Regulators, please, temporarily, lower capital requirements for banks on exposures to “The Risky”

Current capital requirements for banks, based on perceived risks, allow banks to expect to earn much more risk and transaction cost adjusted returns on equity when lending to “The Infallible”, than when lending to “The Risky”. 

And therefore, the already dangerous huge exposures of banks to “The Infallible” or to “The Infallible” who morphed into being risky are growing day by day, while the exposures to those originally perceived as “The Risky”, like small business and entrepreneurs, are, equally or even more dangerously for the economy, drying up. 

And, as bank capital gets scarcer and scarcer, the de-facto discrimination in favor of “The Infallible” and against “The Risky” increases. And now, with regulators doubling down on their mistake and also creating liquidity requirements based on perceived risk, it will all just get worse. 

Day by day “The Infallible” needs to pay lower interest rates, and “The Risky” higher ones, than what would have been the case without the distortions imposed by the regulators, or, as The Joker would call them The “Schemers”. 

We must urgently put a stop to this. Not only do our best chances of revitalizing economic growth rates lie in giving “The Risky” equal access to bank credit, but also we need to give our small savers, our widows and orphans and our pension funds, an equal opportunity to save with exposures to “The Infallible” that produce the returns they should produce. 

Therefore regulators, please…..temporarily lower the capital requirements for banks on exposures to “The Risky” and draw up a schedule for over some few years, making the capital requirements to be the same for the exposures to “The Infallible” and to “The Risky”. 

In fact since “The Risky” have never ever caused a major bank crisis and these have always, no exceptions resulted from excessive exposures to “The Infallible” that turned risky, if you schemers cannot refrain yourself from interfering and distorting, perhaps to feel you earn your salary, then why do you not set the capital requirements for banks slightly higher on exposures to “The Infallible” than on exposures to “The Risky”. That would make much more empirical sense, you dummkopfs! 

And you congressmen, please come up fast with some good tax incentives for those who inject fresh capital into our banks and that is so much needed.