to handle interest rate risk in the express capital standards, they said supervisors and regulators need to do this themselves, either by express interest rate risk capital requirements suitable for their jurisdiction or supervision,” Petrou said. “Same thing with sovereign risk concentrations and a number of other governance issues. When regulators issue core principles for bank governance, those are Pillar 2 standards.”



25 05, 2023

MarketWatch, Thursday, May 25, 2023

2023-05-25T15:27:09-04:00May 25th, 2023|Press Clips|

Regional bank crisis may be far from over, experts warn

By Chris Matthews

Regulators should stay vigilant as headwinds remain, say analysts

The stock-market panic over the regional banks has subsided for now, but experts say that regulators should remain focused on shoring up the stability of the sector amid economic headwinds that could persist for years to come. Shares of regional banks like PacWest Bancorp Corp. PACW, -6.46% have rebounded in the past week following news that their deposit bases had stabilized, with the SPDR S&P Regional Banking ETF gaining nearly 15% from its early March lows….A new variable for regulators to consider is the speed with which runs on Silicon Valley Bank and Signature Bank occurred, according to Karen Petrou, co-founder of the banking advisory firm Federal Financial Analytics, Inc. “The most radically new lesson of the recent crisis is the vulnerability of banks to viral runs,” she said, noting that new technology has enabled panic to spread much faster than in previous eras, carving out a new terrain for regulators to navigate….Petrou said that these new realities mean that Congress should increase deposit insurance for business transaction accounts and regulators must get serious about improving bank supervision and becoming much more assertive when they see behavior that could lead to worries about bank solvency. There were quite a lot of opportunities for regulators to step in and turn these failed banks around,” she said. “We’ve got to have much better supervision.”


15 05, 2023

American Banker, Monday, May 15, 2023

2023-05-16T16:14:10-04:00May 15th, 2023|Press Clips|

Consensus on Fed’s post-crisis reforms might be elusive

By  Kyle Campbell

There is a lack of consensus on the Federal Reserve Board about what bank regulation and supervision should look like after the recent string of regional-bank failures. Michael Barr, the Fed’s vice chair for supervision, laid out several changes he’d like to see in his report on the failure of Silicon Valley Bank last month. But remarks by Fed Gov. Michelle Bowman raised questions among policy analysts about how much of Barr’s post-crisis agenda will actually be adopted. Karen Petrou, managing partner at Federal Financial Analytics, said the language of Bowman’s speech indicates some fundamental disagreements within the Fed that could prove difficult to bridge. “[Fed Chair Jerome] Powell has essentially decided that he endorsed the Barr report and then you have Bowman saying only one board member saw it. Clearly, there seems to be some internal issues there in terms of transparency and collegiality,” Petrou said. “Whether those continue and then how they drive what the others do is much harder to predict because it’s not policy, it’s personal.”




11 05, 2023


2023-05-11T17:10:33-04:00May 11th, 2023|2- Daily Briefing|

Treasury Presses Fed Efforts to Contain Systemic Liquidity Risk

In remarks today, Treasury Under-Secretary Nellie Liang addressed systemic liquidity risks such as the 2020 dash-for-cash and recent bank failures.  Treasury is cautiously optimistic about increasing regional-bank stability, but systemic liquidity risk is now structural.

FDIC Proposes Special, Costly Uninsured-Deposit Assessment

The FDIC today voted 3-2 to propose the special assessments presaged in Chairman Gruenberg’s Congressional testimony after SVB and SBNY’s failures (see Client Report REFORM218).  Notably, the assessment does not also cover the $13 billion of cost estimated for the FRC rescue in conjunction with JPMorgan’s purchase; its rescue was not technically systemic and its cost will thus be covered as the FDIC reviews DIF ratios in coming meetings at which more broadly-shared, traditional premiums are likely also to increase.

GOP Endorses GAO Recommendations; Dems Point To Bank Management

At today’s HFSC Oversight Subcommittee hearing on the GAO’s report (see Client Report REFORM223), Subcommittee Chair Huizenga (R-MI) built the case that the Fed has historically been unable to properly supervise troubled banks and noted that the committee will investigate this along with the Systemic-Risk Exception used in recent failures.

Waller Disavows Fed Climate-Risk Action

Confirming the Fed’s omission of climate risk in its new financial-stability report (see Client Report SYSTEMIC96), Gov. Waller today said not only is climate risk not now a threat to financial stability, but it also does not pose a safety-and-soundness hazard to large banks.

FRB-NY Data Contradict Story

10 05, 2023


2023-05-10T17:20:41-04:00May 10th, 2023|2- Daily Briefing, Uncategorized|

McHenry Seeks To Use Appropriations Denial As Legislative Weapon

In his letter to Appropriations Committee leadership late yesterday afternoon, HFSC Chairman McHenry (R-NC) not only highlights GOP budgetary issues, but also requests that the panel deny funding for further SEC action on new rules governing open-end funds, equity-market execution, and climate-risk disclosures.

CFPB Declares Unilaterally Reopened Deposit Accounts To Be UDAAP 

Continuing its and the Administration’s campaign against “junk fees,” the CFPB today issued a circular establishing that its UDAP authority may apply to banks that unilaterally reopen a deposit account to process debits or deposits after a consumer has closed it.

FHFA Concedes on DTIs, May Even Address LLPA Controversy

FHFA today retreated far more completely on its controversial March decision to retain an upfront fee related to a borrower’s debt-to-income level, now saying that it will postpone this requirement indefinitely pending views to be solicited via a forthcoming RFI.

Barr Lambasts Regulators as Democrats Press Targeted Change

At the HFSC Financial Institutions Subcommittee hearing today, Chairman Barr (R-KY) was scathing in his denunciation of reports from the Fed (see Client Report REFORM221) and FDIC (see Client Report REFORM222) on the failures and of what he called a “term paper” from the FDIC outlining deposit-insurance options (see Client Report DEPOSITINSURANCE119).



10 05, 2023

Washington Post, May 10, 2023

2023-05-12T12:16:58-04:00May 10th, 2023|Press Clips|

After Dimon’s First Republic purchase, tougher banking regulations loom

New rules forcing the big banks to increase their capital reserves are in the works, along with changes for regional banks

By David Lynch

When regulators earlier this month needed someone to take the failed First Republic Bank off their hands, they chose Jamie Dimon, the chief executive of JPMorgan Chase, putting him in position to boost his company’s annual profits by half a billion dollars….“The biggest focus will be the midsize regional banks. That’s where the thrust of the changes are going to be,” said Karen Petrou, managing partner of Federal Financial Analytics. “But the endgame will affect JPMorgan. It is likely to significantly increase capital requirements for some of the biggest banks.”Together, the flurry of regulation promises to reshape the competitive landscape…


9 05, 2023


2023-05-09T17:29:45-04:00May 9th, 2023|2- Daily Briefing|

California SVB Supervisor Says Fed Mostly To Blame

The state regulator for several failed and troubled banks, California’s Department of Financial Protection and Innovation (DFPI), has now released its own SVB post-mortem, blaming the Fed far more than it blames itself.

Senate Progressives Push For Card Late-Fee Restrictions  

Sens. Warren (D-MA), Brown (D-OH), and six other progressive Democrats today sent a letter to the CEOs of large credit-card issuers strongly protesting the industry’s recent defense of credit-card late fees.  As detailed in our analysis (see FSM Report CREDITCARD36), the CFPB has proposed structural changes in what it characterizes as “junk fees,” an initiative the senators strongly endorse.


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