I started reading the proofs of a book due out in March, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It by Anat Admati and Martin Hellwig. The title refers of course to the Hans Christian Anderson fairy tale, The Emperor’s New Clothes, in which the emperor is revealed to be naked by a seemingly naive question.
Just a few pages in to the introduction, I can tell I’m going to love it. Sample quotation:
“A major reason for the success of bank lobbying is that banking has a certain mystique. … Many of the claims made by leading bankers and banking experts actually have as much substance as the emperor’s new clothes in Andersen’s fairy story. But most people do not challenge these claims, and the claims have an impact on policy.”
“Politicians seem to be taken in by the lobbying. For all the outrage that expressed about the crisis, they have done little to address the issues involved.”
Not just politicians – I refer to the Financial Times (print edition) headline earlier this week on the weakened liquidity rules accepted by the BIS: “Years of lobbying pay off for banks” (watered down subsequently online to ‘Basel bends on liquidity rules’).
More on the naked bankers when I review the book in due course.