by Anat R. Admati (Get the Book)This excellent volume provides an invaluable lens through which to view modern banking and the ways it has evolved to privatize returns and socialize risks. The latest financial crisis provides another opportunity to recalibrate the governing rules in the direction of the public interest. However, in the US, the finding of the Financial Crisis Inquiry Commission (2010-11) included a clear rejection of forced structural change in systemically important financial firms. The UK's Vickers Commission report (2011) and EU's Liikanen Report (2012) likewise shied away from full-blown structural banking reforms. Admati (Stanford Graduate School of Business) and Hellwig (Max Planck Institute for Research on Collective Goods) provide an accessible explanation of the inherent risks in the current banking system and propose sensible rules and reforms to make the system stable without damaging bank lending or economic growth. It is difficult to argue with the authors' logic from the perspective of the public interest, but it is easy to see how the political economy of bank regulation could have left society highly exposed to the financial risk dynamics of the recent past. This timely volume is accessible to a wide readership. --Choice
