Tags: financial | crisis | literacy | bank

Financial Authors Speak in LA

By    |   Friday, 23 May 2014 07:41 AM

Three financial authors recently spoke to an audience at the Los Angeles Book Fair, held at the University of Southern California, with the presentations moderated by a fourth writer, Michael Hiltzik, a financial columnist for the Los Angeles Times, who spiced the discussion with refreshingly cynical quips about the industry.

The first to speak was Nomi Prins, author of All the Presidents' Bankers: The Hidden Alliances that Drive American Power," whose appearance on C-SPAN's AfterWords was the subject of Thursday's article. Prins told of having ridden in an Uber car and heard the driver talk about his outrage that the banking industry has close ties with presidents that date back many decades. She found it surprising and satisfying that her thesis had become part of the narrative of a random driver.

The second speaker was Anat Admati, an economics and finance professor at Stanford University's Graduate School of Business, one of the leaders of the current policy debate, whose book The Bankers' New Clothes: What's Wrong with Banking and What to Do About It, co-authored with Martin Hellwig of the University of Bonn has recently been published in paperback. She expressed the frustration of the relative handful of writers, including this writer, who have dissented against the longstanding policy of bailing out insolvent financial institutions that are "too big to fail." Admati quipped that following this industry has been like falling into a rabbit hole: "I couldn't believe what I heard and what I didn't hear. What was all this nonsense?"

Admati described an endless task of trying to refute the nonsense propagated by the industry, much of which is ridiculous on its face. She mused that "If we don't clear this nonsense, we have no hope." (This writer has concluded that the industry has subverted the channels of communication and filled them with its message, and the industry flacks can produce this material head of those who follow forlornly in its wake. On balance, this is getting worse.)

Specifically, Admati labeled the industry narrative of the 2008 episode of the continuing financial crisis "spin that it was a natural disaster or some 'liquidity problem' with the plumbing, flawed narratives meant to hide the responsibility of regulators and politicians that failed and were barely tweaked." She ridiculed the "reforms" of the Dodd-Frank Act as the equivalent of curtailing the speed of oil trucks that are carrying oil cargoes through residential neighborhoods at 90 mph and will now have to dial it back to 87 mph.

The third author, Helaine Olen, is also trying to warn readers about misleading industry messages with her book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.

To illustrate what she is saying, this writer recalls hearing a panelist at an American Enterprise Institute (AEI) event deride the "financial literacy" movement, which is often promoted by legislators on Capitol Hill. This writer went to the AEI speaker afterward to say how refreshing it was finally to hear someone say something bad about financial literacy.

Olen told the story of how lenders have subverted financial literacy programs to convey the message that if consumers are swindled, it is their own fault for not reading, for example, the misleading fine print produced by expert industry lawyers.

(Archived video can be found here.)

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Robert-Feinberg
Three financial authors recently spoke to an audience at the Los Angeles Book Fair, held at the University of Southern California, with the presentations moderated by a fourth writer, Michael Hiltzik, a financial columnist for the Los Angeles Times.
financial, crisis, literacy, bank
549
2014-41-23
Friday, 23 May 2014 07:41 AM
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