Tag: Refinancing

Can We Create Equality Insurance?

~ Karen Petrou ~ 1 Comment

By Karen Petrou

Much of the work posted so far on this blog centers on the traditional pillars of financial policy:  monetary policy and the sweeping post-crisis framework of bank regulation.  But, awesome though the Fed’s reach may be and as critical as banking is to income and wealth equality, these financial-policy channels are not the only ones that determine economic equality.  In this blog post, we assess another policy channel:  health, property-and-casualty, and life insurance.  With almost no research in this sector, we pose questions based on what we’ve read and what we think we know based on all our other works.  At the least, insurance requires equality evaluation and, quite likely, significant changes so it makes low-and-moderate income and wealth families healthier, readier to retire, better positioned to bequeath wealth to their children, and all around more equal. Continue reading “Can We Create Equality Insurance?” →

Disquiet on the Home Front

~ Karen Petrou ~ 2 Comments

By Karen Shaw Petrou and Basil N. Petrou

On June 20, FRB Chairman Powell said, “Nine years into an expansion that has sometimes proceeded slowly, the U.S. economy is performing very well.”  Although Mr. Powell noted low labor participation, puzzling inflation, and problematic wage growth, he said that all will come right as long as the Fed stays the course.  No mention was made of unprecedented U.S. income and wealth inequality or of a housing market serving mostly the oldest, wealthiest, and most coastal among us.  Too bad – inequality and the impediments to effective monetary-policy transmission it erects are among the most important reasons that the nine years Mr. Powell cites have seen the slowest recovery in decades in concert with new threats to financial stability. Continue reading “Disquiet on the Home Front” →

Refi Madness

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By Karen Shaw Petrou

The ability of U.S. borrowers to refinance their residential mortgages may seem like a small matter when considering economic inequality, but it’s actually a critical question given the central importance of homes to wealth accumulation for all but the richest Americans.  Some have suggested that mortgage refinancings (refis) simply be banned for lower-income households to prevent wealth-destroying equity extraction, while others have claimed that refis not only promote home ownership and economic growth, but also validate the equality benefits of post-crisis monetary policy.  A new paper from the Federal Reserve Bank of Philadelphia demonstrates that refis aren’t economic equality curses or blessings – instead, they’re procyclical accelerants that put vulnerable borrowers at risk in booms when credit flows far too freely and that then excludes those most in need of lower-cost loans as post-crisis loans go only to the wealthiest households in the highest-priced homes.  Continue reading “Refi Madness” →