It has been four-and-a half years since the largest banks that were largely responsible for causing the global financial crisis were rescued from their own self-inflicted wounds by a government that deemed each one so large and so systemically significant that its failure would bring down the entire system. In the aftermath of the financial crisis, which cost millions their jobs and resulted in trillions of dollars of lost wealth, surely our regulators would have addressed the root causes of the crisis and lived up to their promises to reform our financial system so that it never again would be subject to the dangerous practices of executives at giant banking institutions. Right?
Think again. As we will learn in today’s book salon, our financial system remains sick. Our banks remain unnecessarily fragile, built on a foundation of borrowed money that helps create momentous private profits when times are good but causes massive social losses when they are not. The necessary and common sense reforms that could have provided a safer financial system have been soundly defeated, with the voices calling for reform drowned out by the hysterical warbling that any type of meaningful reform would have devastating consequences for growth and the real economy by the banks, their lobbyists, and the others whom they pay off.
In their groundbreaking new book, The Bankers’ New Clothes, Anat Admati and Martin Hellwig, two of the world’s most prominent and respected academics in finance and economics, expose the lies propagated by those who fight so dramatically to preserve the broken status quo. Argument by argument, scare tactic by scare tactic, they take on the bankers’ arguments and shred them, one by one, exposing them as nothing more than self-serving justifications for preserving a system that serves only the banks, not the general public. And most importantly, they do so in plain English with real world examples that are familiar to anyone who has ever had a bank account, a credit card, or a mortgage. They make the complex simple, and in so doing, reveal that as taxpayers we have been on the wrong side of a decades-long con that has enriched a handful of bankers while the rest of us suffer for their excesses.
But Admati and Hellwig do not stop there. In addition to exposing the falsity of the bankers’ arguments, they offer simple solutions on how we can greatly improve our banking system by providing for stable banks that are incentivized to support the broader economy through sensible lending, and describe a path to such reforms that will encourage economic growth for everyone, not just the entitled few on Wall Street.
The Bankers’ New Clothes is essential reading. Whether you are new to these topics or are intimately familiar with them, this book will quickly make you an expert capable of piercing the veil of deceptive complexity that the bankers and their supplicants so deftly hide behind.
Please join us for what will be a fascinating discussion at the intersection of politics, business and finance.
[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]