Saturday, July 12, 2014

What would the reactions be if capital requirements for banks discriminated against gays, the sick, women or black people?

Those perceived as risky credit risks do already pay higher interest rates, do get smaller loans and do have to accept harsher terms… and so why on earth would regulators require banks to have much more capital when lending to the risky than when lending to the “safe”, and so that the risky need to accept even higher interest rates, even smaller loans and even harsher terms… and all this when there has been no major bank crises in history that has resulted from excessive exposure to those ex ante perceived as not risky? Are current bank regulators sadists?

What would the reactions be if capital requirements for banks discriminated against gays?
What would the reactions be if capital requirements for banks discriminated against the sick?
What would the reactions be if capital requirements for banks discriminated against black people?
What would the reactions be if capital requirements for banks discriminated against women?

All hell would break lose!

But, no these only discriminate in favor of the “infallible” and against “the risky”, and so nobody cares.