Marketplace, Monday, November 25, 2024
Trump taps Scott Bessent for treasury secretary
Host, Sabri Ben-Achour, talks with FedFin managing partner, Karen Petrou, about the role of Treasury Secretary. (2:00min)
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Politico, Monday, November 18, 2024
The one institution that Trump can’t afford to break
Some of Trump’s closest advisers are angling for the president-elect to choose a candidate who will shake things up at Treasury.
By Sam Sutton
Donald Trump has chosen to move fast and break things with his early picks for top Cabinet posts. He is facing stiff resistance to that strategy when it comes to the Treasury Department. The president-elect has been hung up for days over who will get the nod for Treasury secretary, the most powerful economic post in his Cabinet. It had been a two-man race between billionaire Howard Lutnick, Trump’s transition team co-chair, and Scott Bessent, a hedge fund executive, until internal squabbling created openings for other candidates, including former Federal Reserve Gov. Kevin Warsh, Sen. Bill Hagerty (R-Tenn.), and Apollo Global Management CEO Marc Rowan….A mismanaged Treasury could “add more uncertainty to the Treasury bond market, which is already in a potentially fragile condition due to liquidity shortages, deficits and a number of other challenges,” Karen Petrou, managing partner of Federal Financial Analytics, said. Rising federal deficits have also fomented concerns about the dollar’s role as a reserve currency and the U.S. government’s ability to respond to any economic crisis in the future. Markets are more likely to respond favorably if they have faith that the person running the show has a firm grasp on how policy shifts affect the broader economy….
https://www.politico.com/news/2024/11/18/trump-treasury-disruption-00190250
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11, 2024
FedFin Assessment: It’s Still Not Game-On for Most Bank Mergers
As promised, this post-election forecast looks at bank-merger policy, providing a cautionary note in response to the go-go, game-on forecasts for new mergers often touted by investment bankers. While community- and midsize-bank mergers will move with more certainty, more alacrity is unlikely unless the OCC and FRB join the FDIC with at least an initial deadline. The same banking-agency staff who will work on bank mergers next year are also the same banking-agency staff working on them now. However, we also expect new OCC and FDIC leadership to retract recent agency merger policies, saying at the same time that new ones are forthcoming. Why is there a need for new ones? As detailed in this report, aspects of the new policies addressed….
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.
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11, 2024
FedFin Assessment: The Fate of the Federal Reserve
In a recent client brief, we provided our forecast of what might happen to Federal Reserve independence, process, powers, and personnel under either a Harris or Trump presidency. This is of course no longer an either/or matter, with this report thus reviewing and, where needed, updating our initial assessment of what Mr. Trump could do to the central bank even where Chair Powell says he can’t. Sherrod Brown’s defeat makes the Fed particularly vulnerable in the Senate, where Elizabeth Warren (D-MA) stands a strong chance of becoming the Banking Committee’s ranking Democrat. She and incoming chair Tim Scott (R-SC) will agree on a lot about the Fed, especially if Sen. Rick Scott – a frequent Warren ally on the Fed front – becomes Majority Leader….
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…
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FedFin Assessment: Are Crypto’s Wins the Banks’ Losses?
One of the more striking results of the election is the enormous win crypto firms got for their $135 million of Congressional-campaign spending: victories so far in every race it entered. Much of this is due not just to crypto’s lure; instead, it reflects choices based not only on a candidate’s crypto sentiments, but also on the opponent’s vulnerability. As a result, at least some of crypto’s luster could fade when Congress gets back to work. However, Donald Trump campaigned on a pro-crypto platform, endorsing legislation such as the Lummis (R-WY) bill to create a “strategic reserve” for bitcoins…
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…
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American Banker, Thursday, November 7, 2024
Changes coming to the Fed in a Trump presidency
By Kyle Campbell
Donald Trump’s return to power all but guarantees that changes are coming to the Federal Reserve Board of Governors, but the range of potential shake-ups varies widely. At a minimum, Trump will have the opportunity to appoint two governors to the board during the coming four years and determine the leadership of the body….Karen Petrou, managing partner of Federal Financial Analytics, said whether or not the Trump administration seeks to remove Barr or his title will depend on who runs the incoming president’s transition and what they prioritize. Because of the legal uncertainties around removability, she expects such an undertaking would be, at most, a low priority. “The external environment, whether it’s any kind of financial market stress, geopolitical risk, civil disobedience, or Trump trying to do all the things he cares about doing personally and surrounding himself with the uninhibited people willing to do it, that’s the agenda,” Petrou said. “Not Michael Barr.”…
https://www.americanbanker.com/news/changes-coming-to-the-fed-in-a-trump-presidency
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11, 2024
FedFin: Don’t Wait Up
Markets are ablaze with expectations that Trump II will bring back Fannie/Freddie 1.0. Could it be? Maybe, but markets were ablaze with like-kind expectations in November 2016, and it still took the White House until January of 2021 on its way out the door to lay out a privatization plan the Biden team promptly filed in the bin. A lot better will need to happen a lot faster for anything different to happen this time around. Given the complexities both financial and political, this seems unlikely absent statutory reform by a Congress perennially unable to bring itself to do so.
The full report is available to subscription clients. To find out how you can sign up for the service, click here.
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Marketplace, Morning Report, Thursday, November 7, 2024
Why the economy drove voters toward Donald Trump
Host Davis Brancaccio talks to Federal Financial Analytics‘ managing partner, Karen Petrou about how economic inequality explains a lot of votes for Donald Trump.
https://www.marketplace.org/2024/11/07/why-the-economy-drove-voters-toward-donald-trump/
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American Banker, Wednesday, November 6, 2024
Trump win likely to delay Basel III, imperil Biden bank regulation
By Ebrima Santos Sanneh
The incoming Trump administration is likely to lead to swift turnover at bank regulatory agencies, which would push finalization of new capital standards for large banks further down the road…. Karen Petrou, a managing partner at Federal Financial Analytics, expects the scope of the new framework to be further narrowed. Specifically, she anticipates the requirements being applied only to banks with $250 billion in assets or more and the market-based requirements being limited to the largest global systemically important banks and others with large trading books. She said some revisions could be made to cap operational risk weights and amend credit risk standards, too. Overall, Petrou said, the final version of the Basel III endgame will be the result of a “very complicated negotiation” — one that would likely escape the attention of a potential Trump administration. “Once you start bargaining over details, I can guarantee you, because I have been doing this forever, the White House will completely lose interest,” she said. “Full stop.”…
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FedFin Assessment: Trump II Financial-Policy Outlook
Given the likelihood of a Trump win, we turn in this report to our outlook for federal financial policy in a very different Administration than the one that has set it for the last four years. We will refine this outlook when final tallies determine Congressional control, but slim margins will dog both parties and thus significantly complicate the legislative outlook. Congress, like the White House, will also be preoccupied with nomination battles, immigration, geopolitical risk, and acute fiscal-policy challenges in areas such as the new president’s budget, planned tax breaks, and tariffs.
The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.
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