The Disruptor
Contrarian and drawn to the edge; challenges the settled answer.
Anat Admati reads as The Disruptor because she turns insider knowledge against the establishment that trained her. The Stanford GSB scholar describes an awakening from economics' little bubble, and that origin lends her critique a credibility no pure outsider could claim.
“And then I got more interested in kind of governance, but governance in the narrow sense, corporate governance and contract, which was all about the problems between shareholders and managers. So that was that, and then comes the financial crisis.”
“Change completely. You're no longer maximizing total value of the firm, you're maximizing the value of equity in the firm. And from that perspective, equity seems expensive to all heavily indebted corporations, banks in particular, because for other corporations, if they take on more and more debt, the creditors will start pushing back.”
“That, you know, so they have to interact with all laws. They have to obey all laws, minimum wage, you know, all kinds of laws. And so now that's my current interest, which is the corporation as a legal person. Are not a set of assets owned by shareholders. They are a separate thing, right? Twitter is a thing. They have a board.”
“That's it. In other words, their entire funding. So, what they do on the asset side, anybody can do, zero NPV, commercial real estate, whatever. And how they found it where they are privileged. Now, what happens my model of basic safety nets is that the big banks may well be overpaying for the deposit insurance part To the FDAC.”
Masters in Business: “Anat Admati on Banking Regulations and Techlash”
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