Quotes from ANAT ADMATI

Typical reaction to scrutiny: attack and mock messenger and message, minimize the problem, hope attention dies down.

No business in the economy has the easy money that banks get to play with.... The existence of banks with single digit amounts of equity is a completely unhealthy existence -- that is not only a risk for the banks, but for all of us.

Borrowing can be addictive, especially if the borrower benefits from guarantees.

Beware of economists who hide assumptions.

Is this complicated, risky [banking] system the best we can have?

The politics of banking is bad everywhere, including UK. Eurozone has more problems, unhealthy symbiosis.

Quite simply, banks are as indebted and fragile as they are only because they want to be and not because of any benefit this brings to society. Nothing that banks do require that they borrow as much as they do or as much as they lobby to be allowed to do.

Most investments involve risks. If investments are funded by borrowing, the risks are borne not just by the borrowers but also by the lenders, and possibly by others. The borrowing itself magnifies risk, and it creates fundamental conflicts of interest that can also lead to inefficiencies. These conflicts of interest and inefficiencies explain what is wrong with banking.

The present situation is perverse. It is as if we were to subsidize the chemical industry to intentionally pollute rivers and lakes. Such subsidies would encourage additional pollution. If the industry were asked to limit the pollution, it would complain that its costs would increase. Would such complaints make us tolerate the pollution? Subsidizing banks to borrow excessively is just like subsidizing and encouraging companies to pollute when they have clean alternatives.