Press Center

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…

Trump taps Scott Bessent for treasury secretary

Host, Sabri Ben-Achour,  talks with FedFin managing partner, Karen Petrou, about the role of Treasury Secretary. (2:00min)

https://www.marketplace.org/shows/marketplace-morning-report/trump-taps-scott-bessent-for-treasury-secretary/

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The one institution that Trump can’t afford to break

Some of Trump’s closest advisers are angling for the president-elect to choose a candidate who will shake things up at Treasury.

By Sam Sutton
Donald Trump has chosen to move fast and break things with his early picks for top Cabinet posts. He is facing stiff resistance to that strategy when it comes to the Treasury Department. The president-elect has been hung up for days over who will get the nod for Treasury secretary, the most powerful economic post in his Cabinet. It had been a two-man race between billionaire Howard Lutnick, Trump’s transition team co-chair, and Scott Bessent, a hedge fund executive, until internal squabbling created openings for other candidates, including former Federal Reserve Gov. Kevin Warsh, Sen. Bill Hagerty (R-Tenn.), and Apollo Global Management CEO Marc Rowan….A mismanaged Treasury could “add more uncertainty to the Treasury bond market, which is already in a potentially fragile condition due to liquidity shortages, deficits and a number of other challenges,” Karen Petrou, managing partner of Federal Financial Analytics, said. Rising federal deficits have also fomented concerns about the dollar’s role as a reserve currency and the U.S. government’s ability to respond to any economic crisis in the future. Markets are more likely to respond favorably if they have faith that the person running the show has a firm grasp on how policy shifts affect the broader economy….

https://www.politico.com/news/2024/11/18/trump-treasury-disruption-00190250

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