Bank wins right to sue regulator over Camels rating
By Lalita Clozel
After undergoing an exam in summer 2016, Builders Bank in Chicago received some bad news: Its Camels rating had reached a 4, the threshold at which an institution is considered a "problem bank" by regulators. ...“The Seventh Circuit established a principle here — that other than capital, there is grounds for appeal even to the courts on the other criteria in the Camels rating,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics. “It's a fascinating precedent.”
The Income-Inequality Impact of Post-Crisis Policy
By Karen Shaw Petrou
How could it be that the $4.5 trillion on the Federal Reserve’s balance sheet, a real short-term interest rate still beneath 0%, and an array of tough post-crisis regulatory reforms have done so little to make many Americans better off and have even made them angrier about income inequality? Although the Federal Reserve has acknowledged the need to study this conundrum, continued economic malaise combined with profound political discontent make income inequality the most critical question facing policymakers in 2017. It’s a question that cannot just be studied but must be answered through action.
Consumer credit-scoring system to eliminate error-prone data
Marketplace’s Mitchell Hartman talks with Karen Petrou, managing partner of Federal Financial Analytics about consumer credit reporting agencies eliminating some information from credit reports that might reflect negatively on would-be borrowers. Some of that information has been prone to errors in the past, and consumer advocates argued it was unfair to consumers.
Can Donald Trump be Wall Street's Most Unlikely Savior?
By William D. Cohan
On February 3, Donald Trump convened a long-awaited, and not entirely un-controversial, meeting of his high-powered Strategy and Policy Forum in the State Dining Room of the White House. It had been a wild first two weeks in the White House—a fortnight replete with Trump’s botched immigration executive order, protests at airports across the country, “alternative facts,” and the world’s introduction to the delights of Sean Spicer. ...According to Federal Financial Analytics Inc., the six largest U.S. banks by assets spent $70.2 billion in 2013 on regulatory compliance, nearly double what they collectively spent in 2007—and that is on top of the more than $200 billion in fines and penalties that federal and state prosecutors, as well as regulators, have extracted from shareholders of Wall Street banks for their role in causing the financial crisis.
Amazon buying Capital One? Fat chance, but fun to ponder
By Kristin Broughton
Amazon is itching to buy Capital One. No way that could happen … well, er, right, everybody? OK. Admit it. You think that would be illegal, but you don’t remember why anymore. ... Such a transaction would most certainly fail to pass the muster of regulators – and would likely run afoul of decades-old banking laws. “There is a longstanding and firm barrier between banking and commerce,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, describing it as a “foundational” principle of banking law dating back to the Bank Holding Company Act. The legal principle is designed to prevent various conflicts of interest, such as the flow of deposits into a company’s own enterprises, according to Petrou.