Friday, November 20, 2009

An unconstitutional odious discrimination!

When a bank lends to the government it is required to hold zero percent in equity; when it lends to a corporation rated AAA by one of three credit rating agencies then they need 1.6 percent; but, when lending to an entrepreneur or a small business that has not been rated, then the bank is required to hold 8 percent in equity. As bank equity is scarce and expensive this amount to an arbitrary discrimination against unrated entrepreneurs and small businesses.

If I was an entrepreneur or a small business in the US I would go to a judge and denounce that I am being discriminated against by the financial regulators, in an unconstitutional way.

I would also take the opportunity to explain to the judge how perfectly stupid this discrimination is considering that it is precisely the entrepreneurs and small businesses those who can create the real fiscally sustainable jobs, as well as the AAAs of tomorrow; and also remind the judge that entrepreneurs and small businesses had nothing to do in creating this crisis.

PS. What would the US Supreme court opine if asked: “Is a regulatory discrimination against The Risky and in favor of The Infallible, not an odious and unconstitutional negative action?”