Bank regulators de facto create another type of illicit financial flows

When regulators allow banks to hold less equity against what is perceived as safe than against what is perceived as risky then they increase substantially the flow of bank credit to the infallible sovereign and the AAArisktocracy, and decrease substantially the flow of bank credit to SMEs and entrepreneurs.

That is an odious regulation that favors those already favored; and an odious regulatory discrimination against those already naturally discriminated against, precisely by virtue of being perceived as risky.

That impedes banks to allocate credit efficiently to the real economy and, by killing the opportunities of the risky to have fair access to bank credit, increases inequalities. 

And so those regulations could be accused of de facto stimulating the creation of another type of illicit financial flows.

PS. And all for nothing, since never ever has a major bank crisis ever resulted from excessive exposures to something perceived as risky, they have all, no exceptions, resulted from excessive exposures to something erronously perceived as safe.