Press Clips

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 [...]

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, [...]

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 [...]

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 [...]

Trump, Pulte weaponizing housing finance for political ends, experts say By Andrea Riquire The announcement from President Donald Trump on Aug. 25 that he was firing Federal Reserve governor Lisa Cook amounts to an extraordinary weaponization of the housing finance system that depends on private, deeply personal data from millions of Americans, experts said the following day. In a post on Truth Social, Trump claimed "sufficient cause" to remove Cook immediately, pointing to accusations that she had made false statements on mortgage applications, and bringing the president one step closer to shaping the balance of the Fed's seven-member board in his favor, as he’s attempted to do for months. That step "is nothing more than one person’s inference from documents," said Karen Petrou, co-founder of Federal Financial Analytics, Inc., and long-time Fed-watcher. "It’s not what the law calls sufficient cause suitable for firing a Federal Reserve governor. It’s just an assault on the independence [...]

"The president has just made us a higher-risk country" Host David Brancaccio talks with Karen Petrou at Federal Financial Analytics after President Donald Trump moved to fire Federal Reserve Governor Lisa Cook last evening. That's Petrou's conclusion "The president has just made us a higher-risk country" https://www.marketplace.org/episode/2025/08/26/the-president-has-just-made-us-a-higherrisk-country

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 https://www.marketplace.org/story/2025/08/19/threats-to-the-us-dollar-as-the-the-worlds-reserve-currency  

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 [...]

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 [...]