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 rationalize 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.

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.

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. Admati was listed as one of the 100 most influential people by Time Magazine and as one of the 100 Global Thinkers by Foreign Policy Magazine in 2014.

Martin Hellwig was appointed Director at the Max Planck Institute for Research on Collective Goods, Bonn, and Professor of Economics, University of Bonn (Courtesy Appointment) in

2004.

He holds a diploma in economics from the University of Heidelberg (1970) and a doctorate in economics from the Massachusetts Institute of Technology (1973).

His academic career involved a postdoctoral year at Stanford University, three years (1974-77) as Assistant Professor of Economics at Princeton University, ten years as Associate Professor (1977-79) and Professor of Economics (1979-87) at the University of Bonn in Germany, nine years (1987-1996) at the University of Basle, Switzerland, and another eight years at the University of Mannheim (1996-2004).

He has also held visiting positions at the Université Catholique de Louvain, the London School of Economics, Hebrew University, Jerusalem, and Harvard University.

Prof. Hellwig was the first Chair and is currently Vice Chair of the Advisory Scientifc Committee of the European Systemic Risk Board, one of the institutions the European Union created after the financial crisis. He is also a Member of the Economic Advisory Group on Competition Policy of the European Commission, DG Comp, and of the Scientific Advisory Committee of the German Ministry of Economic Affairs. In the past, he has been a member and Chairman of the German Monopolies Commission and, more recently, of two ad hoc advisory committees in Germany, dealing with government loans and loan guarantees to nonfinancial companies and with exit strategies for the government’s participations in banks in the financial crisis.

He is also a former President of the European Economic Association and of the Verein für Socialpolitik (German Economic Association), an Honorary Member of the American Economic Association, a Fellow of the Econometric Society and a former Co-Editor of Econometrica. His research interests involve financial markets and institutions, corporate governance, public economics, network industries and competition policy, foundations of monetary theory and macroeconomics and anything else that looks intriguing.