Anat Admati, the Stanford finance professor, is becoming a more prominent figure in finances and in Washington, especially with her recent book, “The Bankers’ New Clothes: What’s Wrong With Banking and What to Do About It.” She even left a copy in the hands of President Obama last month. Per The New York Times:
Ms. Admati’s simple message is that the government is overlooking the best way to strengthen the financial system. Regulators, she says, need to worry less about what banks do with their money, and more about where the money comes from.
Her solution is to make banks behave more like other companies by forcing them to reduce sharply their reliance on borrowed money. That would likely make the banking industry more stodgy and less profitable — reducing the economic risks, the executive bonuses and, for shareholders, both the risks and the profits.
