One of the most amazing things about the debate we’ve had over financial reform since the crisis of 2008 is that we haven’t really questioned the system itself, only the state of individual institutions. Stanford professor Anat Admati, whose book The Bankers’ New Clothes, which she co-wrote with Martin Hellwig, has become a call to arms for reformers globally, has done just that. Rather than focus on the details of stress tests or Dodd-Frank regulations, Admati has asked a simple, powerful question: Why do banks, even under new postcrisis rules, do business with 95% borrowed money when no other business would dream of it? Why are banks special? Her answer: They aren’t, and financial reform needs to go much further to reflect that. “Is this complicated, risky system the best we can have?” she asks. Thanks to Admati, central bankers, global policymakers and economists are starting to wonder that too.
Foroohar is an assistant managing editor and economic columnist at TIME
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