Press Clips

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).

17 03, 2024

Barron’s, Sunday, March 17, 2024

2024-03-18T10:00:45-04:00March 17th, 2024|Press Clips|

The U.S. Economy Is Booming, But Only for a Few

“Our economy is literally the envy of the world,” President Biden declared in his recent State of the Union address. There’s some truth to this exceptionalism talk. However, the U.S. economy seems to be doing better than other advanced economies thanks also to data badly distorted by U.S. economic inequality. Here, we’re also exceptional, just in the bad way of being less equal than all other advanced democracies. Big-picture numbers show the U.S. economy beating much of the rest of the world. Gross domestic product grew 2.5% in 2023, compared to 1.9% in Japan, 0.5% in the U.K., and negative 0.3%—a mild recession—in Germany. Unemployment numbers are similar. What these apparently favorable comparisons miss, however, is how spending and investing by the few Americans who own so much of American wealth and receive so much of its income drive an economy that leaves almost everyone else farther and farther behind. Unequal economies are also unduly vulnerable to recessions and financial crises. The seeming strength of the U.S. economy is a brittle platform for growth or, as the White House hopes, political support….

https://www.barrons.com/articles/economy-inequality-bidenomics-ef5ef7ed

13 03, 2024

American Banker, Wednesday, March 13, 2024

2024-03-14T09:44:17-04:00March 13th, 2024|Press Clips|

Banks knock FDIC over growing tab for last year’s failures

By Polo Rocha

One year after Silicon Valley Bank and Signature Bank failed in the span of three days, big banks are miffed about their growing tab from last March’s wild weekend. The gripes stem from decisions made between March 10-12, 2023, when the Federal Deposit Insurance Corp. stopped deposit runs by taking over the two banks and declaring a systemic risk exception to ensure that the vast quantities of uninsured deposits at those failed banks were covered….Karen Petrou, the co-founder of the consulting firm Federal Financial Analytics, said the $4 billion difference is a “very significant mistake” that calls into question the FDIC’s credibility in gauging the costliness of bank resolutions. “When an agency gets something this wrong, it’s not unreasonable for those picking up the tab to ask,” Petrou said. The agency has been gradually getting rid of certain assets that First Citizens Bank and New York Community Bancorp did not acquire when they bought many of the remnants of the two failed banks. First Citizens bought much of SVB, and New York Community acquired parts of Signature…

https://www.americanbanker.com/news/banks-knock-fdic-over-growing-tab-for-last-years-failures

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6 03, 2024

Marketplace, Wednesday, March 6, 2024

2024-03-06T15:15:40-05:00March 6th, 2024|Press Clips|

How November’s election could shape antitrust policy

It’s the morning after Super Tuesday primaries, and for people making money decisions large and small, the election results are not a paradigm shift. We’ll discuss why with Karen Petrou, managing partner at Federal Financial Analytics.

https://www.marketplace.org/shows/marketplace-morning-report/this-elections-big-trust-issue-maybe-not-the-one-youre-thinking-of/

8 02, 2024

Politico Morning Money, Thursday, February 8, 2024

2024-02-08T12:31:26-05:00February 8th, 2024|Press Clips|

The latest on NYCB

By Zachary Warmbrodt

…. MM has a first look at the political and policy impacts to watch from Federal Financial Analytics. A few highlights:

  • The bank reported deposit inflows but what they are and how long they last is uncertain. A big factor: The government will likely be hard-pressed to do anything resembling a bailout or a systemic designation.
  • Details about NYCB’s reliance on Federal Home Loan Banks will be key. The FHFA – the agency overseeing the FHLBs — is taking a sterner view of troubled bank advances than it once did.
  • GOP lawmakers may focus on the FDIC’s decision to sell Signature Bank’s assets to NYCB, given it had yet to integrate Flagstar Bank and already had significant concentrations in New York-area commercial real estate. It could feed into Republicans’ push to force out FDIC Chair Martin Gruenberg.

https://www.politico.com/newsletters/morning-money

31 01, 2024

Barron’s, Wednesday, January 31, 2024

2024-02-01T15:30:06-05:00January 31st, 2024|Press Clips|

There’s a Silver Lining for the Middle Class in High Interest Rates

By Matt Peterson

Americans are starting to feel better about the economy, but it might be a while before they release their anger at the Federal Reserve and Chairman Jay Powell. His approval rating has fallen even farther than President Joe Biden’s, according to Gallup. The Fed is seen as presiding over a period of inflationary agony. Its interest-rate increases were intended to slow price gains across the economy, but in the process they’ve made important aspects of American life more expensive. Sen. Elizabeth Warren (D., Mass.) and other Democrats urged Powell to cut rates this week, citing the high cost of mortgages, among other issues…. Banking analyst Karen Petrou’s 2021 book, Engine of Inequality: The Fed and the Future of Wealth in America, described the Fed in unflattering terms. The prolonged period of low rates helped boost stock prices but left the return on bank accounts’ savings at zero or below in real terms. The Fed didn’t want that result, and Powell has denied that the Fed is responsible for inequality. But Petrou argued that its monetary policy left the middle class “hollowed out.” Now that we’re on the other side of high rates, I asked Petrou for an update on her analysis. Banks are all but tripping over each other trying to recruit savers into high-yield accounts that offer risk-free returns above 5%. If part of the problem with low rates was …

30 01, 2024

Politico, Morning Money, Tuesday, January 30, 2024

2024-01-30T12:37:26-05:00January 30th, 2024|Press Clips|

By Zachary Warmbrodt

Karen Petrou, managing partner of Federal Financial Analytics, said the new policy will provide at least some certainty for national banks but that almost no deals of size will get done without the Federal Reserve and the Justice Department. The Fed and DOJ have been promising a new bank merger review policy but “it’s still nowhere to be seen.”

https://www.politico.com/newsletters/morning-money/2024/01/30/a-bank-merger-mirage-00138491

17 01, 2024

Politico Morning Money, Wednesday, January 17, 2024

2024-01-17T15:19:43-05:00January 17th, 2024|Press Clips|

The industry says the proposal is total overkill and needs to be both recalibrated and reduced. They, and Waller, also say that operational losses aren’t usually correlated with, say, credit risk events, so there’s not really a need to have another capital buffer for it.

“The charge for operational risk is extraordinary,” Bank Policy Institute CEO Greg Baer told reporters Tuesday. “It’s almost double the worst year of operational losses in history … and it assumes counterfactually and counterintuitively that op risk losses are perfectly correlated with market risk and credit risk losses, and therefore that you need to cover the worst case of all three simultaneously and capitalize for it.”

Karen Petrou, managing partner of Federal Financial Analytics, argues that banks’ money is better spent in other ways.

“What matters in terms of op risk in a cyber attack or a natural diaster, it’s not how much capital you have,” she told MM. “It’s whether or not you have redundant systems, backups, and appropriate controls. The amount of money you have stashed away in this punitive capital account will come in handy down the road for building new systems or paying litigation fines or handling angry customers. But the money would’ve been far better spent building resilient systems.”

Regulators’ response to these kinds of complaints about Basel is always the same: We’re listening.

https://www.politico.com/newsletters/morning-money

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12 01, 2024

Financial Times, Friday, January 12, 2024

2024-01-12T09:25:29-05:00January 12th, 2024|Press Clips|

The Fed decision markets need to pay more attention to

Central bank set to make a decision on whether to extend its latest emergency liquidity facility

By Karen Petrou

The writer is managing partner of Federal Financial Analytics

One big market event for early 2024 will come when the US Federal Reserve makes a decision on whether to close its latest emergency liquidity facility on March 11 as a senior Fed official recently signalled it was likely to do so. Called the Bank Term Funding Program, the facility’s name conveys the usual blandness with which the Fed likes to brand the trillions it throws into the financial system. But the BTFP is anything but dull. Without it, all but the biggest US banks could find it even tougher to raise profitability this year; with it, they’ll find it still harder to lend into what the Fed, President Joe Biden, and pretty much everyone else hope will be a robust recovery. The BTFP is just the latest of the many rescue facilities the Fed brought forth after recent crises, marshalling the new programme as Silicon Valley Bank and Signature bank failed and dozens of other regional banks experienced sudden deposit outflows for which many were woefully unprepared….

https://www.ft.com/content/7d33ea30-26a6-42dc-a135-449ef9bf8c72

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9 01, 2024

Marketplace Morning Report, Tuesday, January 9, 2024

2024-01-09T12:02:35-05:00January 9th, 2024|Press Clips|

“More people are carrying more debt for longer”
We’ll parse through some of the latest data on consumer debt and hear who’s getting hit the hardest.

Investors are looking ahead to Thursday, when we’ll get the December consumer price index. We’ll discuss what we could expect with Karen Petrou, co-founder and managing partner at Federal Financial Analytics.

https://www.marketplace.org/shows/marketplace-morning-report/more-people-are-carrying-more-debt-for-longer/

20 12, 2023

American Banker, Wednesday, December 20, 2023

2023-12-20T11:30:07-05:00December 20th, 2023|Press Clips|

Fed’s rosier outlook could mean end of emergency lending facility

Recent forecasts from the Federal Reserve projecting greater stability in 2024 could spell the end for an increasingly popular funding facility at the central bank…Karen Petrou, managing partner at Federal Financial Analytics, said removing the facility could have consequences…”As with all its emergency fixes, the Fed is in a mighty pickle if it closes the BTFP,” Petrou said. “Banks continue to sit on large unrealized losses and love this security blanket.”  Petrou noted that the program provides cheaper funding than the Fed’s official last resort lending facility, the discount window, as well as other funding sources, such as the Federal Home Loan Banks and the private repurchase agreement market. As commercial deposits continue to trend down — having fallen by $900 billion since their peak in April 2022 — Petrou said banks want as many alternative funding options as possible. But, she noted, this preference alone is not enough to justify reauthorizing the BTFP.  “The window was meant to address an emergency and the Fed can’t rationalize this subsidy and the risk it takes if there’s no emergency,” Petrou said.  “As with [quantitative easing], it’s a lot easier for the Fed to throw billions to banks than get them back.”

https://www.americanbanker.com/news/feds-rosier-outlook-could-mean-end-of-emergency-lending-facility

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