Small businessmen or entrepreneur, if only you knew, you would be raving mad at bank regulators.

Suppose you were an entrepreneur or a small or medium sized business with no credit rating as you cannot afford that. And then that in order to realize your dreams you should have been able to access a $400.000 loan at 7%, had the banks not been regulated, but now, only because they are regulated with the Basel Committee's criteria, the banks will only offer you $200.000, and this at 10%. Would you not be mad at this Basel Committee? 

Why $200.000 and not $400.000? Because the bank has to hold much more capital five times more when lending to you, correctly perceived as risky, which is why the bank charges you a higher interest rate, than when investing in or lending to something perceived as “absolutely safe”. And because bank capital is scarce, especially now, since some of the “absolutely safe”, like AAA rated securities collateralized with badly awarded mortgages to the subprime sector or Greece, and to which the banks held large exposures against which they were only required to hold a minuscule 1.6 percent in capital, ended up being very risky. 

Why 10% and not 7%? The banks are allowed to invest or lend to other those perceived as “absolutely safe” holding much less capital, five times less, than when lending to you, and so you surely must understand that you have to pay them much extra, in order for them to make the same expected risk adjusted return on equity. 

But why have I not been told this? Because the Basel Committee and the “absolutely safe” and the too big to fail banks that have been able to become too big to fail only because they were allowed to hold ridicule low equity have powerful friends, like the Financial Times who does not want to raise this issue on how regulators distort and discriminate, even though I have written soon 1.000 letters on it to its editor.

And now it is only going to get worse for you, “The Risky”, the commoner, since now with their Basel III decree, the Basel Committee, with liquidity requirements, is intent on favoring even more the aristocracy of “The Infallible”.