Anat Admati Discusses the Still-Too-Big-to-Fail Banks on Bill Moyers

Anat Admati, along with Simon Johnson, has been one of the most forceful advocates for having banks carry much higher levels of equity than they have in recent decades. In this interview with Bill Moyers, Admati stresses how little has been done to fix the underlying problem: that banks are subsidized to borrow, that creditors are confident that large banks will be rescued and hence don’t exercise any adequate discipline, and that they therefore have a “heads I win, tails you lose” deal with the rest of society:

ANAT ADMATI: They got a great deal. And so what they’re going to do is, if they make profit, they want to pay them out and keep borrowing. And so there’s nothing essential about that, or nothing good about that, except for a few people. And then who exactly wins and loses? They might tell– pacify the shareholders by saying, here, we’ll give you dividends, we’ll give you dividends in good times.

And then when the bad time come, or when they have fines or anything else happens, the shareholders pay. And who are the shareholders? That’s also all of us through our pension funds. And how did we do on the S&P 500? Very poorly. So the notion that these institutions by living dangerously somehow help us, that’s completely nonsense. And so what we have is a really unhealthy system that we perversely get talked into subsidizing and supporting.

This interview also features Admati debunking some of Tim Geithner’s defenses of the Administration’s “save the banks, the devil take the hindmost” response to the crisis on Jon Stewart. The more Geithner is called out on his misdirections and lies, the better.

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  1. Mark J. Lovas

    This discussion goes nowhere. No solution is offered. What’s offered is the same old tea bag with freshly boiled water. Moreover, they don’t know what justice is. Justice is not retribution. Justice would not require causing pain to people who abuse power. It requires taking their illegitimate power away. Sure, they won’t like that, but it’s nothing compared to what the people in Detroit or Athens are getting.–And there’s the rub, those who caused the crisis have been rewarded. We pay for their mistakes. and, no, I do not accept the propaganda that the crisis is over. Detroit, Athens, and many other cities show us that the economy is in terrible shape–Our economy, not their economy. I want to hear about making the banks public, about not allowing the wealth of the society to be monopolized by a small group of people.

  2. Xelcho

    I enjoyed your rant as much as the next guy, but if you take a moment to consider the conditions that exist and just how weak our republic is against such strong predatory capitalist players there is no hope of changing the game. Entertaining various silver-bullet style solutions is typical american distractionism, there is no stomach for meaningful change as it would not benefit any of the power players, only the meaningless classes. Do you really think we can regulate our way out of this? If not what options are left to such a weak republic, with a completely captured political system?

    1. Jim

      …which is exactly what the oligarchy would like the well-informed to believe.

      Defeatism is the real distractionism.

      As far as the video and the original comment is concerned, the first step to solving any problem is recognizing what the problem is. And all of the assumptions that you make are not 100% true, no hope or stomach for real change? Speak for yourself.

  3. indio007

    I watched this yesterday. I was particularly curious about her comment that banks lent money but that money was borrowed by them. She stops there. Well, who were the damn fools that lent the banks money?

    1. F. Beard

      Well, who were the damn fools that lent the banks money? indio007

      Small depositors, without their true consent since the banks are the only truly risk-free option for the storage of and transactions with claims to fiat for them.

      The existence of government deposit insurance and the lack of a free*, risk-free Postal Savings Service that makes no loans (nor pays interest) is a HUGE, HUGE implicit subsidy of the banks.

      *Up to median account size and number of transactions.

    2. profoundlogic

      Those fools were a distracted and compliant populous who didn’t demand the bankers’ heads on a silver platter. Of course the corrupt leaders in bed with the bankers were more than willing to open up the public purse and bail out the criminals with other people’s money.

      One thing we should take away from this mess is that the notion of asking and/or hoping for reform is a futile endeavor.

      1. Carla

        Obviously neither asking nor hoping will do a damned thing. As Frederick Douglass said “Power concedes nothing without a demand. It never did and it never will.”

        But for God’s sake, don’t waste a demand on reform. Change the rules. If what I’m working on is not a rules-changer, it ain’t worth my time.

        This Bill Moyers segment with Anat Amadti was pathetic.

    3. flora

      Re: who were the fools….. The TBTF banks were created over the past 20-25 years by mergers and consolidations. You may have deposited money in a smaller bank and now find your account is held by a big. During the melt down Hank Paulson insisted that some banks must merge or else. So the melt down produced even fewer, even bigger banks. The Fed loans money to the bigs via the discount window.

      Trickle-down economics, President Herbert Hoover’s economic response to the Great Depression, is IMO the guiding principle behind govt’s current failure to hold either the big banks or their officers accountable. For the GOP to push trickle-down during the financial melt down, when Bush was president, wasn’t surprising. For Obama and the Dems to continue to push trickle-down policies (they can’t possibly still believe it works) is a sign that they are clueless or worse. (I was glad to read here on Friday that Kara Stein at the SEC is calling for tougher regulations and real penalties.)

      From Wikipedia: “”Trickle-down economics” and the “trickle-down theory” are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided to businesses and upper income levels will benefit poorer members of society by improving the economy as a whole. The term has been attributed to humorist Will Rogers, who said during the Great Depression that “money was all appropriated for the top in hopes that it would trickle down to the needy.” The term is mostly used ironically or as pejorative.”

    4. skippy

      Rational self interest homo economicus specious reasoning, meets, you don’t always – get – what you – pay – for…

      skippy…. Unearned wealth seems to have a high correlation to negative long term side effects, there’s a banking prize for that imo.

  4. cnchal

    In 2008, how did Goldman Sachs become a bank holding company in 24 hours? What corrupt privilege was extended to make that happen? Speedy 100 mph paperwork?

    Instead of coddling these criminals, Goldman Sachs should have been taken out behind the barn and symbolically shot between the eyes. There should not have been an AIG bailout, with a $13billion freebee. They should have gone bankrupt for their mistakes, like capitalism intended, and gone to prison for their criminal conduct.

    Instead, the President of the United States says no crimes were committed. That way, he could continue being of service to his owners.

    The banks have not been reformed, and this financial crime wave will bite us in the ass again.

  5. TedWa

    Banks are above the law, meaning they are the law.
    Obama handed over our national sovereignty and democracy to them. This corporate takeover is in all fields, not just finance. It’s in Big Pharma, agriculture (GMO’s and Monsanto), oil and gas, everywhere, legal and illegal up to the SCOTUS. You know they want to control all water rights too. If we elect a conservative Wall Street politician to President, these powers vested in the office could easily turn this country into a real totalitarian state. Look what they’re doing in Michigan. Did the states vote for the Constitution and join the union so it could be thrown out whenever the powers that be decide “imminent” danger? (Now defined to almost any threat present or in the future, innocuous or not, imminent or not, thanks to Obama)
    The only power we have left is the vote. Vote out all incumbents – vote your conscience. If you don’t, you cede control of every aspect of your life over to these power brokers and they will abuse that power. The founding fathers must be turning over in their graves seeing how this republic has been sabotaged, up to the highest offices of the land, to where it’s forms and functions are unrecognizable and now more those of a totalitarian state. We the people, the backbone of this country, are being reduced to chattle and the rightly deserved term, sheeple.

  6. TedWa

    A number of conclusions can be drawn from where we are today. 9/11 was an inside job, with Wall St, that allowed unprecedented growth of the surveillance state and the MIC. IE.. war on an ever-elusive foe that will never end. Hence the government and Wall St collusion to hide their crimes, because if we were to find out what was going on, they would both have to fall – so they protect each other. Illusion upon illusion has become the reality they put forth – with the banks continual bailouts and the unending propaganda and captured media.
    Dodd/Frank (written by bank lobbyists) was never meant to be real regulation. At over 2,000 pages it was meant to be wrangled over for years, to give the banks time to water down any real regulation. Glass-Stegal was under 100 pages and there was no doubt about it’s intent and implementation.

  7. Carla

    “9/11 was an inside job, with Wall St, that allowed unprecedented growth of the surveillance state and the MIC. IE.. war on an ever-elusive foe that will never end. Hence the government and Wall St collusion to hide their crimes, because if we were to find out what was going on, they would both have to fall – so they protect each other.”

    And so you advocate…VOTING? For what?

    Maybe wherever you live you have something or somebody to vote for.

    Not here in Ohio. I voted Green Party — Jill Stein — for President. My Democrat “friends” were convinced that ALL BY MYSELF, I was electing Romney to the Presidency. You would not believe the sh*t they gave me. Yeah, well, I don’t know if Stein even polled 1 percent nationally. And she was hands down, the best candidate running for POTUS.

    1. TheCatSaid

      We can start creating change at the local level, through elections and getting involved.

    2. TedWa

      I voted Stein also, my conscience is clear. I did the right thing and so did you. That should be enough. If everyone voted their conscience things would change, quickly. I think they got rid of Cantor by voting their conscience. Can we do any less?

  8. ewmayer


    My own definition of trickle-down economics: “They piss on you and tell you it’s raining.”

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