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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, March 17, 2013

Goldman Sachs Needs "New Clothes"

Anat R. Admati and Martin F. Hellwig have written a book about banking called "The Bankers' New Clothes."  (It would be better for Goldman to have new clothes rather than parade around "in the altogether" as they are now.)

According to the authors, the book will help readers become educated about the banking system and help them understand the dangerous and fragile nature of banks that can cause problems for the economy.  Another failure of the banking system may cause even graver harm.  Banks are not more special than other institutions and regulation will make them safer without causing harm to them.

To get a feel for the authors' narrative style, here is an excerpt from an omitted chapter of the book.  The site also includes a vido clip about the book.
The Bankers' New Clothes
By Anat Admati and Martin Hellwig
. . . . 
The book argues that we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society. Banks are as fragile as they are not because they must be, but because they want to be–and they get away with it. Whereas this situation benefits bankers, it distorts the economy and exposes the public to unnecessary risks.

Weak regulation and ineffective enforcement allowed the buildup of risks that ushered in the financial crisis of 2007-2009. Much can be done to create a better system and prevent crises. Yet the lessons from the recent crisis have not been learned.

The Bankers’ New Clothes seeks to engage the broader public in the debate by cutting through the jargon of banking, clearing the fog of confusion, and presenting the issues in simple and accessible terms. It calls for ambitious reform and outlines specific and highly beneficial steps that can be taken immediately.

Read the rest here


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