The Bankers' New Clothes, The Danger of Blind Trust in Finance

Our guest today is Anat Admati, professor of Finance and Economics at Stanford Graduate School of Business and co-author of The Bankers’ New Clothes. In this episode, she takes a critical look at trust in powerful institutions—arguing that, when misplaced, trust can be not only naive but dangerous.

Anat explains that much of the financial system operates on the illusion of oversight and accountability. While many believe that governments, regulators, and boards are safeguarding the public interest, the reality is often one of regulatory capture, corporate self-interest, and systemic opacity. She challenges listeners to rethink assumptions about “checks and balances” in modern capitalism.

She also reflects on the role of academics and public intellectuals in holding power to account. While research often stays behind paywalls or within elite circles, Admati calls on scholars to engage more directly with public discourse—and describes the resistance they often face when challenging the status quo. The conversation covers trust, leadership, corporate governance, and the failures of financial reform. Anat argues that effective change requires more than technical fixes—it requires moral courage, transparency, and a willingness to challenge institutional convenience.