For copies of press clips listed below, please contact Federal Financial Analytics at info@fedfin.com. Please include the date and title of the requested item(s).
Why the U.S. dollar is under threat as the world’s reserve currency
Host David Brancaccio talks with Federal Financial Analytics’ managing partner, Karen Petrou about US Dollar and Reserve Currency
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The trouble with Fannie and Freddie
By Sam Sutton
President Donald Trump wants to sell shares in Fannie Mae and Freddie Mac. And if you believe his Truth Social account, he wants to get a deal done before the end of the year. The structure of a Trump-led initial public offering of the housing-finance giants would be enormously consequential to a $9 trillion market for mortgage-backed securities that helps limit costs for American home buyers. And while an IPO could represent a major step toward ending Fannie and Freddie’s 17-year-old federal conservatorship, pulling it off will force the White House to figure out how to make the companies attractive assets for Wall Street without jeopardizing arrangements that are critical to the mortgage market. “It’s a tricky, tricky balancing act,” said Karen Petrou, the managing partner of Federal Financial Analytics. The administration’s plans for the offering are still hazy, but The WSJ’s initial reporting suggests it would value the two mortgage giants at about $500 billion and involve selling 5 percent to 15 percent of their stock. But if Trump is able to make that happen, it could open the door to future offerings that would simultaneously unwind the government’s ownership stake in the GSEs — which may help deficits — and boost the GSEs’ capital. But whether that results in changes to the MBS market is anyone’s guess. “They’ve got a ways to go,” Petrou said. “But the more stock they sell, the more capital they raise.”..
US Regulators to Play Key Role in Next Crypto, Bank Fight
By Yash Roy
A major battle between crypto firms and traditional lenders over interest and bank charter applications is poised to be decided by regulators appointed by President Donald Trump, who has been a vocal supporter of digital currencies. …“This is an industry that doesn’t think it needs to wait for rules, unlike the banking industry,” said Karen Shaw Petrou, a managing partner of Federal Financial Analytics, where she analyzes financial firms, including lenders. “Stablecoin issuers just go for it and that’s going to unsettle the banks more than probably anything.”..Recently, Circle announced a partnership with Binance for an off-exchange collateral where customers can park their money when they are not making a payment. The largest US crypto exchange, Coinbase, already offers a rewards program for certain consumers, which some in the banking industry argue could potentially be illegal under the no-interest provisions of the Genius Act. Coinbase disagrees, saying the program has been tailored to be in compliance with the law.“The statutory language is vague and has room for exception, but that’s when the fun starts,” Petrou said.
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How Long Can the Fed’s Independence Last?
By Joe Nocera
As the Federal Reserve board was meeting on Tuesday to make its latest decision about interest rates—amid President Donald Trump’s continuing agitation for them to be lowered—I got on the phone with several of Fed chairman Jerome Powell’s most cogent critics. Critics like Karen Petrou, the highly respected cofounder of the bank advisory firm Federal Financial Analytics, who has long argued that the policies of Powell and his predecessors, Janet Yellen and Ben Bernanke, dramatically increased income inequality. Critics like Mohamed El-Erian, the well-known economist, former CEO of bond investing giant Pimco, and now president of Queens’ College, Cambridge, who warned before just about anyone that Powell was sowing the seeds of inflation by keeping interest rates too low early in his tenure. Critics like Christopher Leonard, whose book The Lords of Easy Money makes the case that the huge bond-buying program begun by Bernanke to get the U.S. through the financial crisis—and inexplicably continued by Powell after the crisis was long over—was little more than a gift to Wall Street that did nothing for the rest of us. In other words, they each believe Powell, as Fed chairman, has made multiple mistakes that have cost the United States a great deal. “If he was the CEO of a company, his performance would have gotten him fired,” El-Erian told me. Yet when I asked each of Powell’s critics if Donald Trump should be able to fire him before …
The stablecoin bill is now law. What’s next for banks?
By Claire Williams
WASHINGTON — Now that President Donald Trump has signed the stablecoin bill into law, banks are gearing up to lobby regulators as they make rules that could either further threaten or protect banks’ traditional turf.
The stablecoin bill poses both an existential threat and opportunity for bankers, experts say….”The issues on which we’re more focused with our banking clients are really the rules that will be forthcoming about how the nonbank issuers can engage on stablecoin,” said Karen Petrou, co-founder of Federal Financial Analytics. “There certainly is the question of the extent to which a bank holding company or an insurance or subsidiary of an IDI could engage in stablecoins. But the bigger issue from most of our clients is what the marketplace is likely to look like and who’s coming at them.” The Fed is also responsible for a key piece. The stablecoin bill says that master account status for nonbank payment stablecoins maintains the status quo, not explicitly banning nonbanks from access. “Arguably, the Fed has the authority to open master accounts,” Petrou said. “Now, that’s what the stablecoin issuers believe. Banks say no, and the status quo says ‘back over to you, Fed — you decide.”
https://www.americanbanker.com/news/the-stablecoin-bill-is-now-law-whats-next-for-banks
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Who should the head of the Federal Reserve be accountable to? We’ll discuss that and more with Karen Petrou of Federal Financial Analytics.
https://www.marketplace.org/episode/2025/07/22/the-matter-of-central-bank-independence…
Why Banks Are on High Alert About Stablecoins
By Dylan Tokar and Gina Heeb
Stablecoins are poised to become a part of the mainstream financial system, and banks are on high alert about how the cryptocurrency could threaten their business. The House voted 308-122 Thursday to pass a bill that spells out some ground rules for stablecoins, which function as digital dollars in the wider crypto world. The Genius Act is now headed to President Trump, who has indicated he would sign it. A major issue for banks is whether stablecoin issuers will lure away customer deposits. A Treasury Department report in April estimated that stablecoins could lead to as much as $6.6 trillion in deposit outflows, depending in part on whether issuers could offer yields similar to bank accounts….Those concerns would be especially acute if nonbank stablecoin issuers were to get access to the Federal Reserve system, said Karen Petrou, managing partner of consulting firm Federal Financial Analytics, in a recent memo. The Genius Act doesn’t prohibit access to the Fed by nonbank stablecoin issuers, so it will remain up to Fed officials to determine who gets access. The Fed system gives banks access to extra cash in the event of market stress. The trade-off for banks are costly liquidity requirements, which don’t currently apply to stablecoin issuers. Nonbank stablecoin issuers could sap deposits from banks and simply invest them for their own benefit, rather than use them to help fund loans “that benefit banks, borrowers and …
By Sam Sutton
President Donald Trump swore that he wouldn’t attempt to fire Federal Reserve Chair Jerome Powell before his term expires next spring. A new White House investigation of cost overruns at the Fed’s headquarters has reignited speculation that he just might try. White House Budget Director Russ Vought’s probe into a yearslong, $2.5 billion renovation of the central bank’s Washington offices represents a serious escalation in the administration’s offensive against Powell. Trump and other top officials have blasted the Fed chair repeatedly over his refusal to cut interest rates. …. “They appear to be trying to build a strong case for mismanagement and the violation of certain federal rules,” said Karen Petrou, the managing partner of Federal Financial Analytics. “All of the accusations on monetary policy are irrelevant to this. It is a straightforward administrative action.” The Supreme Court has signaled that the president can’t summarily dismiss central bankers. But the White House’s investigation into Powell’s oversight of agency finances — rather than his monetary policy decisions…
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Making sense of the ‘crazy quilt’ of financial regulators
Caitlin Mullen Senior Reporter
As the U.S. bank regulatory system has grown throughout history, so have calls to simplify it. Bank of America CEO Brian Moynihan this year lamented “the spaghetti chart of overlap” among bank regulators and reiterated suggestions from big-bank executives that it’s time to “start with a fresh sheet of paper.” …It’s an issue that can pit large banks against small: Bigger banks tend to be annoyed by the plethora of regulators, but smaller banks like the choice, Hsu said. “It does feel like Hamilton versus Jefferson,” he said during a June Brookings event. “That tension’s always been there.” And the resources required to stay on top of such a large and complicated banking system demand a sizable apparatus. There’s a comfort factor, too: Consolidation attempts fail “because individual institutions want things the way they are,” said Karen Petrou, managing partner at Federal Financial Analytics. There are, to some degree, captive regulators “everybody’s quite comfortable with,” and arbitrage opportunities between national and state charters that banks don’t want to lose, she added….
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Wells shed its asset cap — but it isn’t clear why
By Kyle Campbell
In 2018, the Federal Reserve Board’s total growth restriction on Wells Fargo established a new tool for dealing with large banks with broken compliance cultures. Many in and around the banking space viewed the $1.95 trillion asset cap — imposed in response to Wells Fargo’s cross-selling and fake accounts scandals — as a high-water mark for regulatory enforcement, ….Some view the longevity of the penalty as an indictment of the Fed more than the bank. Karen Petrou, co-founder and managing partner of Federal Financial Analytics, said if Wells Fargo was consistently failing to get into compliance, its supervisors should have increased the penalty to force swifter action. On the other hand, she added, if the bank had satisfied the necessary criteria years ago, regulators should not have dragged their feet in removing the cap. “If the supervisors are not just following picky little details and the bank is truly delinquent, then they should move past one enforcement order and slam them with another,” Petrou said. “But seven years of limbo speaks to me of supervisory failure, not Wells Fargo recalcitrance.” Petrou said regulators are incentivized to keep enforcement actions in place longer than necessary to avoid being held accountable for scandals or bad actions that might arise from a bank after their release. It leaves banks in a state of perpetual limbo, she said, hinders their competitiveness. “We need to have a much more …