Press Center

The Potential “Perverse” Consequences for Banks of New M&A Policies

Host Rob Blackwell

Karen Shaw Petrou, managing partner of Federal Financial Analytics, details how new guidelines by federal regulators to curb M&A could inadvertently increase the market power of the biggest banks and Big Tech.

https://bankingwithinterest.libsyn.com/the-potential-perverse-consequences-for-banks-of-new-ma-policies…

Will regulators hit the gas or brakes on remaining post-Basel reforms?

By Kyle Campbell

For more than a year, a once ambitious bank regulatory reform agenda has largely been on hold as agencies deal with the fallout from last summer’s much maligned joint capital proposal. Now that the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency are in apparent agreement on a path forward for the so-called Basel III endgame, regulators are poised to work through their backlog of joint initiatives, including expanded long-term debt requirements and new liquidity standards….The Fed, the FDIC and the OCC have been eyeing a long-term debt expansion since 2022, when they issued what is known as an advanced notice of proposed rulemaking — a precursor to a formal rulemaking process — before issuing an official proposal last September. But finalizing that rule while risk-based capital changes are still pending could have significant unintended consequences, said Karen Petrou, managing partner of Federal Financial Analytics. The proposal would set long-term debt requirements at each impacted bank at the greater of 6% of total risk-weighted assets, 3.5% of average total consolidated assets or 2.5% of total leverage exposure if the bank is subject to the supplementary leverage ratio. Because the Basel III endgame proposal would realign the risk-weighting calculus, Petrou said neither banks nor regulators can know the impact of the long-term debt requirement until the capital rules are established. “The long-term debt rule can make no …

Political bluster threatens the Fed’s ‘vibes-based’ independence

By   Kyle Campbell 

Once taken as a given, the Federal Reserve’s independence is facing existential questions in the current political environment. Former president and Republican presidential nominee Donald Trump said in an interview last week that if elected he would “bring interest rates way down” while also combating inflation, which he said was “destroying our country.”…Others see the agreement as a capitulation by the Treasury to secure short-term participation by the Fed in its war financing efforts. Karen Petrou, founder of Federal Financial Analytics and highly regarded expert on financial policy, said the accord amounted to an acknowledgment by the Treasury that it never had the ability to force the Fed’s hand. “It was essentially Appomattox for the Treasury Department,” Petrou said, referring to the Confederate surrender in the Civil War. “They had to sign it.”

https://www.americanbanker.com/news/political-bluster-threatens-the-feds-vibes-based-independence

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‘They need to kick the tires’: Karen Petrou on bank-fintech alliances

By Penny Crosman

The bankruptcy of bank-fintech partnership middleware provider Synapse and the many consent orders banks have received from regulators regarding their fintech relationships have formed a dark cloud over banking as a service. The way forward should include much more due diligence on banks’ part, according to Karen Petrou, co-founder and managing partner of Federal Financial Analytics, a Washington, D.C. firm that provides analytical and advisory services on legislative, regulatory and public-policy issues affecting financial services companies.  “I think they really need to kick the tires and not just look at the fee revenue, but at the resilience of their counterparty in these deals,” Petrou said. “Clearly one of the issues with Synapse is at least a hundred million dollars of customer money is missing, and while [compared to] the scale of trillion dollar financial crises, that might not seem like a lot, it’s a lot to the individual households,” she said in a recent American Banker podcast….

https://www.americanbanker.com/news/they-need-to-kick-the-tires-karen-petrou-on-bank-fintech-alliances

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 Some banks are making a Faustian bargain with fintechs: Karen Petrou
By Penny Crosman

Welcome to the American Banker Podcast. I’m Penny Crosman. The disputes between banking-as-a-service middleware provider Synapse and its banking partners have cast doubt on the whole practice of banking as a service, where fintechs build relationships with customers directly and bank partners keep the money in their vaults. Today we’re here with Karen Petrou, managing partner at Federal Financial Analytics, to get her take on this whole situation and what the way forward might look like. Welcome, Karen.

https://www.americanbanker.com/podcast/some-banks-are-making-a-faustian-bargain-with-fintechs-karen-petrou…

Unpacking the June jobs report

https://www.marketplace.org/shows/marketplace-morning-report/more-signs-of-a-cooling-labor-market/#Unpacking-the-June-jobs-report…