The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It

This book is next up in my queue. It looks to be a primer on why big, highly leveraged banks are bad for the economy.

The reviews are outstanding; full chapter 9 after the jump. The book’s site is here; Amazon page here.

 

Reviews:

More than four years after the financial meltdown devastated the economy, our banking system remains resistant to reform and riddled with risk. The Bankers’ New Clothes challenges us to question the status quo and to think anew about the transformative changes in banking that are needed to serve the public interest. This work should spur a long-overdue debate on real banking reform.”

-Phil Angelides, chairman of the Financial Crisis Inquiry Commission

The Bankers’ New Clothes underscores that there is perhaps no reform more important and central to a stable financial system than capping the ability of financial institutions to take excessive risks using other people’s money.

-Sheila C. Bair, former chair of FDIC and author of Bull by the Horns

The Bankers’ New Clothes accomplishes the near impossible by translating the arcane world of banking regulation into plain English. In doing so, it exposes as false the self-serving arguments against meaningful financial reform advanced by Wall Street executives and the captured politicians who serve their interests. This revelatory must-read shreds bankers’ scare tactics while offering commonsense reforms that would protect the general public from unending cycles of boom, bust, and bailout.

-Neil Barofsky, author of Bailout

Bankers have sold us a story that their risky practices are the necessary cost of a dynamic system. Admati and Hellwig expose this as a misguided and dangerous lie, and show how banks can be made more stable–if less profitable for the bankers themselves–without sacrificing economic growth. This brilliant book demystifies banking for everyone and explains what is really going on. Investors, policymakers, and all citizens owe it to themselves to listen.

-Simon Johnson, coauthor of 13 Bankers

A clearheaded antidote to the ill-advised snap reactions to the financial crisis, The Bankers’ New Clothes carefully counteracts arguments that the banking system is now more secure. With direct and rigorous analysis, Admati and Hellwig lay bare the ongoing misinformation about modern banks, and show what remains wrong with banking. This book is the voice shouting that the bankers are still not wearing any clothes. We should listen.

-Frank Partnoy, author of Infectious Greed

I like this book. The Bankers’ New Clothes explains in plain language why banking reform is still incomplete, contrary to what lobbyists, politicians, and even some regulators tell us.

-Paul Volcker, former chairman of the U.S. Federal Reserve and the U.S. Economic Recovery Advisory Board

 

Full chapter after the jump . . .

 

Sweet Subsidies

Admati and Hellwig

Category: Bailouts, Books, Crony Capitalists

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4 Responses to “The Bankers’ New Clothes”

  1. stonedwino says:

    This book sure sounds and reads like the “Das Kapital” manifesto on how deal with banks…

  2. GoBigRed says:

    I just started reading this book last night. The book is a lot shorter than it looks; the notes seem to take up 40% of the pages.

  3. jpmist says:

    Anat Admati is one of my favorite guests on Bloomberg. When interviewed she comes across like your favorite spinster aunt over post-dinner coffee explaining in very clear language how much banks are screwing everyone over.

    She doesn’t pull any punches and makes the very apt points that banks insists their borrowers to have 20% skin in the game, but it’s ok for banks to have less than 3%. That banks have basically conned their way into getting everyone to buy into their narrative that banks are special and can’t raise the capital to run their business like any other corporation.

    You can hear her Bloomberg interviews here: http://media.bloomberg.com/bb/avfile/News/Surveillance/v4FKl48gFlwU.mp3 and http://media.bloomberg.com/bb/avfile/News/Surveillance/vrLqal4HFJrE.mp3

  4. romerjt says:

    After reading Barofsky’s “Bailout” and half way thru Bair’s “Bull by the Horns” I may not go for this book being unable to read any more illustrations of how Timothy Geithner acted to protect and benefit the big banks and screwed the homeowners and the American people. The book I’m waiting for explains WTF Obama was thinking.