With capital requirements for banks based on perceived risk interest rates were manipulated… where do the risky sue?

When regulators set the capital requirements for banks based on perceived risks, even though these perceived risks are already priced in by the bankers in the interest rates, they are effectively manipulating the interest rates. The direct consequence is that those officially perceived as not-risky, have to pay much less interest than what would be the case without this distortion, and those officially perceived as risky need to pay much more… and all for absolutely no good reason at all.

And so when I read that Barclays has been fined £290m ($450m) for trying to manipulate a key bank interest rate which influences the cost of loans and mortgages, my first thought was, where can the “risky” small businesses and entrepreneurs sue the regulators for all the monstrously excessive interests they paid?

My simple calculations, here, indicate that a not rated bank client, exclusively on account of this odious regulatory discrimination, has to pay about 270 bp (2.7%) more in interest rates when compared to an AAA rated bank client… or, like now, in times of extremely scarce bank capital, suffer the consequences of being excluded from access to bank credit.