The Bankers’ New Clothes: A Timely Update on our Fragile Banking System
Ten years after publishing The Bankers’ New Clothes, CASI co-faculty director Anat Admati and her co-author Martin Hellwig have updated their highly acclaimed book, with a new preface and four new chapters that expose the shortcomings of current policies.
The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It-- New and Expanded Edition picks up where the Global Financial crisis left off, revealing new systemic weaknesses and showing how the dominance of banking endangers the rule of law and democracy itself. The Bankers New Clothes offers a renewed call for responsible regulation before the next crisis appears.
Below is a list of media publications, interviews, and audio excerpts featuring CASI faculty co-director Anat Admati on her book.
Book Launch Tackles Big Issues
London Business School, 04/08/2044
Banks should be required to hold equity levels of 20-30% against all lending. That is the recommendation of Anat R Admati, George G.C. Parker Professor of Finance and Economics at the Stanford Graduate School of Business, and Martin Hellwig, Director of the Max Planck Institute for Research on Collective Goods.
The co-authors were speaking at London Business School (LBS) at the launch the latest edition of their highly acclaimed book, The Bankers' New Clothes: What's Wrong with Banking and What to Do About It.
Nonsense and Bad Rules Persist in Banking
Anat Admati OpEd, Project Syndicate, 04/08/2024
In December, the CEOs of the eight largest banks in the United States participated in a three-hour posturing session before the Senate Banking Committee. It was a disheartening display that showcased the toxic blend of politics and asinine rhetoric that often characterizes discussions about banking. Much of the hearing focused on proposed banking regulations known as the “Basel 3 Endgame.”
Opinion: Memo to Jamie Dimon and Other Bankers: What Benefits Large Banks Doesn’t Necessarily Benefit Americans
Anat Admati, Published in Marketwatch, 04/08/2024
… Prudent banks insist on borrowers having "skin in the game" when they lend, yet vehemently oppose regulations aimed at reducing their dangerous reliance on borrowing. Banks' aversion to equity funding and addiction to borrowing enables them to shift costs and risks to others, ultimately benefiting at public expense. They often get away with it by keeping politicians and the public confused.
The Banker
Anat Admati and Martin Hellwig, 03/18/2024
When Silicon Valley Bank failed, the most shocking fact was not the deposit run or the role of social media but the supervisors’ failure to recognise the bank’s technical insolvency months earlier. Even today, official narratives ignore the solvency problems that eventuallycaused the run and the flaws in the rules that allowed these problems to remain hidden.
The Bankers’ New Clothes: An interview with Stanford’s Anat Admati
Francine McKenna, The Dig (Substack), 03/06/2024
On February 27 I took the train to Princeton to hear my friend Anat Admati talk about the new edition of her book, The Bankers’ New Clothes. Anat R. Admati is the George G.C. Parker Professor of Finance and Economics at Stanford Graduate School of Business (GSB) and a senior fellow at Stanford Institute for Economic Policy Research.
This is the 10th-anniversary update that has recently been published. The completely new section IV is great!
Anat Admati on How to Never Bail Out Banks Again
Bloomberg, Odd Thoughts podcast, 03/04/2024
What did we learn from the March 2023 banking crisis? And what could we be doing differently now? In this episode, Tracy Alloway and Joe Weisenthal speak with Anat Admati, professor at Stanford Graduate School of Business, about why bank bailouts (in all their different varieties) persist and what can be done about it. Admati discusses why banks are structurally disincentivized to behave like other types of companies, the impact of new capital requirements including the Basel Endgame proposal, and competition with other types of lenders including private credit.
Listen to the full podcast here.
Money Life with Chuck Jaffe
moneylifeshow.com , 01/24/2024
Stanford University professor Anat Admati, co-author of The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It, discusses how the collapse of Silicon Valley Bank and other troubles that occurred in 2023 are not really over, and why the system that has immunized banks from most troubles has also ensured that troubles will keep happening.
Listen to the full podcast here.
More Regulation? Big Banks Say They’re Safe Enough Already
Peter Coy, New York Times, 01/22/2024
The backsliding appalls a lot of economists, among them Anat Admati, a professor of finance and economics at Stanford’s Graduate School of Business. Admati is a co-author with Martin Hellwig, a German economist, of a 2013 book on pretty much exactly this topic, “The Bankers’ New Clothes: What’s Wrong With Banking and What to Do About It.” (An updated edition of the book just came out.)
“It just sickens me,” Admati told me last week. “It doesn’t have an economic rationale, beginning to end.”
Read the full opinion piece here.
Capitalisn’t: The Capitalisn’t of Banking with Anat Admati
Capitalisn’t Podcast, Chicago Booth Review, 01/18/2024
Anat Admati joins Capitalisn’t hosts Bethany McLean and Luigi Zingales to discuss the updated edition of her and Martin Hellwig’s book, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It. Dissecting new financial developments, including the failure of Silicon Valley Bank, the crypto industry, and shadow banking, Admati lays bare how the current financial system is rigged for the benefit of the few. She also prescribes how we can build and regulate a fairer and more accountable financial system and, thus, a more stable and equitable capitalist economy.
Listen to the full podcast here.
The Bankers’ New Clothes -Book excerpt
By Anat Admati, Martin Hellwig ProMarket, 01/18/2024
“The global banking system was so fragile in 2007–2009 that it was unable to withstand the impact of the decline in U.S. housing prices. The breakdowns of financial institutions and the declines in asset prices were stopped only when central banks and governments provided massive bailouts and supports. We wrote this book to explain why the system had become so fragile and how it had broken down, and to advocate for better rules.”
Out Today: A Deep Dive into the Dark Side of Banking and its Handmaiden, Central Banks
Pam Martens and Russ Martens, Wall Street on Parade, 01/09/2024
“It is a must read for every American who is bold enough to remove their media tinted, rose-colored glasses and take a hard look at how the U.S. banking system got into the mess it’s in today.”
“The new edition brings the reader up-to-date with the bank runs and second, third and fourth largest bank failures in U.S. history that occurred in the spring of last year, along with four new chapters: “Too Fragile Still,” “Bailouts and Central Banks,” “Bailouts Forever,” and “Above the Law?”
