Press releases and other resources for media.
Federal Financial Analytics’ managing partner Karen Petrou talks about how the Federal Reserve tackles price instability and income inequality with Bloomberg’s Caroline Hyde. (21min in)
Interview with Federal Financial Analytics‘ managing partner Karen Petrou on Biden’s Fed picks (12min in)
Bank of America to Cut Overdraft Fees to $10 From $35
By Orla McCaffrey and Will Feuer
Bank of America Corp. said Tuesday it would cut overdraft fees to $10 from $35 beginning in May, following other big banks that have rolled back or ditched such charges. Overdraft fees, which are charged when customers don’t have enough cash in their accounts to cover their purchases, are under scrutiny by regulators and politicians who say they unfairly exploit cash-strapped families. Under the Biden administration, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency have pressed banks to scale them back. In a December report, the CFPB flagged Bank of America, JPMorgan Chase & Co. and Wells Fargo & Co. on their overdraft fees….“It’s an astute political risk-management strategy,” said Karen Petrou, head of Federal Financial Analytics, a regulatory advisory firm. “It does pay to get out ahead of the reaper, and it does seem certain that the CFPB will turn to regulating overdraft fees.”
Biden’s likely Fed pick could change tone on climate risk, capital rules
By Joe Adler and Jon Prior
The Biden administration appears close to naming a Treasury Department veteran and leading voice on fighting climate-related financial risk to the top bank-regulatory job at the Federal Reserve Board. Sarah Bloom Raskin — who was the No. 2 at Treasury and a Fed governor in the Obama administration — has emerged as the top candidate for vice chair of supervision at the central bank and could be nominated as early as this week, according to several news outlets. …Other key areas for a vice chair of supervision to address are how to regulate cryptocurrency and the future of a key capital measure known as the Supplementary Leverage Ratio. “I do not think she will try to reverse everything Quarles did because that is a formidable undertaking of lengthy proposals that will limit the ability to do anything new,” said Karen Petrou, managing partner at Federal Financial Analytics.“She’ll likely take on climate, crypto, maybe reopening the Volcker Rule and covered funds, certain aspects of [foreign bank] regulations. She will also play a major role in the Fed’s issues in pending Treasury-market reform, like what to do about the SLR.”
4 questions about FDIC’s leadership limbo
By Brendan Pedersen and Joe Adler
WASHINGTON — Even against the backdrop of a power struggle that raised questions about who controlled the Federal Deposit Insurance Corp.’s agenda, the resignation of FDIC Chair Jelena McWilliams with only hours left in 2021 came as a shock to many in the capital. McWilliams had said repeatedly that she planned to serve out the remainder of her five-year term ending in June 2023 regardless of whether a Democrat or Republican was president….But others say partisanship at the agency was eased by McWilliams’ choice to resign rather than challenge the authority of her Democratic directors in court. “We don’t have closure on that question, but I don’t know that it matters anymore,” said Karen Petrou, managing partner of Federal Financial Analytics. “These are matters solely within the FDIC’s purview — not to the White House.”
Get ready for 2022’s Fed
By Courtenay Brown
Get ready for new faces who could leave a mark on the economic recovery. Where it stands: There are three open slots on the seven-seat Federal Reserve Board of Governors, plus openings for permanent heads at two regional Fed banks — all of which may be filled this year. Why it matters: Fresh voices are coming at a delicate moment. The Fed is moving to choke off soaring inflation, teeing up this year for a pivot away from its ultra-easy money policies…..One important vacancy is the Fed’s vice chair for supervision, its most influential bank cop.Former Fed governor Sarah Bloom Raskin, who in recent years has called on financial regulators to do more to address climate change, is the leading candidate for that post, Axios’ Hans Nichols reported last night.”Regulatory policy is where I think you’re going to see a really sharp shift,” says Karen Petrou, co-founder of Federal Financial Analytics, a banking consulting firm.The big picture: Fed watchers say new additions to the board may introduce a sea change for issues the central bank has started to be more outspoken about. Climate change is one, and a more inclusive definition of full employment — that factors in indicators like the Black unemployment rate — is another. “I think you’ll see more discussion of inclusive monetary policy, but whether we see actual inclusive monetary policy is much harder to predict,” says Petrou.
Research in the early “translational” stage, when basic findings are applied to potential treatments, has long been notoriously difficult to finance. The pandemic has made matters worse. But relief may be on the way. While a bill to create government-backed bonds to finance private research — known as BioBonds — did not advance in the House of Representatives, the financial analyst behind the idea, Karen Petrou, is in talks with the White House, which is creating a new agency to speed up research and cures. Called ARPA-H and modeled after the Defense Advanced Research Projects Agency, the proposal has broad bipartisan support, according to a recent Morning Consult poll. So do BioBonds, Petrou said, adding that she hopes Congress will pass the measures early next year. (The White House did not respond to a request for comment).
How to Make the ‘S’ in ESG More Relevant
By Karen Petrou
Environment, social and governance investing is all the rage, but most all investment goes into the “E” and, to a lesser extent, the “G” and not the “S.” We neglect social-welfare investment at grave risk and for no good reason. But there is a way to quickly change this by making ESG meaningful for an urgent social good: speeding treatment and even cure for diseases and disability. Even before the pandemic, biomedical research was advancing too slowly and often without regard to critical, unmet needs. Covid-19 has seriously delayed promising research across the spectrum of disease and disability. In just one case, a major study finds that the pandemic threatens “the viability of cancer research as a whole.” New financial instruments backed, at least at first, by a federal guarantee can reverse this disastrous trend.
Four questions for Jerome Powell on equality and accountability
By Karen Petrou
In July, Rep. Ritchie Torres (D-N.Y.) asked Fed Chair Jerome Powell about the inequality that I and many others attribute in part to post-2010 Fed policy. In November, Sen. Jon Ossoff (D-Ga.) asked virtually the same questions and got the same “not us” answer. This response is surely comforting to the central bank, but it should be unacceptable to the Senate as it considers Powell’s confirmation. It will be easy for senators to spend all their time quizzing Powell on why inflation isn’t actually “transitory,” why employment isn’t “maximum,” and if markets pumped so high atop the Fed’s safety net will do yet another black-swan dive. However, the cost of economic inequality measured by political polarization, lost hope and even lost lives is far too high to ignore. To the extent that the Fed has increased inequality — and it has — it should quickly change policy or be required to do so.