Karen Petrou, a fiscal policy analyst whose insights into banking regulation and monetary strategy influenced the actions of Washington policymakers and global financial services giants, died on Feb. 21 at her home in Washington. She was 72.
The cause was metastatic breast cancer that spread to her liver, her brother, Stephen Dolmatch, said.
For four decades, Ms. Petrou ran a Washington-based consultancy, Federal Financial Analytics, that advised many of the world’s biggest financial companies and trade groups on the intricacies of banking regulation and federal policy.
Her expertise and clarity made her a sought-after speaker at conferences, and she testified frequently before Congress and spoke to policymakers at the Federal Reserve.
Ms. Petrou was known for delving into complex rules and bluntly distilling their real-world impact on Wall Street financiers and everyday consumers. The 2010 Dodd-Frank Act, the sweeping set of reforms that Congress passed in the wake of the housing crash that catalyzed the Great Recession, was one of her specialties.
“I like the intellectual challenge of taking a 200-page rule and determining what it means for merger-and-acquisition opportunities, new products and franchise issues,” Ms. Petrou said of her policy work in an interview with The New York Times in 2009.
Her analyses transcended ideology. As the 2007 housing market meltdown set off a broader crisis, she criticized the regulatory laxness that had allowed lenders to take outsize risks and make reckless loans.
When Congress responded with an ornate set of new rules, she became one of the most prominent voices warning in research papers, media interviews and congressional testimony about the unintended consequences of draconian restrictions — especially what she called “complexity risk” from overlapping and, at times, contradictory mandates.
In a 2023 hearing before the House Financial Services Committee, held soon after the collapse of three regional banks, Ms. Petrou noted that it was “the seventh financial crisis where I have had the honor to appear before this committee and your colleagues in the Senate.”
The trade publication American Banker described her in 2012 as “the sharpest mind analyzing banking policy today — maybe ever.”
In recent years, Ms. Petrou focused her analytical work on the causes, effects and risks of America’s sharp increase in wealth inequality. She placed significant blame on the Fed, citing monetary policies that she viewed as favoring rich investors over wage-earners, who were increasingly forced to take on debt to pay for their medical needs, higher education and housing.
Her 2021 book, “Engine of Inequality: The Fed and the Future of Wealth in America,” delved into the roots of America’s expanding wealth gap and policy options for addressing it. A review in American Banker said the book’s proposals — some of which could be accomplished quickly, through organizational changes and other reforms at the Fed — “open an important debate on how to foster a more equitable financial system.”
“Because my nature is one of an analyst, not an advocate, I dove into the data,” Ms. Petrou wrote. “The more one knows the hard facts of financial policy’s inequality impact, the angrier one becomes. I thus switched into advocate mode.”
Karen Ann Dolmatch, the elder of two siblings, was born on March 6, 1953, in Queens and grew up in Westchester County, N.Y., in Irvington and Briarcliff Manor. Her father, Theodore, was a publishing executive who also owned a small publishing company. Her mother, Blanche (Goldberg) Dolmatch, was an artist whose paintings are held by private collectors and museums, including Israel’s Yad Vashem.
Ms. Petrou graduated from Wellesley College in Massachusetts in 1975 and married Robert Shaw that year. They later divorced.
After receiving a master’s degree in political science at the University of California, Berkeley, Ms. Petrou was hired by Bank of America, taking a newly created role of political analyst. She left in 1985 to start her own company after a bank executive told her that he “did not feel good about making a young woman a senior vice president,” she told Wellesley’s alumnae magazine.
She started the company with her father, who published a newsletter she began writing about financial policy.
“She encountered a lot of gender discrimination,” Mr. Dolmatch, her brother, said. “That prompted her to go out on her own. It was really a matter of, ‘If I have my own business, I’m not going to have to have other people taking credit for what I’m doing.’”
Through her consulting work, she met Basil Petrou, a housing finance expert. They soon merged their firms and married in 1995. Mr. Petrou died of pancreatic cancer in 2021. In addition to her brother, Ms. Petrou is survived by four nieces and two nephews.
In her last decades, Ms. Petrou was often accompanied in public by an attention-grabbing companion: a German shepherd guide dog.
She was diagnosed at 18 with retinitis pigmentosa, a progressive eye disease that leads to blindness. As her vision deteriorated, she turned to a Kurzweil text-to-speech machine for her extensive reading. She was using guide dogs by her 40s, an alliance that she invoked in her policy work.
“Guiding complex banks to sound practice requires the same formula that works for skilled guide dogs: a set of rules that takes different eventualities into account backed not only by judgment, but also by strong incentives that align the dog and the blind person in a joint, joyous endeavor,” she wrote in a critique of another analyst’s speech about financial regulation.
Ms. Petrou was a board member of Fidelco Guide Dog Foundation, a nonprofit that provided her and others with trained guide dogs, and a trustee and board member of the Foundation Fighting Blindness, an advocacy group for medical research on treatments and cures for vision loss. In 2024, she became the latter organization’s chairwoman.
Ms. Petrou brought her financial expertise to her research advocacy. She proposed a financial instrument, called BioBonds, to help fund medical and pharmaceutical research. These low-interest, government-backed loans would fill a market gap in the challenging middle phase between early-stage research — which is often funded by grants — and commercialization of successful breakthroughs.
A bipartisan congressional coalition sought federal funding for the BioBonds program, but the legislative effort stalled. Ms. Petrou had recently been focusing on a new idea: to create tax incentives for venture capital firms to co-invest with nonprofit organizations.
Ms. Petrou’s guide dogs — most recently, a shepherd named Ivan — were treasured sources of aid and camaraderie, especially after her husband died. Jason Menzo, the chief executive of the Foundation Fighting Blindness, recalled her delight in being a “dog mom.”
“In public and in the media, she was this very serious person,” he said. “She was passionate and very driven and extremely results-oriented. I got to see her in her home, relaxed, throwing a dog toy that’s bouncing off the walls, with this 100-pound German shepherd chasing it around glass tables. That gave her pleasure. That made her happy.”
Stacy Cowley is a Times business reporter who writes about a broad array of topics related to consumer finance, including student debt, the banking industry and small business.
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