Equality Banking: A Roadmap

By Karen Petrou

  • Economic inequality and ultra-low interest rates create a vicious cycle in which rates drive down savings, financial intermediation becomes less profitable, unequal households have still more difficulty preserving income and accumulating wealth, banks drop equality-essential services, consumers are made still more unequal, and it all starts all over again.
  • Breaking this cycle requires hard decisions about which retail-banking services genuinely enhance economic equality and quickly developing effective, measurable delivery channels to promote widespread adoption.
  • There is no shortage of commitments from high-level federal officials supporting equitable finance; what’s missing are specific, near-term action steps.
  • This post thus provides a step-by-step roadmap for quick public- and private-sector innovation, regulation, and inclusion. 

Almost a decade to the day after the “Occupy Wall Street” movement crystalized the populist politics that now characterizes U.S. debate, the Acting Comptroller of the Currency announced that his agency’s top priority is reducing inequality.  This echoes the Biden Administration’s emphasis on equality and racial equity, but all of these high-minded goals are more hortatory than clear directives.  They are thus unlikely to advance equitable banking, exacerbating not just economic inequality, but also America’s discontent and resulting disfunction. Reducing economic inequality is clearly essential, with banks and other financial companies sure to face mandates or even public-finance competitors if vital needs are not quickly and equitably met. 

Continue reading “Equality Banking: A Roadmap”

Hard Questions on Data Privacy

By Karen Petrou

On February 13, bipartisan Senate Banking leadership asked for views on how best to craft a new consumer-data privacy and security framework.  Reflecting 2017’s Equifax debacle, the inquiry seems rooted in the credit-reporting framework.  Essential though it is, data-integrity fixes for the credit bureaus aren’t anywhere near sufficient protection now that consumer financial data are increasingly clutched in the hands of Facebook, Amazon, Google, and an array of lightly- or un-regulated technology-based consumer-finance providers.  As we have demonstrated, sustainable, sound, and fair consumer credit is critical to economic equality.  Continue reading “Hard Questions on Data Privacy”

Making “Responsible Innovation” a Reality: Big Tech, Small Money, and U.S. Economic Equality

By Federal Financial Analytics

FedFin has just released a new policy paper laying out how emerging risks in unregulated tech-based financial products may threaten U.S. economic inequality.  It’s not that regulated institutions have always done that much better, but rather that the power of big data, predictive modeling, and far-flung commercial interests combines with tech-firm culture in still more dangerous ways far outside the reach of effective controls or meaningful enforcement.  Continue reading “Making “Responsible Innovation” a Reality: Big Tech, Small Money, and U.S. Economic Equality”