About Arezou Rafikian

This author has not yet filled in any details.
So far Arezou Rafikian has created 1457 blog entries.
9 06, 2022

FedFin on: Equitable Endeavors

2022-06-09T14:34:48-04:00June 9th, 2022|The Vault|

When Sandra Thompson earlier this year enunciated a new equitable-finance mission, we forecast that Fannie and Freddie would undertake an array of new activities that significantly expand their footprint along with their equity and equality impact.  As anticipated, the plans announced yesterday by Fannie and Freddie go beyond FHFA’s reiterated mission statement earlier this week, mirroring in some ways the banking agencies’ broad view of CRA as a community-development and racial-equity instrument as well as the boost to LMI housing on which attention long focused.  But, for all the public-good creds these plans engender, several will doubtless promote market angst as the GSEs launch pilots that tread heavily on MI, title-insurer, and servicer toes.

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

6 06, 2022

m060622

2022-06-09T16:38:32-04:00June 6th, 2022|6- Client Memo|

The Fed’s Political Peril

Last Wednesday, the American Banker quoted me on the politics behind President Biden’s contradictory campaign to demand inflation-stifling policies while at the same time championing Fed independence.  The article quoted me accurately, but as I read it, the brevity of my comments made them seem unduly pointed.  As in Renaissance Florence, modern-day Washington is awash with nuance.  To understand what President Biden meant, one has to watch for the equivalent of a carefully-arched eyebrow or a seemingly-offhand remark.  Those I see and hear say that the White House will not hesitate to turn the Fed into the fall guy for inflation and then defenestrate it in political self-defense.

m060622.pdf

6 06, 2022

Karen Petrou: The Fed’s Political Peril

2022-06-06T10:11:43-04:00June 6th, 2022|The Vault|

Last Wednesday, the American Banker quoted me on the politics behind President Biden’s contradictory campaign to demand inflation-stifling policies while at the same time championing Fed independence.  The article quoted me accurately, but as I read it, the brevity of my comments made them seem unduly pointed.  As in Renaissance Florence, modern-day Washington is awash with nuance.  To understand what President Biden meant, one has to watch for the equivalent of a carefully-arched eyebrow or a seemingly-offhand remark.  Those I see and hear say that the White House will not hesitate to turn the Fed into the fall guy for inflation and then defenestrate it in political self-defense.

This isn’t to say that President Biden wants to sacrifice the central bank on the midterm’s altar.  Despite entreaties of his more bloody-minded political aides, the President has so far heeded Secretary Yellen and given Jay Powell the equivalent of a royal pass.  Still, the carefully calibrated comments last week show that this pass is increasingly conditional.

It’s not hard to understand why those frightened of a return to what Martin Wolf last week called a U.S. autocracy are willing to push the Fed in front of the firing line. I am less and less alone in thinking that Democrats in 2016 lost it all because they trusted conventional economic thinking far too much.   Still, the Biden Administration has so far made the same mistake.

Starting in 2015, the Fed said that the American economy was a “good place.”  President Obama took …

4 06, 2022

Barron’s, Saturday, June 4, 2022

2022-06-06T10:50:28-04:00June 4th, 2022|Press Clips|

The Fed’s Anything-We-Can-Think-Of Monetary Policy Isn’t Working

By Karen Petrou

The day Jerome Powell won his second term as Federal Reserve chair, he said he couldn’t promise a soft landing and hadn’t meant to commit his fellow policy makers only to fifty basis-point hikes. He has also walked away from his insistence that inflation is transitory and the economy is “robust.” We’ve gone from whatever-it-takes monetary policy to anything we can think of. One major reason for this muddle is that the Fed’s models and objectives depend on anachronistic assumptions that America has a vibrant middle class. Once we did; now we don’t. With a deep middle class, policy transmits effectively through the economy; without one, it can’t. We urgently need a new approach to central banking that takes inequality fully into account and thus protects sustained, shared prosperity.

https://www.barrons.com/articles/the-feds-anything-we-can-think-of-monetary-policy-isnt-working-51654301021?tesla=y

1 06, 2022

American Banker, Wednesday, June 1, 2022

2022-06-01T17:09:43-04:00June 1st, 2022|Press Clips|

Politics at play behind Biden’s Fed blessing

Kyle Campbell

In their first policy meeting in nearly a year, Joe Biden gave Jerome Powell something no other president has given to a Federal Reserve chairman: his blessing to raise interest rates. Biden, in brief remarks given Tuesday afternoon in the Oval Office, said he would respect the Fed’s independence as it took steps to cool down inflation, which has been running at a four-decade high...Karen Petrou, managing partner at Federal Financial Analytics, said the high-profile meeting was a way to “separate the administration from the Fed when it comes to fighting inflation.” It could also be a way for the president to hedge his bets, she added. “If inflation meaningfully abates, then the White House can take credit and politely recognize the Fed,” Petrou said. “If inflation stays about the same or worsens, then the emphatic emphasis  on independence sets up the Fed as the inflation fall guy.”

https://www.americanbanker.com/news/politics-at-play-behind-bidens-fed-blessing

 …

1 06, 2022

FedFin: AI Adverse-Action Requirements

2022-06-01T16:27:40-04:00June 1st, 2022|The Vault|

Continuing its use of novel rulings that preclude public notice and comment, the CFPB has issued a landmark ruling on artificial intelligence (AI) and other forms of algorithmic underwriting stipulating lender responsibility for sending out the adverse action notices required under the Equal Credit Opportunity Act (ECOA).  The CFPB recently added a broader range of credit decisions on outstanding loans (e.g., granting or reducing lines), to these notice requirements, making the reach of this new policy still broader.  Lenders are responsible for adherence to these requirements even if their underwriting models are provided by third parties or credit decisions are made by third parties such as fintechs or auto dealers.  However, when these nonbanks are the lender, they are then subject to CFPB enforcement even if the Bureau does not have formal supervisory power over them under another recent CFPB ruling…

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

1 06, 2022

FedFin: How Adverse Is This?

2022-06-01T16:25:49-04:00June 1st, 2022|The Vault|

As detailed in our new in-depth report, the CFPB has issued another sweeping rule by way of a seemingly innocuous circular not subject to public notice and comment.  Under it, lenders that use third-party underwriting are responsible for ensuring that borrowers receive thorough adverse action notices even if the lender has no authority over the AI or other complex models determining credit outcome.

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

 …

1 06, 2022

GSE-060122

2022-06-01T16:22:05-04:00June 1st, 2022|4- GSE Activity Report|

How Adverse Is This?

As detailed in our new in-depth report, the CFPB has issued another sweeping rule by way of a seemingly innocuous circular not subject to public notice and comment.  Under it, lenders that use third-party underwriting are responsible for ensuring that borrowers receive thorough adverse action notices even if the lender has no authority over the AI or other complex models determining credit outcome.

GSE-060122.pdf

1 06, 2022

The Hill, Wednesday, June 1, 2022

2022-06-01T10:27:41-04:00June 1st, 2022|Press Clips|

Biden hedges inflation backlash with focus on Fed

By Sylvan Lane

President Biden’s relationship with the Federal Reserve has come under the spotlight as the White House touts the central bank’s leadership of the fight against inflation. Biden met with Fed Chair Jerome Powell at the White House on Tuesday as the administration touts its efforts to curb rising prices. The meeting came one day after the White House laid out a plan for fighting inflation focused on allowing the Fed to act without interference from the administration….”While it is intuitively true that the Fed is independent and the president cannot tell it what to do, he is the lead figure for the economy to whom most Americans look,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics. She cited former President Carter losing his 1980 reelection bid to Reagan despite his appointment of Volcker, whose attempts to curb inflation did not prevent Reagan from winning another term in 1984.

https://thehill.com/policy/finance/3507305-biden-hedges-inflation-backlash-with-focus-on-fed/

 

 …

23 05, 2022

M052322

2022-05-23T09:39:40-04:00May 23rd, 2022|6- Client Memo|

The Moral Obligation of Stablecoin Issuers

At the height of what proved his fleeting power, the founder of a now-evaporated stablecoin said, “I never debate the poor.”  And, perhaps he doesn’t have to – his was not among tall the fiat-currency wallets emptied in the course of this high-flying venture.  Those were mostly in the virtual pockets of young and often minority households.  Regardless, this statement is stark evidence of the difference between the social-welfare obligations demanded of banks and the get-it-while-you-can ethos embodied by this entrepreneur, Elon Musk, and all their acolytes.  We demand much of banks because they take other people’s money.  The same obligations should bind stablecoins because they also take other people’s money and thus need to be governed not just for safety and soundness, but also for equality and equity.

M052322.pdf

Go to Top