Anat Admati on Bank Regulation and the Bankers' New Clothes

EconTalk

Library of Economics and Liberty

Social Sciences, Society & Culture, Books, History, Science, Philosophy, Courses, Interviews, Business, Economics, Ethics, Education

4.7 • 4.4K Ratings

🗓️ 8 April 2013

⏱️ 60 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Anat Admati of Stanford University talks with EconTalk host Russ Roberts about her new book (co-authored with Martin Hellwig), The Bankers' New Clothes. Admati argues that the best way to reduce the fragility of the banking system is to increase capital requirements--that is, require banks to finance their activities with a greater proportion of equity rather than debt. She explains how debt magnifies returns and losses while making each bank more fragile. Despite claims to the contrary, she argues that the costs of reducing debt are relatively small for society as a whole while the benefits are substantial.

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty.
0:06.4	I'm your host, Russ Roberts of Stanford University's Hoover Institution.
0:11.0	Our website is econtalk.org where you can subscribe, comment on this podcast, and find links
0:16.3	and other information related to today's conversation.
0:19.0	You'll also find our archives where you can listen to every episode we've ever done going
0:23.3	back to 2006.
0:25.4	Our email address is mailadycontalk.org.
0:27.9	We'd love to hear from you.
0:29.8	Today is March 21st, 2013, and my guest is a not-udmody of Stanford University, and
0:39.6	the author with Martin Halwig of The Banker's New Clothes, what's wrong with banking and
0:44.7	what to do about it?
0:45.7	A not-welcome back to e-contalk.
0:47.0	Thank you for having me again.
0:49.6	Your new book, The Banker's New Clothes, is now one of my favorite books on the crisis,
0:53.5	and I read quite a few.
0:55.6	What the book does is it takes you step by step through how debt works for an individual
1:00.0	for a bank for a nation, and one of the things you learn, even if you know something about
1:04.2	debt, is that debt is tricky.
1:06.0	You talk a lot and very clearly about the incentives that debt creates, the side effects
1:13.0	of debt, the fragility of debt.
1:15.4	So if you find balance sheets confusing or equity, a scary word, this is a great book for
1:20.6	you.
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Library of Economics and Liberty, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Library of Economics and Liberty and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.