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).

3 06, 2021

The American Prospect, Thursday, June 3, 2021

2021-06-03T17:01:04+00:00June 3rd, 2021|Press Clips|

The Fed Becomes the Nation’s Only Bank Regulator
By David Dayen
When the acting head of the Office of the Comptroller of the Currency (OCC) Blake Paulson sent a letter to Senate leaders in April defending the agency’s practice of allowing federally chartered banks to effectively launder consumer loans at any interest rate, enabling evasion of state interest-rate caps, it was seen as a last straw….Certainly, in the run-up to the housing bubble, the Fed was not seen as tough on banks, after longtime chair and Ayn Rand acolyte Alan Greenspan downgraded regulation and supervision in favor of allowing market discipline to govern. Greenspan and his successor Ben Bernanke insisted that the damage from subprime mortgages would not spread to the overall banking system, a serious error. The central bank “missed a great deal of the problems that led up to the 2008 crisis,” said Karen Petrou, co-founder and Managing Partner of Federal Financial Analytics, a banking consultant, and author of Engine of Inequality, a book about the Fed. After the crash, policymakers noted the Fed’s dual mission of protecting the safety and soundness of the banking system and of protecting consumers. These were seen so much at odds that the Consumer Financial Protection Bureau was created to take the consumer protection function out of the Fed, which regarded it as a lesser imperative anyway.

https://prospect.org/economy/the-fed-becomes-the-nation-only-bank-regulator/

21 05, 2021

Bloomberg Law, Friday, May 21, 2021

2021-05-21T19:06:28+00:00May 21st, 2021|Press Clips|

House ‘BioBond’ Bill Aims to Get Medical Research Back on Track
By Jeannie Baumann
Biomedical companies and universities could jump-start clinical trials disrupted by the pandemic under a bipartisan House proposal to establish a new federally backed loan program.
Reps. Bobby L. Rush (D-Ill.) and Brian Fitzpatrick (R-Pa.) will introduce legislation Friday that aims to boost “innovative biomedical research into therapies to address unmet medical needs,” according to a copy of the bill obtained by Bloomberg Law. They modeled their proposal for “BioBonds” after green bonds, which are fixed-term loans to finance projects that will benefit the environment….Karen Petrou had been working since 2013 with her late husband, Basil Petrou, on creating a loan guarantee program for medical research that would appeal to both the clinical trial and finance industries. “It’s a way of totally changing the way early stage, biomedical translational research is funded, from equity investments to loans,” she said. The co-founder and managing partner of Federal Financial Analytics, Inc., also sits on the board for Foundation Fighting Blindness because it’s the leading funder of the type of blindness she has. The idea was to start a pilot project that focused on research devoted to eye diseases and conditions. They initially planned to move slowly and try broaden it to the larger community at large if the targeted
loans were successful…

https://news.bloomberglaw.com/pharma-and-life-sciences/house-biobond-bill-aims-to-get-medical-research-back-on-track-17

17 05, 2021

Wall Street Journal, Sunday, May 16, 2021

2021-05-17T13:31:20+00:00May 17th, 2021|Press Clips|

Inequality Would Widen if U.S. Policies Spur Sustained Inflation
By Jon Hilsenrath
Federal Reserve and Biden administration officials say economic inequality is bad and they aim their policies in part at helping to reduce it. In the short run, at least, those policies might be widening inequality, not shrinking it….A fall in inflation-adjusted wages hits low- and moderate-income households especially hard, because they dedicate a larger share of their paychecks to covering daily living costs. The numbers might be temporarily skewed, but if inflation persists and is fueled by the Fed or the Biden administration’s policies, it could raise questions about the costs and benefits of those policies for working Americans. Economists describe inflation as a regressive tax—meaning it hits low-income workers hardest. “I don’t see anything good happening from an economic inequality perspective,” said Karen Petrou, a financial analyst and author of “Engine of Inequality,” a critique of Fed policy. “Most American households are living hand to mouth.” Ms. Petrou said a decade of the Fed’s low-interest-rate policies have mostly helped the wealthy by pushing stocks higher. That effect has accelerated recently. While inflation-adjusted wages fell in April from a year earlier, the Dow Jones Industrial Average was up more than 40% over the same period. The wealthiest 10% of U.S. households own 88.5% of stocks, according to Fed data.

https://www.wsj.com/articles/inequality-would-widen-if-u-s-policies-spur-sustained-inflation-11621173602?mod=searchresults_pos2&page=1

 

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13 05, 2021

American Banker, Thursday, May 13, 2021

2021-05-13T13:44:57+00:00May 13th, 2021|Press Clips|

What’s the fate of bank-nonbank partnerships after ‘true lender’ vote?
By Brendan Pedersen and Hannah Lang
The Senate’s rejection of a Trump-era rule making it easier for banks to sell loans to third parties spells considerable uncertainty for fintech firms, even as the Biden administration likely prepares to remake the standard. The chamber’s passage of a Congressional Review Act resolution striking down the Office of the Comptroller of the Currency’s “true lender” regulation all but guarantees the rule’s demise. The resolution now moves to the Democrat-controlled House, where it is expected to pass….The outcome was an “important reminder” that historically, banking issues haven’t always been fiercely partisan, according to Karen Petrou, managing partner at Federal Financial Analytics. She said the bipartisan vote reflects a diverse coalition of interests that opposed the rule, including consumer advocates and states’ rights supporters. “Many people mistook this as a purely Democratic initiative because of all the consumer advocacy, but this was actually a broad coalition with deep roots also in the GOP,” she said. With the OCC’s new Biden-appointed comptroller, Michael Hsu, starting this week, the agency was already expected to revisit the “true lender” rule with or without a congressional reversal. Therefore, the Senate’s vote Tuesday shouldn’t have caught the industry off guard, Petrou said.

https://www.americanbanker.com/news/whats-the-fate-of-bank-nonbank-partnerships-after-true-lender-vote

12 05, 2021

Wall Street Journal, Wednesday, May 12, 2021

2021-05-12T20:05:22+00:00May 12th, 2021|Press Clips|

Housing-Market Surge Is Making the Cheapest Homes the Hottest
By Ben Eisen
The red-hot U.S. housing market is giving an extra boost to the cheapest houses, including many in historically stagnant neighborhoods that have suffered from a lack of investment. It is pushing forward efforts to revive the local economies of Detroit, Cleveland, Youngstown, Ohio, and other areas where homes can sell for as little as a few thousand dollars but typically require a lot of work to fix up and can’t be financed with a mortgage….While prices in many low-cost areas remain far below national averages, some worry that the price appreciation either won’t last or won’t reach the residents who stand to benefit most. The rising prices could also lock some families out of homeownership, especially young people and first-time buyers. It is unclear if the recent rise “is a sign of upward and sustainable wealth accumulation for low-income and minority households,” said Karen Petrou, author of “Engine of Inequality: The Fed and the Future of Wealth in America.” “I think the data is at best equivocal on that point.” Still, community advocates see signs that neighborhood revitalization is spreading from more established neighborhoods to those previously lacking signs of economic life.

https://www.wsj.com/articles/housing-market-surge-is-making-the-cheapest-homes-the-hottest-11620811980?mod=searchresults_pos1&page=1

7 05, 2021

Marketplace, Friday, May 7, 2021

2021-05-10T14:51:47+00:00May 7th, 2021|Press Clips|

Federal Reserve points to risks in the current economy
Justin Ho
We talk a lot about the Federal Reserve and its role as a guardian of interest rates, but a big part of the Fed’s mandate is keeping the larger financial system stable. This week, the central bank put out a report looking at that stability. It found that even though coronavirus vaccinations are rolling out and the economy’s set to rebound this year, there are still plenty of risks lurking out there, which the Fed is keeping an eye on…“The more debt they have in relation to their capacity to repay it, the less it takes to throw them into the ditch,” said Karen Petrou, managing partner at Federal Financial Analytics. The Fed mentioned a hedge fund called Archegos Capital Management. It made big bets on stocks using money it borrowed from banks. And this year, it went bust after some of its bets went bad. Petrou said this was just one small hedge fund. But, “even relatively small, tiny ones can leave big, big holes in big banks. And that sobered up the Fed.” Listen here: https://www.marketplace.org/2021/05/07/federal-reserve-points-to-risks-in-the-current-economy/

4 05, 2021

American Banker, Tuesday, May 4, 2021

2021-05-04T21:31:47+00:00May 4th, 2021|Press Clips|

Congress’s inaction on ILCs, fintech charters worries bankers
By Neil Haggerty
Critics of nontraditional bank charters like trusts and industrial loan companies have often looked to Congress to intervene and hold back a potential wave of new entrants into the banking system.“The longer these nontraditional charters, particularly those aligned with powerful tech platform companies, are allowed to operate, the more they restructure the financial services market,” said Karen Petrou, managing partner at Federal Financial Analytics. “The market doesn’t care what Congress does until Congress does it. So things are going to change irreparably.”

https://www.americanbanker.com/news/congresss-inaction-on-ilcs-fintech-charters-worries-bankers

30 04, 2021

American Banker, Friday, April 30, 2021

2021-04-30T18:43:49+00:00April 30th, 2021|Press Clips|

Book Review: Why the Fed should reengineer its monetary policy
By Richard Herring
Richard Herring is Jacob Safra Professor of International Banking and Professor of Finance at the University of Pennsylvania’s Wharton School of Business
Since the financial crisis in 2008, the Federal Reserve has embarked on the most accommodative monetary policy in its history. Between low interest rates and quantitative easing — known as QE — the Fed has never done so much to encourage investment and lending for so long. Those policies are designed to lower unemployment and help ordinary Americans, but in her new book, “Engine of Inequality, The Fed and the Future of Wealth in America,” Federal Financial Analytics managing partner Karen Petrou argues the central bank is actually doing more harm than good. Petrou is justly renowned for her encyclopedic knowledge of financial regulations, having advised a wide range of corporate and institutional clients for decades on the impact of regulations on financial institutions and markets. Given that pedigree, one might be surprised that the subject of this passionate book is the growing economic inequality in the United States and what financial regulators should do about it….

https://www.americanbanker.com/opinion/why-the-fed-should-reengineer-its-monetary-policy

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27 04, 2021

ProPublica, Tuesday, April 27, 2021

2021-05-10T18:32:09+00:00April 27th, 2021|Press Clips|

How the Federal Reserve Is Increasing Wealth Inequality
The Fed’s low-interest-rate policies have stabilized the economy and turbocharged the stock market. But those who don’t own lots of stocks haven’t benefited anywhere near as much as those who do.
By Allan Sloan and Cezary Podkul
Ever since the COVID-19 pandemic struck, the Federal Reserve has gotten plenty of kudos for moves that have helped stabilize the economy, kept house prices from tanking and supported the stock market. But those successes have obscured another effect: the inadvertent impact the Fed’s ultra-low interest rates and bond-buying sprees are having on economic inequality….“Inequality is a cumulative process,” said Karen Petrou, author of “The Engine of Inequality: The Fed and the Future of Wealth in America” and managing partner of the Washington-based consulting firm Federal Financial Analytics. “The richer you are, the richer you get, and the poorer you are, the poorer you get, unless something puts that engine in reverse,” she said. “That engine is driven not by fate or by untouchable phenomena such as demographics but most importantly by policy decisions.”

https://www.propublica.org/article/how-the-federal-reserve-is-increasing-wealth-inequality

27 04, 2021

3BL Media, Tuesday, April 27, 2021

2021-04-28T17:23:14+00:00April 27th, 2021|Press Clips|

Evolving Finance, Money and Markets
By Hazel Henderson
Today’s global casino is now experiencing yet another step change, as central banks shift their focus from austerity and debt to stimulus to cope with pandemics and climate crises and fending off Facebook‘s competitive “Libra” and other cryptos. As the rules change in finance and money, they are also changing in markets, as they adapt to ecological limits, consumer pressures, and shareholders’ changing values. Key public intellectuals have emerged who are facing down all the old verities in textbook economics and over-averaged macroeconomic statistics and models, including GDP, still driving societies into unsustainable paths…. Some of today’s most courageous intellectuals are also watchdogs, as for example, financial expert Karen Petrou in “Engines of Inequality: The Fed and the Future of Wealth in America” …Let’s first look at Karen Petrou’s case against the Federal Reserve in the USA, taking us through the politics of money-creation and credit allocation, which we covered in our TV Special “The Money Fix“.  She shows how well-intentioned regulations and Fed policies after the meltdown of 2008 exacerbated inequality. Petrou’s keen expertise critically assesses the Fed’s long underperformance and many failures to exercise its mandate. She faults its blind acceptance of obsolete, over-aggregated economic statistics and provides new clarity on these models. Petrou takes us through the history and purpose of the Fed since its founding in 1913. She shows how its dominance by private interests and banks, its policy mistakes exacerbated the agonies …

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