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Truth is Powerful

Direct: The Rise of the Middleman Economy and the Power of Going to the Source

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Kathryn Judge is a law professor at Columbia University, with most of her work regarding banking and finance. Below, she shares 5 key insights from her new book, Direct: The Rise of the Middleman Economy and the Power of Going to the Source . Listen to the audio version—read by Kathryn herself—in the Next Big Idea App. 1. We live in a middleman economy.

Our economy has a lot of middlemen, and they play a structural role in shaping the economy. It used to be, in the United States, that we had community banks spanning the country. They tended to be small organizations taking money from local depositors and using it to make loans to small businesses and homeowners in the area. They did so through what they knew about the people to whom they were loaning money.

Then, starting in the 1980s, there was a significant shift as banks began buying up other banks. Suddenly the four largest banks dominated banking. Not only did they become bigger, but they had a different way of making loans. They used standardization and data to figure out who deserves loans. This facilitated new sources of capital which provided a backbone that led […]

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