Press Center

Examiner discretion takes center stage in CAMELS debate

By   Kyle Campbell
As freshly appointed agency heads aim to refocus their approaches to supervision, an emerging question is how much discretion will be left for bank examiners — if any at all. Regulators and lawmakers have already sought to remove one key discretionary tool by barring the consideration of reputational risks. But some policy specialists want them to go further…Karen Petrou, managing partner of Federal Financial Analytics, said there are ways to put quantitative measures around seemingly qualitative factors. She noted that governance could be examined by establishing benchmarks for things such as executive compensation and board composition against which individual banks can be measured. Petrou said management examination is critical, noting that it is often an early indicator of future issues — but only when done correctly.”I would like it refined, and if the agencies think they cannot refine it, then I want it out,” she said. “It needs to be a largely quantitative, transparent and accountable measure of managerial controls.”

https://www.americanbanker.com/news/examiner-discretion-takes-center-stage-in-camels-debate

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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…

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…

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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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 …

How Treasury’s Bessent Is Upending Bank Regulation

Host Rob Blackwell

Not that long ago, the Treasury secretary mostly took a back seat to the banking agencies in crafting policy, stepping in only during times of crisis. Not anymore. Karen Shaw Petrou, managing partner of Federal Financial Analytics, discusses Treasury Secretary Scott Bessent’s expansive view of his own role, why he’s taking charge, and what it means for banks.

ow.ly/pt0550VjRAs…

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

Big banks are raking in cash

By Caleigh Wells

The end of 2024 was a great time for big banks. Goldman Sachs, Citigroup, BlackRock — a bunch of financial institutions posted their calendar fourth-quarter earnings Wednesday. And a lot of them exceeded investors’ already rosy expectations. JPMorgan Chase and Wells Fargo, for example, both saw their net income soar 50%. Several factors came together in the quarter that spelled good news. “There was a lot of market volatility, and banks traditionally do very well when markets are volatile,” said Karen Petrou, managing partner at Federal Financial Analytics. Petrou said volatile markets make people trade, seek advice and look for other services. Much of that volatility was based on election uncertainty. But Petrou doesn’t expect that to end. “Some of what the president-elect [Donald Trump] says may be just bluster, but bluster from the Oval Office really moves markets, and I think you will see a good deal of volatility,” Petrou said.

https://www.marketplace.org/2025/01/15/big-banks-fourth-quarter-earnings/…

Barr’s self-demotion changes little for regulatory outlook

By Kyle Campbell

Michael Barr has elected to end his term as Federal Reserve’s top regulator a year and a half ahead of schedule, taking the threat of a costly and potentially damaging legal fight with the incoming Trump administration off the table for himself and the central bank…Karen Petrou, managing partner of Federal Financial Analytics, said whether Fed Chair Jerome Powell allows Barr to helm the committee after he vacates the vice chair position on Feb. 28 will dictate the degree and speed of policy change at the Fed, particularly as it relates to supervision. “If there is a new chair of the Fed committee on [supervision and regulation], things could change more quickly at the Fed,” Petrou said. “If not, then not.” …Regardless of what happens with the Fed’s vice chair for supervision, Petrou said changes to bank policy were always inevitable under Trump. Just how drastic those reforms end up being will be determined by the people the White House chooses to lead the FDIC and OCC. “Interagency bank policy depends very much on who the next acting or confirmed comptroller is and the lineup at the FDIC,” she said. “Without knowing that, I cannot forecast interagency policy, because there is significant potential under the Trump administration that the normally institutional, relatively non-partisan nature of bank regulation will not continue over the next four years.”

https://www.americanbanker.com/news/barrs-self-demotion-changes-little-for-regulatory-outlook…

Where the Fed’s Michael Barr goes from here

By Kyle Campbell

Michael Barr has a lot to do and little time to do it. His term as vice chair for supervision at the Federal Reserve ends in 19 months. Before then, he hopes to change liquidity standards, require more banks to issue long-term debt and rewrite the capital framework for the nation’s largest banks…The proposal stems from an agreement struck by the Basel Committee on Banking Supervision in 2017, which was itself a product of the group’s post-global financial crisis policy response. Implementing the Basel endgame has been a thorny issue for regulators around the world. The U.K. and the European Union also have not fully adopted the standards into their bank oversight regimes.But Karen Petrou, managing partner of  Financial Federal Analytics and a leading expert in regulatory policy, said the U.S. proposal put forth last year was simply too flawed to be codified. “The fundamental reason why the endgame capital rules and other priorities never advanced is that they were a combination of intensely technocratic detail combined with overarching, often inexplicable purposes, such as simply significantly raising capital requirements,” Petrou said. “Proposals like that, with so many technical flaws and inconsistencies combined with controversial objectives, almost always fail. It is a very poor approach to federal rulemaking.”

https://www.americanbanker.com/news/where-the-feds-michael-barr-goes-from-here…