The Bankers' New Clothes: What's Wrong with Banking and What to Do About it - with Anat Admati

Economist Anat Admati delivered a lecture at King's College London on their book (co-authored by Martin Hellwig): The Bankers' New Clothes: What's Wrong with Banking and What to Do About it.
In the book, Admati and Hellwig examine how new bank failures proved to be a rude awakening for everyone who believed that the banking industry was reformed after the Global Financial Crisis-and that we’d never again have to choose between massive bailouts and financial havoc. The Bankers’ New Clothes uncovers just how little things have changed-and why they believe banks are still dangerous.
The lecture took place on 8 May, 2024, in London.
Interested in what the School of Politics and Economics can offer you? Check out our undergradate and postgraduate programmes here: www.kcl.ac.uk/politics-economics

[@stevefrith9924]

Plumbers may be confused with this explanation. May I mention the bank of England note that banks create new money in the process of making a loan, ie they do not lend deposits. In the main they lend on asset's that become collateral and in doing so provide new money that increases the "value" of assets; mostly mortgages. Since this is fundamental to the activity of banks I wonder why this is not mentioned?

[@mrlucasftw42]

Understandable that due to contagion, you can't let a large bank fail. However, you could throw board members in prison for criminal negligence (maybe even financial terrorism, if they ran a too big to fail into the ground, shaking the whole system). Further, could easily make equity take a nice haircut, thereby strongly incentivizing shareholders to elect better board members that do not allow obscene risk into the game (never mind make it the new normal).

[@electroncommerce]

Such a lovely presenter, and a great group. Her very direct and interesting take on using the standard expectations that CORPORATIONS are expected to conform to should be also to applied to banking CORPORATIONS is almost revelatory as an idea. Much appreciated!

[@googooboyy]

What I learned: buy bitcoin. Limit exposure to banks. Be your own bank.

[@klam77]

What i Learned: hack bitcoin for free everytime some fool praises bitcoin.

[@musiqtee]

Stating that _banking / FIRE-sector_ is “above the law” is important. The equally important dialectic would be “how has banking / FIRE-sector *influenced and changed* the law?” Deregulation is a misnomer, as it really means _changing_ legislation - not abandoning it fully. That’s the popular-political narrative, but every parliamentary decision is an action - not an inaction - of legislative change. Ownership IS power - however we tweak our economic models of analysis. Economics need to re-internalise ecology and not expect individuals to always be rational - we’re not. A practice of economics models should be ‘top down’, not ‘bottom up’ - since every individual will exist within the model, not as an externality to it. 😊

[@klam77]

Basel specs are all WINDOW DRESSING.

[@Feninou]

Unfortunately, I don't think we can get out of this materialistic crisis if we keep this abstract materialistic mindset.

[@mrlucasftw42]

Regarding the commodity question - the point here is that banks have radically similar products - yes you can have different logos on your credit card - and some different terms potential, but banks lend the same dollar that any other bank does. So sure, rate competition - but radically similar products. I'm surprised that focus of the question went over the panel's head. Compare that to say a restaurant - sure, most restaurants serve hamburgers and salads - but these can be dramatically different. Even at similar price points. Take US Mortgage loans - given the underlying structure for Conforming loan sizes, those are virtually identical bank to bank. There may be nominal little promo differences and a few basis points here or there - but you get principally a near identical product. Heck, they probably have damn near the same disclosures (due to regulations/ underlying agencies, etc) outside of changing the rubber stamped corporate name on them.

[@mrlucasftw42]

That first question @ 51 minutes or so - what a question!

[@mrlucasftw42]

Interesting points about limited liability. I think limited liability is very much pointing at the root of the problem. I think those that hold material control should NEVER have unlimited liability. As opposed to those with minority interests the effect virtually zero power on what the corporation (or its agents /employees) do.

[@ImNotHereToArgueFacts]

The hidden context here, is her understanding of the system is much greater than can be relayed in a 30min overview. Didn't help ordinary Joe very much.

[@hydrogreen1111]

What's wrong with banking? The central bank model came into existence in 1694 when the frontman William Paterson contracted with William of Orange for £1,200,000. The Bank of Emgland was given a governmental sounding name of and we were converted to usury debt slaves ever since. Finance capital is too powerful of a pervasive influence where too many are profitting from it to alter course.

[@user-wr4yl7tx3w]

His points is all well known but he fails to realize that unfortunately requiring banks to have more equity and less leverage means cost to economic growth and access to credit. Be careful what you ask for. What’s obvious is not.

[@MorrisFilmPhoto]

Thanks 4 Good Video / Program! Apology; but I lost my way after 2-3 min 😂 and I can't hear about anything "new" is/has happeni!? Unless, of course, as mention we return back to Gold Standard! Still, maybe we all need old thinking to explain latest trends as we don't have invented words for those "trends" yet 🤔 Still, not to disregard but to put it into context! Nothing new only SameSame 😂Greed & Corruption 👋

[@edenalmakias817]

Banking should be a public utility and shouldn't operate for profits...

[@eliasmai6170]

without risk, there are no rewards. banking is about profits to fund innovations and fund economic activities to generate revenues for government and the private sectors.

[@edenalmakias817]

​@@eliasmai6170 Banks don't use their profits to fund anything (they create money/credit). Most of their lending goes into assets (real estate) that already exist and not to "innovation" in the private/public sectors. Also, if you watched this lecture, you would see that banks don't really have to take any risks (they are protected by the regulators). At an even deeper level, currency is issued by the government and doesn't need private banks to invest or lend.

[@dirksharp9876]

​@@eliasmai6170treasuries could do that. The "reward" is needless wars and patents for already large companies, pharmaceutical giants. Add some declining currency, severe consolidation and declining living standards and you have the same mistake every other group of people in history have made when they went down this road.

[@Silks-]

⁠@@eliasmai6170 look where that’s got us. We’re massively overpopulated, exploited every resource of the planet including human labour to the point we’re on the brink of global civilisation all collapse, it funded many wars, it enslaved the average person. It’s a predatory system that became far too powerful and only acts to serve itself at the expense of the planet and all living beings on it.

[@lucrativeleadershipconvers5149]

That's what credit unions are. The starved stepchildren of the banking industrial complex

[@Alexander-xq1gr]

Her inability to answer questions at the end does make you question the validity of her thesis.

[@Watching58]

Looks like a dud talk from the comments

[@keimonbest]

I will still consume

[@Kenny-tl7ir]

Just buy Bitcoin. Solved.

[@tomaszsurdej8294]

England is much more interesting than America. Why aren't you talking about the UK? Why are they using a British accent to speak American English, which is considered King's English in the UK? Or are you trying to appeal to those people in Midlands, who speak a peculiar dialect which sounds like American English? This isn't what London English sounds like. Be London, in London. adwokat Tomasz Surdej - BAR OF KIELCE, POLAND