Arezou

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So far Arezou Rafikian has created 2159 blog entries.
7 05, 2025

Bloomberg, Wednesday, May 7, 2025

2025-05-09T13:06:59-04:00May 7th, 2025|Press Clips|

Trump Has Cut Thousands of Wall Street Cops While Markets Wobble

By Katanga Johnson and Weihua Li

Donald Trump’s administration is set to shrink the ranks at the top US financial regulators by more than 2,300 workers, a group that includes bank examiners, criminal investigators and economists. The cuts are the steepest in decades for the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Securities and Exchange Commission, the primary agencies responsible for oversight of banks, trading houses and the public markets…“The problem with bank supervision is not lack of personnel, but rather where they are deployed, how they are supervised by senior officials, and the extent to which the agencies demand rapid action on problem institutions,” said Karen Shaw Petrou, the managing partner at Federal Financial Analytics, a Washington-based consulting firm.

https://news.bloomberglaw.com/us-law-week/trump-has-cut-thousands-of-wall-street-cops-while-markets-wobble

6 05, 2025

Marketplace, Tuesday, May 6, 2025

2025-05-06T13:28:52-04:00May 6th, 2025|Press Clips|

Bird-watching at the Federal Reserve

By David Brancaccio

Which bird is it: hawk or dove? The guardians of interest rates at the Federal Reserve meet today and tomorrow on what to do about an economy under stress. And President Donald Trump would prefer the Fed be dovish by lowering interest rates. We’ll get out our binoculars with Karen Petrou, managing partner at Federal Financial Analytics.

https://www.marketplace.org/episode/2025/05/06/ford-says-the-road-ahead-is-unclear#bird-watching-at-the-federal-reserve

5 05, 2025

Karen Petrou: Why Ratings Are Late Matters a Lot

2025-05-05T11:47:38-04:00May 5th, 2025|The Vault|

The Wall Street Journal on Friday speculated that CAMELS ratings for the biggest banks are delayed due to looming change in the Board’s supervisory philosophy after Gov. Bowman is confirmed. Or, the Journal speculates, perhaps specific examiner ratings are being overridden by senior officials outside the examination chain of commands. There’s no question that supervisory ratings are on hold, but the reason for the delay will reveal the difference between a supervisory framework with integrity and one craven to political whim.

As I’ve written, the bank-supervisory system needs radical overhaul at the FRB and FDIC and could do with more than a touch-up at the OCC. The Fed’s own report on SVB and the FDIC’s assessment of Signature show flaws from top to bottom that are virtually-identical repeats of flaws that led to the 2008 crisis. The Fed and FDIC promised big fixes, but none has been made public and some appear quixotic.

Gov. Bowman is thus right to question the way the Fed supervises and rates banks. Fed examiners rated SVB’s risk-management exposures and capabilities well until right before the bank’s imminent demise suggested a downgrade. This follows a pattern all too reminiscent also of credit rating agencies: everything’s A-OK until market forces turn inexorable because investors are far better attuned to risk than examiners. See again why I think that economic-capital measures of capital are a better way to ensure resilience under stress.

Also right are those calling for a radical rewrite of the management test behind …

23 04, 2025

Bloomberg, Wednesday, April 23, 2025

2025-04-24T09:14:13-04:00April 23rd, 2025|Press Clips|

Powell Attempts Balancing Act as Trump Tests Fed’s Autonomy

By Craig Torres

Donald Trump’s second term has begun with a renewed determination to curb the Federal Reserve’s treasured autonomy. Jerome Powell’s response so far: trying to draw a sharp line around monetary policy independence, even if it means appearing to give ground elsewhere. The Fed chair’s balancing act comes as the Trump administration has moved to swiftly rein in the central bank’s autonomy on bank supervision, the president continues to pressure Powell to cut interest rates, and Republicans on Capitol Hill signal they will ramp up their oversight….About a month after his inauguration, Trump issued an executive order that swept up regulation into White House review. While Fed governors vote on bank rules and a White House review may not change the vote, some say the presumption that the Fed’s decisions should proceed unquestioned in a variety of areas is over.“Whatever independence the Fed had in bank regulation is now gone,” said Karen Shaw Petrou, the managing partner at Federal Financial Analytics, a Washington-based consulting firm.

https://www.bloomberg.com/news/articles/2025-04-23/powell-attempts-balancing-act-as-trump-tests-fed-s-autonomy?sref=BSO3yKhf

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21 04, 2025

American Banker, Monday, April 21, 2025

2025-04-22T12:54:20-04:00April 21st, 2025|Press Clips|

Fed regulation, supervision take backseat in independence fight

By Kyle Campbell

Federal Reserve officials are battling to maintain their political independence on monetary policy, but the same cannot be said for their regulatory and supervisory authorities. Instead, central bank officials have downplayed their ability to set their own banking oversight policies rather than boisterously defend it from the Trump administration’s efforts to bring it under more direct executive control… Some policy analysts and observers see the Fed’s disparate treatment of its authorities as a pragmatic choice. Facing pressure on multiple fronts, Karen Petrou, managing partner at Federal Financial Analytics, said the Fed was wise to bolster its monetary independence — and fortunate to have had it explicitly exempted from the Trump administration’s overtures.”The Fed is lucky to have maintained the Trump administration’s agreement to its monetary policy independence in the executive order the president issued on that point,” Petrou said, referring to a February action making independent agencies more accountable to the White House. “That was not a foregone conclusion.” Petrou added that the legislative history and the academic literature that establish and justify the Fed’s monetary independence do not clearly apply to its regulatory and supervisory functions. “Their independence for supervision dates to a period in which the principal concern was that bank examiners would sanction or favor banks based on [favoritism], and that remains a concern,” Petrou said. “But I don’t think that the kinds of rules that redefine macroeconomic growth or the competitive landscape, like …

3 04, 2025

FedFin Assessment: Will There be Banking Battles in This Trade War?

2025-04-03T16:37:22-04:00April 3rd, 2025|The Vault|

In this report, FedFin provides its first assessment of how the sweeping tariffs on trade-in-goods set last night by the White House are likely to affect financial-services firms.  We address first-order effects from trade-in-goods disruptions and resulting macroeconomic consequences as well as the extent to which this trade war – and it’s already a trade war – may spread to trade-in-services that disrupt the course of cross-border finance, transborder data flows, and even financial stability….

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

31 03, 2025

FedFin on: Stablecoin Regulatory Framework

2025-03-31T13:07:30-04:00March 31st, 2025|The Vault|

The chair of the House Financial Services Committee, Rep. French Hill (R-AR), the Digital Asset Subcommittee’s chair, Rep. Bryan Steil (R-WI), eight other Republicans and three Democrats have introduced House legislation to create a long-awaited federal framework for dollar-denominated payment stablecoins.  The bill differs substantively from Senate language, especially with regard to the scope of federal authority and the extent to which stablecoins might come to supplant bank deposits.  However, the bills are similar in many respects and are likely to become still closer as House and Senate consideration continues ahead of final agreement and enactment into law later this spring….

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

26 03, 2025

FedFin on: Trump Orders Improve Federal-Payment Efficiency, Increase White House Control

2025-03-26T15:52:28-04:00March 26th, 2025|The Vault|

As noted, the President yesterday issued two executive orders demanding significant change to the federal payment system.  In this report, we assess the financial-market and banking-system implications of the orders, one of which emphatically states that nothing done to enhance digitalization may be construed to authorize a central bank digital currency.  The purpose of the orders is to reduce fraud, with the Administration saying that GAO has calculated annual federal losses due to fraud to be as much as $521 billion, some of which is doubtless independent of payment-system operations……

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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21 02, 2025

Politico, Friday, February 21, 2025

2025-02-24T15:24:01-05:00February 21st, 2025|Press Clips|

Trump’s plan to rein in agencies sparks alarm for the Fed

20 02, 2025

FedFin on: Debanking Prohibition

2025-02-20T10:46:10-05:00February 20th, 2025|The Vault|

In concert with other efforts to prevent debanking, two Republican senators have introduced legislation to bar insured depository institutions from certain government contracts if the IDI or its affiliate refuses to do business with lawful enterprises they dislike on what the bill describes as social-policy grounds.  The bill is very brief and thus does not provide an administrative framework for implementation in areas such as determining which entities banks inappropriately dislike and which contracts are to be barred.

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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