Basel Committee and Financial Stability Board, do our banks, and the real economy, live on different planets?

Can banks really be safe if the real economy is bad? What about banks’ role in allocating resources to the real economy? Is the risk of banks not supporting adequately the real economy really irrelevant?

I ask this again (for the umpteenth time) because again the Financial Stability Board has produced a consultative document titled “Principles for An Effective Risk Appetite Framework” which navel gazes on a banks internal risk assessments, and completely ignores referencing to any purpose of the banks, other than that stupid one of avoiding risks.

Members of the Basel Committee, and of the Financial Stability Board, we can assure you that if our banks run into trouble while assisting our real economy growing sturdy, we can live with that, but, if our banks are safe, but for instance our kids do not have jobs, that is unacceptable.

Right now this save the banks and forget the real economy fixation, is murdering the developed economies which became developed precisely because of a lot of risk taking.

Currently regulators allow banks to hold less capital against some assets, those perceived as “safe”, than against other, those perceived as “risky”; and that allows banks to earn a higher risk-adjusted return on equity when lending to “The Infallible” than when lending to “The Risky”; and that has introduced distortions which makes it impossible for banks to efficiently allocate resources in the real economy. 

Basel Committee and Financial Stability Board, is it you do not understand, or is it you just don’t care?

Basel Committee and Financial Stability Board, your own “Risk Appetite Framework” is totally screwed up.

Hey! Regulators! Leave them banks alone! All in all you're just another brick in the wall.