Petrou brought gravitas to industry analysis

Whenever Karen Petrou had something to say, it was worth listening. One of the leading financial policy analysts of our time, Petrou passed away on Feb. 21 and since then the New York Times, the Wall Street Journal and others have published tributes to the 72-year-old blind woman who succumbed to cancer. .We first wrote about Petrou in 1996 when she addressed a group of Wisconsin bankers at a WBA event in Madison. More than 400 banks across the country were involved in mergers or acquisitions the year prior, and Petrou commented on the state of the industry. She said that while conditions were favorable, there was a sense of anxiety in the air due to the changing nature of the competition and the onset of internet banking. (Recall that the World Wide Web became a thing in 1994.) She urged bankers to find ways to deliver more value to their customers. She said bankers face a particular challenge because financial products aren’t typically the end goal for a customer. “They don’t want a car loan,” Petrou said at the WBA Management Conference; “they want the car.”While the internet opened the door for more companies to offer financial services, she encouraged bankers, saying they should not fear competition because their familiarity with regulation and comfort with compliance gave them an edge over upstarts.Five years ago, Petrou’s book, Engine of Inequality: The Fed and the Future of Wealth in America, came out. Reflecting on a decade of rock-bottom interest rates, Petrou explained that the Fed was making it easy for upper-income people to increase their wealth by investing in the stock markets, while middle and lower income people struggled because banks paid so little on their savings. The book was somewhat controversial but I think remains a must-read for students of the American economy. I had the chance to hear Petrou at industry conferences, but I never got to interview her, or talk to her. My loss; definitely a missed opportunity.