#OMB – Federal Financial Analytics

Karen Petrou: How the For-Cause Firing Squad Lines Up

Arezou Rafikian2025-07-14T10:13:23-04:00July 14th, 2025|The Vault|

Due to the din of demands from the Trump Administration, many observers disregarded Thursday’s letter on behalf of the President from OMB Director Vought to Fed Chair Powell. They shouldn’t. Mr. Trump is not one to let his enemies off lightly. Even as he continued his anti-Powell vendetta on Friday, his officials are readying a way to rid the President of his Fed chair in a way they hope the Supreme Court must accept.

The OMB letter built on accusations that first surfaced at a Senate Banking Committee hearing late last month. These concern renovations at the Fed’s Eccles Building, a dump of grim brutalist architecture that never saw better days but was at least once in reasonable repair. Over the last decade or so, one couldn’t even say that. It is in fact a prime example of the awful architecture the President wants to blot from the face of the nation’s capital.

The Senate GOP inquiry and the OMB letter thus do not question the need for renovation but accused Mr. Powell of allowing gross over-budget spending on luxuries such as “Italian” – not all-American – beehives, “water features”, oodles of high-end marble, and a secluded art gallery. Mr. Powell acknowledges over-spending but said it wasn’t the Fed’s fault and denied any undue expenses for high-end appurtenances. But, questioned in a follow-up GOP letter, Mr. Powell promised only a staff briefing, doubtless hoping to bury the issue but in fact giving his enemies an open field. Realizing this, the …

Karen Petrou: How Inequitable Rules Stoke Financial Crises and What the Banking Agencies Should do to Cut This Link

Eliza Allen2023-11-13T15:41:25-05:00November 13th, 2023|The Vault|

Last week, OMB issued another edict redesigning the way most of the federal government writes rules, going beyond its earlier directive to consider competitive impact now also to demand detailed consideration of the broader public good, especially when it comes to economic equality. I focused on public-good regulation in last week’s memo because it is sadly alien to federal financial regulation even though, as OMB says, “the benefits and costs of a regulation are ultimately experienced by people.” I grant that economists are people, but some are also people who don’t like people, at least when qualitative assessment of what people need challenges the quantitative conclusions they cherish. Pending banking rules thus ignore the public good in favor of complex market constructs, rationalizing them on assertions that, whatever else befalls finance, crises are less likely. This is a methodology fraught with perverse consequences, the most important of which is that the agencies’ standards will hike the risk of financial crises precisely because they omit distributional analysis.

A demand for distributional consideration is not – repeat not – a plea for the banking agencies to go easy on banks. It’s a plea for them to be as sure as they can that none but banks that need to be reined in are throttled. As OMB now also says, “some alternatives may change distributional effects even without significantly changing stringency.” The extent to which this is the case with bank standards is unknown because not one regulator has ever asked a distributional …