Press Clips

Bank merger policy has long needed a makeover — just not this one By Karen Petrou Until this month, the Department of Justice hadn't finalized the adoption of new bank merger policy guidelines since 1995. Given the banking industry's rapid evolution during the last three decades, an update was certainly overdue. It unfortunately took the bank failures of 2023 to inspire action on a much-needed bank merger policy makeover, and regulators hastily charged ahead to propose sweeping reforms. Despite soliciting feedback from industry experts and policy analysts that revealed a swath of concerns, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency locked step with the DOJ to finalize their respective rewrites of bank merger criteria largely as proposed. This is not the bank merger makeover we needed. Banking regulators realize that allowing high-risk banks to make still-bigger bets by swallowing other banks can pave [...]

The Potential “Perverse” Consequences for Banks of New M&A Policies Host Rob Blackwell Karen Shaw Petrou, managing partner of Federal Financial Analytics, details how new guidelines by federal regulators to curb M&A could inadvertently increase the market power of the biggest banks and Big Tech. https://bankingwithinterest.libsyn.com/the-potential-perverse-consequences-for-banks-of-new-ma-policies

Will regulators hit the gas or brakes on remaining post-Basel reforms? By Kyle Campbell For more than a year, a once ambitious bank regulatory reform agenda has largely been on hold as agencies deal with the fallout from last summer's much maligned joint capital proposal. Now that the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency are in apparent agreement on a path forward for the so-called Basel III endgame, regulators are poised to work through their backlog of joint initiatives, including expanded long-term debt requirements and new liquidity standards....The Fed, the FDIC and the OCC have been eyeing a long-term debt expansion since 2022, when they issued what is known as an advanced notice of proposed rulemaking — a precursor to a formal rulemaking process — before issuing an official proposal last September. But finalizing that rule while risk-based capital changes [...]

Political bluster threatens the Fed's 'vibes-based' independence By   Kyle Campbell  Once taken as a given, the Federal Reserve's independence is facing existential questions in the current political environment. Former president and Republican presidential nominee Donald Trump said in an interview last week that if elected he would "bring interest rates way down" while also combating inflation, which he said was "destroying our country."...Others see the agreement as a capitulation by the Treasury to secure short-term participation by the Fed in its war financing efforts. Karen Petrou, founder of Federal Financial Analytics and highly regarded expert on financial policy, said the accord amounted to an acknowledgment by the Treasury that it never had the ability to force the Fed's hand. "It was essentially Appomattox for the Treasury Department," Petrou said, referring to the Confederate surrender in the Civil War. "They had to sign it." https://www.americanbanker.com/news/political-bluster-threatens-the-feds-vibes-based-independence  

'They need to kick the tires': Karen Petrou on bank-fintech alliances By Penny Crosman The bankruptcy of bank-fintech partnership middleware provider Synapse and the many consent orders banks have received from regulators regarding their fintech relationships have formed a dark cloud over banking as a service. The way forward should include much more due diligence on banks' part, according to Karen Petrou, co-founder and managing partner of Federal Financial Analytics, a Washington, D.C. firm that provides analytical and advisory services on legislative, regulatory and public-policy issues affecting financial services companies.  "I think they really need to kick the tires and not just look at the fee revenue, but at the resilience of their counterparty in these deals," Petrou said. "Clearly one of the issues with Synapse is at least a hundred million dollars of customer money is missing, and while [compared to] the scale of trillion dollar financial crises, that [...]

 Some banks are making a Faustian bargain with fintechs: Karen Petrou By Penny Crosman Welcome to the American Banker Podcast. I'm Penny Crosman. The disputes between banking-as-a-service middleware provider Synapse and its banking partners have cast doubt on the whole practice of banking as a service, where fintechs build relationships with customers directly and bank partners keep the money in their vaults. Today we're here with Karen Petrou, managing partner at Federal Financial Analytics, to get her take on this whole situation and what the way forward might look like. Welcome, Karen. https://www.americanbanker.com/podcast/some-banks-are-making-a-faustian-bargain-with-fintechs-karen-petrou

Unpacking the June jobs report by Sabri Ben-Achour The U.S. economy added 206,000 jobs in June, according to the labor department.   On the other hand, the job growth in previous months was revised down significantly. Let’s discuss with Karen Petrou, co-founder and managing partner at Federal Financial Analytics. https://www.marketplace.org/shows/marketplace-morning-report/more-signs-of-a-cooling-labor-market/#Unpacking-the-June-jobs-report

Why are bond prices up right now? And what difference does it make? By Mitchel Hartman We’re in the midst of a bond market rally. In the last eight weeks — barring Monday, when the bond market retreated a bit — bond prices have been going up, as their yields — the annual interest rate they pay — have been going down....The Fed’s got interest-rate-setting meetings in July and September. But here’s the thing: It met just last week: At that meeting, “they changed their forecast,” said Joanna Gallegos. “They said for the end of the year, we anticipate only making one rate cut versus three.” Basically, said Karen Petrou, a managing partner at Federal Financial Analytics, the bond market is saying to the Fed: “We can hear you. We’re just not listening.” “Even though [Chair] Jay Powell said, ‘We’re going to keep rates about where they are for a [...]