Press Clips

Trump adviser Stephen Miran mired in Fed’s personnel purgatory

By Eleanor Mueller

Stephen Miran was supposed to step down from the Federal Reserve at the end of this week. That’s not going to happen. As Trump nears a decision on a central bank nominee who’d arrive as his chosen successor to Fed Chair Jerome Powell, whomever he picks still has no path to confirmation. Retiring Sen. Thom Tillis, R-N.C., pledged earlier this month to prevent the Senate Banking Committee from advancing any of Trump’s nominees until the Justice Department scraps its criminal investigation into Powell. But the administration has instead signaled that the Powell probe should “take its course,” as Treasury Secretary Scott Bessent put it earlier this month. The stalemate leaves Miran marooned at the central bank, since the law allows Fed governors to stay on as long as it takes for a successor to be “appointed and qualified.”…“We’ll see more of the same [from Miran], which is: calls for much deeper rate cuts than the rest of the FOMC is willing to give,” Karen Petrou, managing partner of Federal Financial Analytics, told Semafor. “A lot of advocating and influencing closed-door procedures — but so far very little on actual decisions.”…The administration may be purposefully hanging back so it can “package” the nominee’s confirmations as both governor and chair, Petrou said. Three of Trump’s four reported Fed finalists — former central bank Governor Kevin Warsh, National Economic Council Director Kevin Hassett, and BlackRock executive Rick Rieder — …

What Trumpian Chaos Is Doing to the Dollar

One potential long-term casualty of continued political instability sown by the administration: America’s centrality to the international monetary system.

By Grace Seger

Natural gas futures charts on the floor of the New York Stock Exchange on January 20. Stocks, bonds and the dollar fell after President Donald Trump threatened tariffs on various European countries before high-level meetings in Davos, Switzerland. For more than 80 years, the U.S. dollar has been central to the international financial system, in no small part because it is the primary global reserve currency. But as in politics, narratives are incredibly important in understanding stock market moves….“What it typically takes to be a reserve currency is a deep and liquid market—which the U.S. has unquestionably—clear rule of law, and policy predictability. And the latter two are a lot less clear these days,” said Karen Petrou, co-founder and managing partner at Federal Financial Analytics….“If Trump not only says something, but then does it, you could see significant market turmoil—shock, panic—but so far, adverse market reaction seems to slow him down,” said Petrou. This is sometimes referred to as the “TACO” effect: “Trump Always Chickens Out.”…By comparison, only around 20 percent of global foreign exchange reserves are held in the Euro, and the Chinese renminbi accounts for roughly 2 percent. Investing in the Chinese renminbi is more of a risk than in the dollar, said Petrou, because it has neither the requirements of clear rule of …

Ford and GM get FDIC approval to open their own banks

By Justin Ho

The Federal Deposit Insurance Corporation recently announced that it accepted applications to set up deposit insurance for new banks created by automakers Ford and GM. Ford Credit Bank and GM Financial Bank are planning to start offering online savings accounts, along with auto loans. Banks that are owned and operated by corporations — also known as industrial banks — aren’t all that common in the U.S. There are currently about a couple dozen of them, according to the FDIC. Industrial banks operate basically the same way as traditional banks: “They take deposits and make loans,” said Karen Petrou, managing partner at Federal Financial Analytics. She said industrial banks are also eligible for FDIC insurance, which backs deposits up to $250,000. Petrou said when a bank can provide that safety, it doesn’t have to pay as much interest to its depositors. “And the lower you can drive your funding costs, the lower you can drive your lending costs, and the more competitive you get,” she said. Auto companies have plenty of reasons to offer competitive loans right now.

https://www.marketplace.org/story/2026/01/23/ford-and-gm-get-fdic-approval-to-open-their-own-banks

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Stop Obsessing About Risks and Let The Banks Compete

By Karen Petrou

Americans have been worrying about the risks of mixing banking and commerce since Aaron Burr shot Alexander Hamilton. Burr’s Manhattan Company at the time promised to build safe drinking-water pipes across Manhattan funded by deposits entrusted to its care. This early example of a bank that took commercial business risks didn’t produce a hit musical, but it did leave Americans with a grudge against mixing deposit-taking and business investments. Burr and his co-conspirators absconded with the money, and it took another 40 years for New Yorkers to gain wide access to potable water. The residual anger at Burr left many firmly committed to never allow another bank to undertake commercial activities. Worries still abound that deposit-holding institutions will take unhealthy risks if left unchecked. But the idea that banks ought not to conduct commerce is at best only a partial explanation of crises gone by. It’s also an even worse predictor of any to come….

https://www.barrons.com/articles/stop-obsessing-about-risks-and-let-the-banks-compete-027daec0?st=eMuSgk

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Five Crypto Firms Get Coveted US Bank-Charter Nod

By Emily Mason and Katanga Johnson

Five cryptocurrency firms received preliminary approval to perform certain banking functions from a US regulator on Friday, marking the latest step in the White House‘s embrace of what was once viewed as a risky, fringe industry. The Office of the Comptroller of the Currency offered conditional approval for national trust bank charters that Circle Internet Group Inc., Ripple, BitGo Inc., Fidelity’s digital assets arm and Paxos had requested, according to a press release….In addition to granting charters, US bank regulators including the Federal Reserve and Federal Deposit Insurance Corp. are looking for other ways to welcome avant-garde firms into the financial system. For instance, the Fed is weighing whether to grant financial-technology firms access to payments systems like FedWire through so-called “skinny” master accounts. These developments do not just signal legitimacy for newcomers, but also a competitive risk for established lenders, said Karen Shaw Petrou, a longtime policy analyst and managing partner of Federal Financial Analytics. “The OCC is making it more than clear that the new light-touch regulatory construct is not all upside for traditional banks,” she said. “The OCC and FDIC, and perhaps even the Fed, will look far more kindly on nontraditional companies outside many rules that are allowed to offer services that compete directly with what I think must now be called legacy banks.”

https://www.bloomberg.com/news/articles/2025-12-12/occ-greenlights-five-charters-for-firms-including-circle-ripple…

Inside the 2025 Bank Reg U-Turn

Karen Petrou is again featured on IntraFi’s podcast, Banking with Interest, hosted by Rob Blackwell.  It’s a wide, wide-ranging discussion of issues from deposit-insurance reform to sharp reductions in the Fed’s portfolio, whether stablecoins really have a use case, and what’s next from the federal banking agencies.

Listen here.…

The Fed’s New “Gain-of-Function” Monetary Policy

By Scott Bessent

Overuse of nonstandard policies, mission creep, and institutional bloat are threatening the central bank’s monetary independence….In her book Engine of Inequality: The Fed and the Future of Wealth in America (2021), progressive financial policy expert Karen Petrou documents how the Fed’s pursuit of a “wealth effect” to stimulate the economy backfired. “Unprecedented inequality,” wrote Petrou, “is clear proof that the wealth effect is all too effective for the wealthy, but an accelerant to economic hardship for everyone else.” Economists’ focus on the supposed benefits of the wealth effect is particularly odd given that the Fed’s asset purchases act more powerfully on the discount rate at which assets are valued than the stream of cash flows that underpins the asset’s price. Asset owners are less likely to bring forward consumption as a result of changes in the discount rate than income growth, and to the extent that they do increase consumption, the effects may reverse once discount rates are normalized. In Petrou’s view, the exacerbation of income and wealth inequality is a function of the distribution of assets in the United States—which the Fed should take as a given. Only the very wealthiest individuals own financial assets that are most directly impacted by the Fed’s large-scale asset purchases. Moving down the spectrum, a substantial portion of the middle of the income distribution has exposure to home equity, but this asset is less sensitive to the Fed’s financial market machinations. The …

The Fed’s ‘Gain of Function’ Monetary Policy

By Scott Bessent

As we saw during the Covid pandemic, lab-created experiments can wreak havoc when they escape their confines. Once released, they can’t easily be put back. The “extraordinary” monetary-policy tools unleashed after the 2008 financial crisis have similarly transformed the Federal Reserve’s policy regime, with unpredictable consequences. The Fed’s new operating model is effectively a gain-of-function monetary policy experiment. Overuse of nonstandard policies, mission creep and institutional bloat threaten the central bank’s independence. The Fed must change course. Its standard tool kit has become too complex to manage, with uncertain theoretical underpinnings. Simple and measurable tools, aimed at a narrow mandate, are the clearest way to deliver better outcomes and safeguard central-bank independence over time….By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen. Its pursuit of a wealth effect to stimulate growth backfired. “Unprecedented inequality is clear proof that the wealth effect is all too effective for the wealthy, but an accelerant to economic hardship for everyone else,” financial analyst Karen Petrou wrote in her book “Engine of Inequality” (2021). The Fed’s growing footprint has profound implications for independence. By extending its remit into areas traditionally reserved for fiscal authorities, the Fed has blurred the lines between monetary and fiscal policy.

https://www.wsj.com/opinion/the-feds-gain-of-function-monetary-policy-ac0dc38a?mod=commentary_article_pos1…

Trump wants to shake up the Fed. Stephen Miran has a playbook

By Sam Sutton

White House economic adviser Stephen Miran is one of Donald Trump’s chief strategists for scaling back the Federal Reserve’s autonomy. The president is giving him a shot at disrupting the central bank from the inside. The Harvard-trained economist, tapped by Trump for a Fed board seat, has proposed measures that would allow the president to fire Fed governors at will. He wants to end the inflation targeting that anchors expectations for prices and has slammed the “wildly inappropriate” purchases of Treasury debt during economic expansions….“Miran would have little difficulty reflecting the president’s views,” said Karen Petrou, the managing partner of Federal Financial Analytics. The proposals he has crafted would create “a far more political central bank.” Critics of Trump’s moves are concerned that a more political Fed would make interest rate decisions based on near-term considerations to aid the economy rather than in the long-term interest of price stability….“There’s a lot that needs to be shaken up,” Petrou said. In that regard, “Miran is certainly the guy to do it.”

https://www.politico.com/news/2025/08/29/trump-fed-shake-up-stephen-miran-00534615

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Trump, Pulte weaponizing housing finance for political ends, experts say

By Andrea Riquire