Sunday, December 16, 2012

What are historians going to say about the Basel Committee's capital requirements for banks based on perceived risk?

I am sure historians will be scratching their heads trying to figure out how the bank regulators of the Basel Committee for Banking Supervision, and of the Financial Stability Board, could have been so dumb so as to base their capital requirements for banks on perceived risks already cleared for by markets and banks through interest rates, amounts exposed and other contractual terms. 

And with it they doomed our banking system to overdose on perceived risks and create obese exposures to "The Infallible" and anorexic exposures to "The Risky". 

In other words the regulators castrated the banks of the Western World and made these sing in falsetto.

Most probably the historians will be explaining it in terms of the incestuous group think which can result when allowing “experts” to debate such matters in a mutual admiration club subject to absolutely no accountability at all.

Damn you dumb bank regulators!