Preface ix

Acknowledgments xiii

1 The Emperors of Banking Have No Clothes 1

PART I Borrowing, Banking, and Risk 15

2 How Borrowing Magnifies Risk 17
3 The Dark Side of Borrowing 32
4 Is It Really “A Wonderful Life”? 46
5 Banking Dominos 60

PART II The Case for More Bank Equity 79

6 What Can Be Done? 81
7 Is Equity Expensive? 100
8 Paid to Gamble 115
9 Sweet Subsidies 129
10 Must Banks Borrow So Much? 148

PART III Moving Forward 167

11 If Not Now, When? 169
12 The Politics of Banking 192
13 Other People’s Money 208

Notes 229
References 337
Index 363