Anat Admati

Professor, School of Business, Stanford University
Co-author, The Bankers' New Clothes

We can have a safer, healthier banking system without sacrificing any of its benefits.

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The 2014 TIME 100 Most Influential People
Foreign Policy Global Thinkers 2014

Anat Admati is the George G.C. Parker Professor of Finance and Economics at the Graduate School of Business, Stanford University. She has written extensively on information dissemination in financial markets, trading mechanisms, portfolio management, financial contracting, and, most recently, on corporate governance and banking. Since 2010, she has been active in the policy debate on financial regulation, particularly capital regulation, writing research and policy papers and commentary. With Martin Hellwig, she is the co-author of The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It.

At the core of The Bankers' New Clothes is an aggressive claim: nothing has changed since 2008. In the face of financial reform, bankers, politicians, and regulators insisted that making the banking system safer would require sacrificing lending and economic growth. The Bankers' New Clothes exposes this claim and its cousins as invalid, dangerous distractions from the real dangers that our unbalanced financial system still presents. Cutting through jargon, Anat presents the issues in simple and accessible terms.

In particular, Anat insists that banks must increase their reserves of "capital" (banking jargon for equity). She tackles the various myths that banks have spread about their relationship to capital, including the widespread claim that increasing capital reserves somehow takes money out of circulation.

Professor Admati received her BS from the Hebrew University in Jerusalem and her MA, MPhil and PhD from Yale University. She is the recipient of a Sloan Research Fellowship, a Batterymarch Fellowship, and multiple research grants. She is a fellow of the Econometric Society, and has served as a board member of the American Finance Association and on multiple editorial boards. She also serves on the FDIC Systemic Resolution Advisory Committee.

Credentials and Honours

  • George G.C. Parker Professor of Finance and Economics at the Graduate School of Business, Stanford University
  • Recipient, Sloan Research Fellowship
  • Recipient, Batterymarch Fellowship
  • Recipient, Q-Group grant
  • Recipient, NSF grant
  • Fellow, Econometric Society
  • Member, FDIC Systemic Resolution Advisory Committee
  • Board of Directors member, Rock Center for Corporate Governance, Stanford Law School
  • Organiser and Board of Directors member, Foundation for the Advancement of Research in Financial Economics
  • Former Board Member, American Finance Association
  • Associate Editor, Journal of Finance
  • Advisory Editor, Journal of Financial Markets
  • Co-author, The Bankers' New Clothes: What's Wrong with Banking and What to Do about It
  • Awarded best paper in the first volume of the Review of Financial Studies
  • Co-winner of NYSE prize for best paper in the RFS-WFA-NYSE Market Microstructure Symposium


The Bankers' New Clothes

What's Wrong with Banking and What to Do about It

Anat Admati and Martin Hellwig

What is wrong with today's banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would require sacrificing lending and economic growth. The Bankers' New Clothes examines this claim and the narratives used by bankers, politicians, and regulators to rationalise the lack of reform, exposing them as invalid.

Admati and Hellwig argue we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society. They show that banks are as fragile as they are not because they must be, but because they want to be — and they get away with it. Whereas this situation benefits bankers, it distorts the economy and exposes the public to unnecessary risks. Weak regulation and ineffective enforcement allowed the buildup of risks that ushered in the financial crisis of 2007-2009. Much can be done to create a better system and prevent crises. Yet the lessons from the crisis have not been learned.

Admati and Hellwig seek to engage the broader public in the debate by cutting through the jargon of banking, clearing the fog of confusion, and presenting the issues in simple and accessible terms. The Bankers' New Clothes calls for ambitious reform and outlines specific and highly beneficial steps that can be taken immediately.

Princeton University Press (24 Feb 2013)


Book of the WeekFinancial Mail
Too Big To Free RideThe National Interest
Why bankers are intellectually nakedFinancial Times
The Real Problem with the Big BanksThe New Yorker


An important book for readers interested in what has been done, and what remains to be done, when it comes to safeguarding financial institutions.
Kirkus Reviews

This book's aim, decisively achieved, is to de-mystify the public conversation about banking so we can all understand how threadbare the industry is.
— Diane Coyle Enlightened Economist blog

"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

"Providing a sound analysis of the role of banking and its regulation in the public interest, The Bankers' New Clothes is free of technical jargon and widely accessible to all policymakers and all who are concerned about banking's future, which is virtually everybody. The book's clear exposition conveys a deep understanding of the pervasive place of banking in the economy and stands in opposition to the self-interested forces of obscurity."
— Kenneth J. Arrow, Nobel Laureate in Economics

"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, author of Bull by the Horns and former chairperson of the U.S. Federal Deposit Insurance Corporation (FDIC)

"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

"Anyone interested in the past, present, or future of banking and financial crises should read The Bankers' New Clothes. Admati and Hellwig provide a forceful and accessible analysis of the recent financial crisis and offer proposals to prevent future financial failures. While controversial, these proposals — whether you agree or disagree with them — will force you to think through the problems and solutions."
— Michael J. Boskin, former chairman of the President's Council of Economic Advisers

"With extraordinary clarity, Admati and Hellwig explain why the banking system is reckless and distorted, what can be done to tame it, and how the politics of banking has failed the public. A must-read for all, The Bankers' New Clothes educates and empowers citizens to demand a better system and tells policymakers how to deliver it."
— Jeff Connaughton, author of The Payoff: Why Wall Street Always Wins

"This entertaining book is an accessible exposé of the myths that financial firms use to perpetuate the advantages they get from government guaranties of their debt. A must-read for concerned citizens, The Bankers' New Clothes should be studied and memorized by lawmakers and regulators so they won't be duped by these false claims in the future."
— Eugene F. Fama, University of Chicago

"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

"At last! Two eminent economists explain in plain English what is wrong with banks and what needs to be done to make them safer."
— Mervyn King, governor of the Bank of England

"This excellent book should be read by everyone concerned with banking systems. Legislation has not removed too-big-to-fail financial policies, continuing the mistake of making innocent citizens responsible for bankers' errors. The Bankers' New Clothes makes the case for increased equity capital and answers bankers' arguments."
— Allan H. Meltzer, author of A History of the Federal Reserve and Why Capitalism?

"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

"Almost subversive in its clarity, The Bankers' New Clothes is the most important book about banking in a very long time. It argues that as long as implicit taxpayer guarantees incentivize banks to raise funds almost exclusively through issuing debt, the global financial system will be subject to periodic destructive crises. The most effective remedy is to force banks to strike a better balance between debt and equity, but there have been many obstacles to implementing this improvement. Future efforts to regulate the financial system should start here."
— Kenneth S. Rogoff, coauthor of This Time Is Different: Eight Centuries of Financial Folly

"With a knack for explaining complex concepts in a very straightforward fashion, Admati and Hellwig take readers on an immensely rewarding and often surprisingly amusing journey. Their brilliant book has much to offer everyone, from novices to experts."
— Stephen Ross, Massachusetts Institute of Technology

"Admati and Hellwig are on a mission to teach citizens, policymakers, and academic economists about the principles of sound banking practice and regulation, as well as the pitfalls and immense social costs of failing to abide by those principles. Much economic pain — such as the U.S. savings and loan crisis of the 1980s and the 2007-2009 financial crisis — could have been avoided had policymakers and the economists who advise them understood and implemented crucial fundamentals."
— Thomas Sargent, Nobel Laureate in Economics

"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


Anat tailors each presentation to the needs of her audience and is not limited to the topics we have listed below. These are subjects that have proven valuable to customers in the past and are meant only to suggest her range and interests. Please ask us about any subject that interests you; we are sure that we can accommodate you.

The Bankers' New Clothes


Agenda In Focus | World Economic Forum

Too Big to Fail and Getting Bigger | Bill Moyers

The Bankers' New Clothes

Sorry, Our Banks Are Still Broken