Wednesday, September 26, 2012
Do conservatives and progressives not know or care about how regulators, with their silly risk weights based on perceived risk which determine the capital requirements for banks, so fundamentally distort the markets?
Do conservatives and progressives not know or care about how regulators, with their silly risk weights based on perceived risk which determine the capital requirements for banks, so fundamentally increase the inequality between the “risky” and the “not-risky”?
Does the Congress not know or care about how the regulators, with their silly risk weights based on perceived risk which determine the capital requirements for banks, effectively intrude in its domain and create subsidies for the “not-risky” and taxes for the “risky”?
Are the current bank regulators really unqualified as risk managers? Absolutely yes!
The number one rule in any risk management must be to identify what risks you cannot risk not to take.
Regulators who do not define the purpose of what they are regulating cannot know one iota about risk-management. Or is it that they don’t care about our economies falling to pieces, as long as the banks stand there in shining armors among the rubble?
Regulators who care about the perceived risks of bank assets, and not about how bankers react to the perceived risk of assets, have no idea of what they are up to.
Regulators who give banks immense incentives to hold assets perceived as “not-risky” ignoring that all bank crisis ever have resulted, exclusively, from banks holding excessive assets that had erroneously been perceived as absolutely “not-risky”, have no idea of what they are up to.
Regulators who do not know that when they allow a bank to hold less capital when an asset is perceived as “not-risky” discriminates against the access to bank credit of the “risky” like small businesses and entrepreneurs, and fundamentally distort the markets, have no idea of what they are up to.
Regulators who do not understand that helping the “risky” to access bank credit is a fundamental part of building a growing and strong economy and jobs, and that favoring bank lending excessively to what is perceived as “not-risky” will only make for a flabby and imploding economy, have no idea of what they are up to.
Risk managers who do not understand that risk-taking is a fundamental part of building a flexible and sturdy system, and that going excessively solely for what is perceived as “not-risky” makes for a
fragile system, have no idea of what they are up to.
Unauthorized? Yes! You tell me who authorized them to do what they did. Any volunteer?
What did the regulators really do? Scared witless by the possibility that bankers would expose themselves too much to assets deemed as “risky”, something that bankers never or very rarely do, they created huge incentives for banks to concentrate on assets that were, ex ante, perceived as “not risky”. In doing so, they fomented an incredible dangerous highly leveraged bank exposure to the “not risky”, and a truly anorexic exposure to the “risky”, like to the small businesses and entrepreneurs, something which has placed us almost over the brink of disaster.
What did the regulators really do? They created the prime cause for why now the US and other sovereigns are saddled by immense, almost unserviceable public debt burdens.
What did regulators really do? As I see it, by excessively promoting bank credit to “super-safe” sectors, like real estate in Spain, and to “infallible” sovereigns, like Greece, they have almost singlehandedly taken the eurozone down.
Sincerely, I am sick and tired of regulators who do not seem to care where they are taking our Western World, as long as they keep their “important” bureaucratic posts within their little mutual adoration club, apparently not accountable to anyone.
Sincerely, I am sick and tired of those incapable of grasping the possibility of our current bank regulators being so fundamentally wrong, so that they, even when they proclaim “Without fear and without favor” do not even dare to ask the questions that needs to be asked.
Sincerely I am sick and tired, and anguished, about my children and grandchildren having to grow up in a world were so much de-facto power lies in the hands of some petit bank regulating bureaucrats.