Wednesday, January 26th, 2022
12:00 – 1:30 p.m. EDT
We were pleased to invite you to a Rethinking Capitalism and Democracy event on Wednesday, January 26th, entitled “The U.S. Federal Reserve and Economic Inequality.” This event featured Karen Petrou (Federal Finance Analytics), with discussant remarks by Mark Levonian (formerly of Promontory Financial Group), Bill Nelson (Bank Policy Institute), and Peter Conti-Brown (University of Pennsylvania).
In her ground-breaking 2021 book, Karen Petrou shows how the U.S. Federal Reserve inadvertently – but dramatically – exacerbated U.S. income and wealth inequality after 2010. Approaching the problem from a pragmatic, market-focused perspective, she demonstrates how the combined force of post-2008 monetary and regulatory policy made Americans more unequal, the financial system even more fragile, and voters angrier.
In the seminar, Petrou provided a perspective on what the Federal Reserve did to counter the pandemic-induced 2020 financial crisis and its inequality impact. She laid out the inequality-transmission channels of current Fed policy and discussed specific policy solutions, to address worsening economic inequality in a higher-risk financial system.
This webinar was moderated by IIEP Distinguished Visiting Scholar Sunil Sharma, and had welcoming remarks by IIEP Director Jay Shambaugh.
Welcome Remarks:
Jay Shambaugh is Professor of Economics and International Affairs, and Director of the Institute for International Economic Policy at the Elliott School of International Affairs, George Washington University. His area of research is macroeconomics and international economics. He has had two stints in public service. He served as a Member of the White House Council of Economic Advisors from 2015-2017. Earlier, he served on the staff of the CEA as a Senior Economist for International Economics and then as the Chief Economist. He also spent 3 years as the Director of the Hamilton Project at the Brookings Institution. Jay is also a Faculty Research Fellow at the NBER and Non-Resident Senior Fellow in Economic Studies at Brookings. Prior to joining the faculty at George Washington, Jay taught at Georgetown and Dartmouth and was a visiting scholar at the IMF. He received his Ph.D. in economics from the University of California at Berkeley, an M.A. from the Fletcher School at Tufts, and a B.A. from Yale University.
About the Moderator:
Sunil Sharma is a Distinguished Visiting Scholar at the Institute for International Economic Policy, Elliott School of International Affairs, The George Washington University, Washington DC, USA, and a Senior Associate at the Council on Economic Policies, Zurich, Switzerland. He was Assistant Director in the IMF’s Research Department from 2015-2018, and the Director of the IMF Singapore Regional Training Institute (STI) in Singapore from 2006-2015. Before moving to Singapore in 2006, Sunil was Chief of the IMF Institute’s Asian Division in Washington, D.C. Prior to joining the IMF in 1992, he was on the Economics faculty at the University of California, Los Angeles (UCLA).
From 2012-2020, he was on the Governing Board of the Mysore Royal Academy (MYRA) School of Business, Mysore, India. During 2012-2018, he was a member of the Advisory Board, Sim Kee Boon Institute for Financial Economics (SKBI), Singapore Management University, Singapore, and over 2011-2015, he served on the International Advisory Board, Institute of Global Finance, Australian School of Business, University of New South Wales, Sydney, Australia.
Sunil has a Ph.D. and a M.A. in Economics from Cornell University, a M.A. from the Delhi School of Economics, and a B.A. (Honors) from St. Stephen’s College, Delhi University. He has published widely on economic and financial topics, and his current interests include governance, systemic hazards, complex systems, the international financial architecture, and the institutional structure and design of financial regulation.
About the Presenter:
Karen Petrou is the co-founder and Managing Partner of Federal Financial Analytics, Inc., a privately-held company that since 1985 has provided analytical and advisory services on legislative, regulatory, and public-policy issues affecting financial services companies doing business in the U.S. and abroad. Petrou is a frequent speaker on topics affecting the financial services industry. In addition to testifying before the U.S. Congress, she has spoken before the Federal Reserve Banks of New York, St. Louis, San Francisco, and Chicago, the European Central Bank, the Office of the Comptroller of the Currency, the International Monetary Fund, the Clearing House, the Bank Policy Institute, the Institute of International Bankers, the Securities Industry and Financial Markets Association, the Japanese Diet, and many other governmental, industry and academic groups. She has also authored numerous articles in publications such as the American Banker and the Financial Times, and is frequently quoted as a bank policy expert in the Wall Street Journal, Bloomberg, Politico, the Hill, and other media outlets.
Prior to founding her own firm in 1985, Petrou worked in Washington as an officer at Bank of America, where she began her career in 1977. She is an honors graduate in Political Science from Wellesley College and also was a special student in an honors program at the Massachusetts Institute of Technology. She earned an M.A. in that subject from the University of California at Berkeley, and was a doctoral candidate there. She has served on the boards of banking organizations and now sits as a director on the board of the Foundation Fighting Blindness and the Fidelco Guide Dog Foundation. In 2019, she and her husband Basil were named “visionaries” by the Foundation Fighting Blindness.
About the Discussants:
Mark Levonian was most recently Managing Director and Global Head for Enterprise Economics and Risk Analysis at Promontory Financial Group. He was formerly Senior Deputy Comptroller for Economics at the US Office of the Comptroller of the Currency (OCC), where he served as a key advisor to the Comptroller before, during, and after the global financial crisis. Mark oversaw quantitative examination support and policy research for the OCC and was closely involved in policy responses to the financial crisis, including the development of bank stress testing. As a senior regulatory official and economist, he led or participated in various Basel Committee initiatives related to economic modeling and played a leading role in the development of rules and guidance for multiple generations of the Basel capital framework. Prior to joining the OCC, Mark was Vice President for Banking Supervision and Regulation and Economic Research Officer at the Federal Reserve Bank of San Francisco, Manager of the Banking Studies Department at the New York Fed, Lecturer in Finance at the University of California’s Haas School of Business, and Senior Economist at the Reserve Bank of Australia. He has been an adviser/consultant to the World Bank, the IMF, and the central banks of Russia and Belarus.
Bill Nelson is an Executive Vice President and Chief Economist at the Bank Policy Institute and an adjunct professor at Georgetown University. Previously he served as Executive Managing Director, Chief Economist, and Head of Research at the Clearing House Association and Chief Economist of the Clearing House Payments Company. Mr. Nelson contributed to and oversaw research and analysis to support the advocacy of the Association on behalf of TCH’s owner banks.
Prior to joining The Clearing House in 2016, Mr. Nelson was a deputy director of the Division of Monetary Affairs at the Federal Reserve Board where his responsibilities included monetary policy analysis, discount window policy analysis, and financial institution supervision. Mr. Nelson attended Federal Open Market Committee meetings and regularly briefed the Board and FOMC. He was a member of the Large Institution Supervision Coordinating Committee (LISCC) and the steering committee of the Comprehensive Liquidity Analysis and Review (CLAR). He has chaired and participated in several BIS working groups on the design of liquidity regulations and most recently chaired the CGFS-Markets Committee working group on regulatory change and monetary policy. Mr. Nelson joined the Board in 1993 as an economist in the Banking section of Monetary Affairs. In 2004, he was the founding chief of the new Monetary and Financial Stability section of Monetary Affairs. In 2007 and 2008, he visited the Bank for International Settlements, in Basel, Switzerland, where his responsibilities included analyzing central banks’ responses to the financial crisis and researching the use of forward guidance by central banks. He returned to the Board in the fall of 2008 where he helped design and manage several of the Federal Reserve’s emergency liquidity facilities.
Mr. Nelson earned a Ph.D., an M.S., and an M.A. in economics from Yale University and a B.A. from the University of Virginia. He has published research on a wide range of topics including monetary policy rules; monetary policy communications; and the intersection of monetary policy, lender of last resort policy, financial stability, and bank supervision and regulation.
Peter Conti-Brown is the Class of 1965 Associate Professor of Financial Regulation at The Wharton School of the University of Pennsylvania, Co-Director of the Wharton Initiative of Financial Policy and Regulation, and Nonresident Fellow in Economics Studies at The Brookings Institution. A financial historian and a legal scholar, Conti-Brown studies central banking, financial regulation, and public finance, with a particular focus on the history and policies of the US Federal Reserve System. He is author of the book The Power and Independence of the Federal Reserve (Princeton University Press 2016), co-author of a leading textbook on financial regulation (The Law of Financial Institutions), and author and editor of several other books and articles on central banking, financial regulation, and bank corporate governance. He received a law degree from Stanford Law School and a PhD in history from Princeton. He and his wife Nikki are the parents of four children.
IIEP Rethinking Capitalism and Democracy Series
The COVID-19 pandemic, like the global financial crisis a decade ago, has laid bare the cracks in the leading capitalist democracies. Fissures in the political, social, economic, and financial orders, accompanied by an increasingly stressed natural environment, pose serious and possibly existential threats to these societies, as exploding income and wealth inequality subverts the integrity and fairness of markets and elections, weak regulatory oversight increases the likelihood and severity of the next crash, and the visible effects of climate change threaten lives and livelihoods and drive migrations. The three spheres of wellbeing – political and social, economic and financial, and the natural environment, are each becoming more fragile while their complex interrelationships are producing wicked challenges. The IIEP webinar series on Rethinking Capitalism and Democracy examines these difficult questions and possible policy responses.
