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Engine of Inequality, by Karen Petrou
The first book to reveal how the Federal Reserve holds the key to making us more economically equal, written by an author with unparalleled expertise in the real world of financial policy.
Following the 2008 financial crisis, the Federal Reserve’s monetary policy placed much greater focus on stabilizing the market than on helping struggling Americans. As a result, the richest Americans got a lot richer while the middle class shrank and economic and wealth inequality skyrocketed. In Engine of Inequality, Karen Petrou offers pragmatic solutions for creating more inclusive monetary policy and equality-enhancing financial regulation as quickly and painlessly as possible.
“Petrou’s book uncovers a hidden engine of our skyrocketing inequality: financial-policy. In an accessible and engaging prose, Petrou takes us through the inner workings of monetary policy at the Fed and financial regulations, how they’ve made inequality worse and how they could instead be retooled to take us to a more equitable future. A novel look at the problem of inequality and bold ideas to help resolve it. A must read.”—Emmanuel Saez, Professor of Economics at the University of California Berkeley and author of The Triumph of Injustice
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Industry Expert
Federal Financial Analytics (FedFin) is a Washington-based financial services-consulting firm that has for decades attracted a high-powered clientele in Washington, on Wall Street, and among global central bankers. Since 1985 FedFin has provided a unique blend of analysis and strategic advice on public policy, regulatory, and legislative issues for industry and governmental clients doing business in the U.S. and abroad.
A proprietary think-tank for its clients, FedFin reviews critical federal and global policy developments in banking, insurance, asset management, and mortgage finance, analyzes them in great depth, and then advises clients on whether what they want can be made to work for them, within the policy environment and for the financial system. It is FedFin’s guiding principle to be an honest broker, and clients depend on the fact that the firm does not offer lobbying or any other services that could compromise its objectivity and independence.
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In the News
American Banker, Wednesday, May 8, 2024
Will Democrats stand by Gruenberg? By Clair Williams Lawmakers — mostly Republicans — let loose almost immediately after the release of an independent review of the Federal Deposit Insurance Corp.'s workplace culture, calling for the agency's chairman, Martin Gruenberg, to resign. Those calls, while neither entirely new nor unexpected, were [...]
American Banker, Friday, April 19, 2024
Is the Fed board eroding regional Fed banks' independence? By Kyle Campbell The Federal Reserve Board of Governors has a greater say over leadership at the reserve banks than it once did. But whether that benefits the central banking system is an open debate...Karen Petrou, managing partner of Federal Financial [...]
Marketplace, Wednesday, April 11, 2024
What do bank earnings tell us about the economy? By Mitchell Hartman It’s the second week of April, which means spring is in the air and daffodils, cherry trees and lilacs are blooming. Here at Marketplace, it also means earnings season is starting. Corporate profit-and-loss reports for the January-to-March quarter kicked [...]
Issues in Focus
The Vault
Karen Petrou on: How FSOC Enables Systemic Risk
One can and should debate the extent to which nonbank mortgage companies (NBMCs) are as systemically-risky as FSOC says they are. But it’s indisputable that, if FSOC believed what it said, then the paltry and politically-improbable recommendations it announced are proof of only one unhappy conclusion: all FSOC can meaningfully think to do when it sees a systemic risk is figure out how to bail it out. This is certainly [...]
FedFin on: FSOC’s Analytical Methodology
Never Mind... When FSOC released its systemic-designation methodology last year, the Council made it clear that nonbank mortgage companies faced top-down federal regulation. Never mind. As with so many other FSOC-declared systemic risks – see, for example, stablecoins – federal regulators have decided not to use the prudential tools they have in favor of asking for statutory change they know they won’t get. The full report is available to subscription [...]
Karen Petrou: Why FSOC is Right to Revisit FMU Designation
In the fog in which FSOC chooses to nestle, it was easy to miss an important indication briefly mentioned in the meeting’s readout: the Council is “reviewing” current financial-market utility (FMU) designations. Firm-specific and activity-and-practice designations usually get all the airtime. So it was again on Friday, when FSOC also decided to back off its plan just last November (see Client Report FSOC29) to designate nonbank mortgage banking. The Council [...]