Losers and winners

The losers are no doubt those countries that insist in their banks needing to have more capital when lending to “The Risky” than when lending to “The Infallible”. 

The winners will be those countries that praying “God make us daring!” understand that in order to make up for the natural risk-adverseness of bankers, it behooves them to require the banks to hold slightly less capital when lending to “The Risky” than when lending to “The infallible”. 

That is how wrong our current bank regulators are. 

The fools are those who keep writing about this crisis being caused by excessive risk-taking when it was caused by excessive exposures to what was considered as “absolutely safe” and against which the regulators therefore required the banks to hold minuscule capital. 

You want to disappear? Then stay in your beds and don’t dare to take any risks. As easy as that!

Weighing the risk of a bank’s clients is not the same as weighing the risks of the bank.

If bank regulators are concerned, like for instance now with uncleared derivatives, it is one thing for them to order the bank to increase the capital it holds against all not risk weighted assets, let us say from 6 to 6.2 percent, and quite another, to target specific assets with a higher capital requirements. The first adjusts the capital to the overall risk level of that banks activity, the second just distorts and discriminates against what the regulator perceives is risky. 

“An nescis, mi fili, quantilla prudentia mundus regatur?” Axel Oxenstierna, 1583 – 1654

We “the real economy” would appreciate this:

That some banks restructure their business into a much less risky operation so as to be able to attract shareholders that appreciate much less risk, like widows and orphans, pension funds and insurance companies and are therefore satisfied with lower returns. 

That could be done by banks by for instance voluntarily agree to hold 15 percent in capital against all of their assets, with none of that horrendous risk differentiation that so much distorts bank lending, by discriminating specially against those “risky” not so risky for banks, businesses and entrepreneurs that try to build an economic future on the margin of the real economy.

And the government, and the FDIC, should be very appreciative of such an evolution, and perhaps should consider giving special long term tax exemptions to any new capital raised for these too-strong-to-fail banks... and that by definition will have a lower return on equity.

If $500bn of fresh bank capital was raised, with that 15 percent capital against all assets, that would leave room for $3 trillion of new bank credit. 

And we, “the real economy”, would certainly very much welcome the managers and the shareholders of the banks, taking a much smaller bite out of us.

The greatest non transparent interest rate manipulation ever

Regulators, the Basel Committee, the Financial Stability Board, with their capital requirements for banks which are much lower for bank holding assets that are perceived (or officially decreed) as absolutely safe than for those assets perceived as risky, effectively manipulated the relative risk-adjusted return on bank equity to be much higher for what's perceived (or officially decreed) as absolutely safe, than for what's perceived as risky. 

That, the greatest non transparent interest rate manipulation ever, which pushed the banks into holding excessive exposures to some of “The infallible” which turned out to be fallible, while holding minuscule bank capital, was the prime cause for the 2008 crisis. 

That, the greatest non transparent interest rate manipulation ever, reduces the incentives for the banks to lend to “The Risky”, like to small businesses and entrepreneurs, those actors who on the margin are the most important for the real economy, and thereby hinders an economic recovery. 

Did the regulators do that on purpose or because they are dumb? I sincerely hope for theirs and ours sake it is the second.

“An nescis, mi fili, quantilla prudentia mundus regatur?” Axel Oxenstierna, 1583 – 1654

PS. My 2019 letter to the Financial Stability Board (FSB)

You the Basel Committee, and you the Financial Stability Board, are you really as smart as you think you are?

Even though you, as bank regulators, never have problems with bank’s risk models that function and credit ratings that are correct, and only have problems when bank’s risk models malfunction and credit ratings prove incorrect, with your capital requirements based on ex-ante perceived risk, you decided to bet all our banking system on bank’s risk models functioning perfect and the credit ratings being perfectly correct… was that such a smart move guys? 

Even though you, as a bank regulators, must have known that except for when outright fraud is  present, all major bank crisis, no exceptions, have resulted from excessive bank exposures to what was perceived as absolutely safe, and none from excessive exposures created to something ex-ante perceived as risky, you decided that the bank needed to hold much more capital when investing or lending to something risky than when investing or lending to something perceived as absolutely safe… was that such a smart move guys? 

Even though you, as bank regulators, must have known about Mark Twain’s accurate description of a banker as the fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain” and that this was often a hinder for those that though perceived as risky are often on the margin the most important players of the real economy decided to give the bankers even further incentives to lend while it is sunny and to withdraw their credit even faster at the slightest indication that it could possibly rain…. was that such a smart move guys? 

What can I say but to quote Axel Oxenstierna: (1583–1654) “An nescis, mi fili, quantilla prudentia mundus regatur?”, “Do you not know, my son, with how little wisdom the world is governed?”, “¿No sabes, hijo mio, con que poca sabiduría el mundo esta gobernado?”, “Vet du inte, min son, med hur litet förstånd världen styrs?” 

In March 2003, while being an Executive Director at the World Bank (2002-2004) and when discussing the implications of Basel II bank regulations I stated: “As the financial sector grows ever more sophisticated, making it less and less transparent and more difficult to understand for ordinary human beings, like EDs, it is of extreme importance that the World Bank remains prudently skeptical and vigilant, and not be carried away by the glamour of sophistication. In this particular sense, we truly believe that the World Bank has a role to play that is much more important than providing knowledge per-se and that is the role of looking on how to supply some of the wisdom-of-last-resort.”

Unfortunately, the whole world is, in dumb open-mouthed amazement, suffocating under the weight of too much knowledge that no one finds time to reflect upon. 

Can we please ask for a time out in order to discuss these quite loony and dangerous Basel bank regulations from scratch? I ask this because when now adding your Basel III liquidity requirements, also based on the ex-ante perceived risk, you seem intent on digging us further down in the hole were you have placed our economies.

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”. 

The Financial Stability Board seems incapable of doing their own “Ex post performance adjustment”.

And now the Financial “Stability” Board with respect to the compensation of bankers practices is discussing “Ex ante risk alignment” and “Ex post performance adjustment” 

I am just sad they can still not understand that, as regulators, their own principal “Ex post performance adjustment” must be to realize, at long last, that their “Ex ante risk alignment of the capital requirements for banks” is absolutely cuckoo. This is so because what is really dangerous for banks and regulators alike is what is perceived as “absolutely safe”, and never what is perceived as “risky”.

When will they face up to the fact they have got it totally, 100 percent wrong

The subsidized risk-free rate

PD. A confession that shall not be heard: “Assets for which bank capital requirements were nonexistent; sovereign credits. A ‘leverage ratio’ discouraged holdings of low-return government securities” “Keeping at it” 2018, Paul Volcker

A theoretical rate, and a major benchmark in the world of finance, is the one which is known as the "risk free rate". Of course, since nothing is completely free of risk, it is normal, as an approximation, to use as that the interest rate which country perceived to have the strongest economies need to pay in order to service their debt, for example the United States. 

But I argue that this "risk free rate" has been consciously or unconsciously (I pray for the latter) manipulated by the Basel Committee on Banking Supervision, the Committee which seeks to be the manager of all world’s banking risks. 

This committee came up with, and the imposed, capital requirements for banks which depend on the risk of the various assets, primarily as perceived by the credit rating agencies and to whom they outsourced much credit analysis. 

When doing so the committee completely ignored, consciously or without thinking (I pray for the latter) that the perceived risks were already considered by banks when setting the interest rates, the amount of the loans and all other terms, let us say of the numerator. Consequently, when the regulators decided the same perception of risks also needed to be reflected in the capital, let us say in the denominator, they condemned the entire banking system to overdose on perceived risk. 

And that has meant that all those who are perceived as being more risky, be they countries, companies or citizens, have to pay higher interest rates and receive smaller loans, than what would have been the case in the absence of these regulations. 

And so also that all who are perceived as less risky, like “solid” sovereigns and corporations with high credit ratings, will pay much lower interest rates and receive many more and larger loans, than what would have been the case in the absence of these regulations. 

And the above distorted and dislocated world economies more than you could believe. Not only did it encourage a dangerous overcrowding of all safe-havens, but also by dangerously ignoring that risk-taking is the oxygen of any development, and that the "absolutely not risky "of today, were almost always the "risky" of yesterday. 

And this means that the "risk free rate" which we today observe in the market, is actually the "risk-free rate less the value of the Basel Committee’s regulatory subsidy”. 

And this means that the flight instruments which the markets and the central banks in the world use, simply do not give correct readings. 

How is this possible? "One has to belong to the intelligentsia to believe things like that: no ordinary man would be such a fool" George Orwell, Notes on Nationalism, 1945. 

Or, as Patrick Moynihan would have explained it: "There are some mistakes it takes a Ph.D. to make”

Translated from El Universal 

Here in Spanish http://bombaaaa.blogspot.com/2013/01/la-subsidiada-tasa-libre-de-riesgo.html

PS. https://subprimeregulations.blogspot.com/2015/07/the-financial-stability-board-makes.html
PS. https://subprimeregulations.blogspot.com/2016/10/since-bank-regulators-in-1988-decreed.html
PS. https://subprimeregulations.blogspot.com/2016/11/olivier-blanchard-agrees-there-is-need.html

PS. http://perkurowski.blogspot.com/2019/09/financial-communism.html

If I was the FDIC, I would ask bank regulators two questions

If I was the Federal Deposit Insurance Corporation, mandated to insure depositors for when banks fail, I would not lose one minute of sleep concerning myself with bank assets perceived as “risky”, but I would certainly toss and turn all night, thinking about assets that are perceived as “absolutely safe” and might not be. 

“The Risky” assets those take care of most of my risks on their own, by means of lower bank exposures, higher interest rate premiums and tougher contract terms. 

It is always “The Infallible” assets which represent the really expensive dangers to me, since if these assets, as sometimes happens, ex-post turn out to be very risky, then the bank exposures are usually enormous, the earned risk premiums much too low, and the contracting terms much too lax. 

And so, if I was the FDIC, I would ask the current bank regulators about what they are thinking when they allow banks to hold so much less capital against “The Infallible” than against “The Risky”. 

And since if I was the FDIC, and therefore also responsible for “promoting sound public policies … in the nation's financial system”, I would also ask the regulators whether allowing banks to leverage their equity much more when lending to “The Infallible” than when lending to “The Risky”, does not introduce distortions that make it impossible for the banks to assign resources in the real economy, with any type of efficiency.

In short, if I was FDIC, current capital requirements based on perceived risk would be completely unacceptable.

It’s what’s safe that’s truly risky.

In 2007, the Fed did not understand how markets were distorted by bank regulations. Do they now?

In the recently released transcript of a Conference Call of the Federal Open Market Committee on  August 10, 2007, on page 9, discussing the emerging financial crisis, we can read the President of the Federal Reserve Bank of Richmond, Mr Jeffrey M. Lacker declare the following: 

“Credit spreads are beyond our ability to peg or influence, and I don’t think we should go down the road of trying to do so” 

Amazing, there was no awareness of that by setting different capital requirements for banks, the bank regulators were already distorting the market appetite for different exposures and thereby the credit spreads. 

Seemingly they had no understanding that by requiring banks to hold only 1.6 percent in capital against securities rated AAA to AA, which implies an authorized bank equity leverage of 62.5 to 1 they had dramatically wetted the markets appetite for these securities. 

I wonder if they have ever discussed how much higher the interest rates on US Treasuries would be if banks had to hold as much capital against that asset, than what they need to hold when for instance lending to “risky” small businesses and entrepreneurs? 

I guess the Fed does not want to hear the truth, that with these regulations the regulators were artificially lowering, or subsidizing, the “risk-free” rate of the world.

Sincerely, in finance, manipulating something like the Libor rate, is chicken shit compared to unwittingly manipulating the risk-free-rate

Citizens, do you agree?

We, your public servants, intend to allow the banks to hold much less capital against our absolutely safe sovereign debts than what they will be required to hold against your risky borrowings. 

This would mean that bank will be able to leverage many times more when lending to us your sovereign than when lending to you. 

And that will de-facto mean that we, as a sovereign, will have to pay much lower interest rates than what would have been the case in the absence of this regulation, while you of course will have to pay higher interest rates. 

In the name of true transparency we should perhaps disclose that this will translate into a huge tax paid by all you citizens who borrow, and of course by all the opportunities for good future jobs that are lost when we in this way curtail the access to bank credit of your risky businesses and entrepreneurs. 

Well in the name of the same true transparency we should perhaps disclose that we have already imposed these regulations with the generous assistance of the Basel Committee for Banking Supervision. They did that with Basel II. 

Though that, you should have already noticed. Frankly, how would otherwise Greece been able to rack up so much debt had it not been for banks being required to hold only 1.6 percent in capital when lending to it? 

Yes we can hear you: “What! Did you authorize our banks to leverage their capital 62.5 times to 1 when lending to Greece? Are you crazy?” 

Yes, we agree, we might have overdone it a bit, but you must also understand that for us, as public servants, it is also very important to show solidarity with fellow public servants of other sovereigns. 

Oh, before we forget, would you agree with that besides the capital requirements we should also develop liquidity requirements which in basically the same way favors our infallible sovereign and discriminates against you risky citizens? Well it really doesn’t matter as we will do it anyhow, now with Basel III. 

Sincerely, 

Your baby-boomer public servants 

Après nous, le déluge.

My letter in May 2012 to Anders Borg, the Minister of Finance in Sweden

Anders,

I am the Venezuelan born Sweden educated former World Bank Executive Director you met for a brief moment during the recent World Bank meetings. Let me refresh your mind about what I told you.

The capital requirements for banks based on ex-ante perceived risks, more risk more capital and less risk less capital are senseless, for many reasons.

Not only has no major bank crisis ever occurred as a result of excessive bank lending to what is perceived as risky, they have always resulted from excessive bank lending to what was perceived as absolutely not risky and turn out to be risky… even the Dutch Tulips would have been AAA rated before their crash.

Also these capital requirements discriminate against the sparkplugs of any economic growth, namely the “risky” small businesses and entrepreneurs.

Risk is the oxygen of economic growth and also what provides our banks with the Lebensraum that allows them to grow sturdy… Build them up on excessive risk-avoidance and you are building yourself an AAA-bomb ready to explode.

I invite you to see a brief video where I explain part of my arguments and, on that same blog, you will find much more.

http://subprimeregulations.blogspot.com/2011/04/basels-monstrous-regulatory-mistake.html

As a small reference as to why perhaps you should hear me out just the following examples:

In November 1999 in an Op-Ed in the Daily Journal of Caracas I wrote “The possible Big Bang that scares me the most is the one that could happen the day those genius bank regulators in Basel, playing Gods, manage to introduce a systemic error in the financial system, which will cause the collapse, of the only remaining bank in the world”

In January 2003, in a letter published by the Financial Times I wrote: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic errors, about to be propagated at modern speeds”

In October 2004, in a written statement delivered as an ED at the World Bank Board I opined: “We believe that much of the world’s financial markets are currently being dangerously overstretched through an exaggerated reliance on intrinsically weak financial models that are based on very short series of statistical evidence and very doubtful volatility assumptions”

Regards

Per

God make us daring! Gud gör oss djärva!

PS. A couple of days later I was advised by the Ministry of Finance that my letter had been forwarded to the political advisor Hanna Schönning... and that was all folks!

The Basel Committee Lunacy

First answer: What poses the larger risk to create a major bank crisis, those that can only result from major bank exposures? Exposures to what is rated below BB-, non investment grade and speculative, or exposures to what is rated AAA to AA, high grade and better? 

And then consider that Basel II requires banks to hold 12 percent in capital when lending or investing in something rated below BB-, an authorized 8.3 to 1 leverage of bank equity; and only 1.6 percent when lending or investing to what is rated AAA to AA, an authorized leverage of 62.5 to 1. 

Let me offer you a hint: Mark Twain described bankers as those who lend you the umbrella when the sun shines but want it back as soon as it looks it is going to rain. 

As I see, what I qualify as the Basel Lunacy, only guarantees that when a real sizable financial explosion occurs, those which can only result from excessive bank exposures, those excessive banks exposures that can only result to something being perceived as absolutely safe, that then the banks will stand there absolutely naked with no capital to speak of between them and the depositors or the taxpayers. 

In “Notes on Nationalism”, George Orwell wrote “one has to belong to the intelligentsia to believe things like that: no ordinary man could be such a fool.” Indeed no ordinary man would be such fools as our current bank regulators, those in The Basel Committee for Banking Supervision or those in the Financial Stability Board.

Struta alla medlemmar i Baselkommittén för banktillsyn - Dunce caps for the members of the Basel Committee

Baselkommittén för banktillsyns töntiga försök att hindra bankerna ta små ofarliga men för real ekonomin mycket viktiga risker med ”De Riskabla”, bara orsakar bankerna att ta fruktansvärda stora, farliga och oproduktiva risker med ”De Ofelbara”. Det är helt galet och vi borde struta alla Baselkommittens medlemmar.

The Basel Committee on Banking Supervision’s silly wish to prevent banks taking small harmless but for the real economy very important risks on "The Risky", just cause banks to take awful big, dangerous and unproductive risks on "The Infallible". It's crazy and we should all place a dunce cap on all the members of the Basel Committee.

The Basel Committee’s bank regulations, seen from the perspective of “Les Miserable”

Small and medium businesses and entrepreneurs, not rated or having a not-so-good credit ratings have been condemned by the Basel Committee for Banking Supervision as belonging to “The Risky”, and sentenced to generate much higher capital requirements for banks whenever they access bank credit, than when “The Infallible” do that.

The odious discrimination implicit in that sentence has doomed our banks to dangerous obese exposures to “The Infallible”, and to equally dangerous anorexic exposures to those who on the margin are the most important actors in the real economy.

That sentence is absurd as it completely ignores that many of those considered as utterly safe and productive today, yesterday were just some of the “Les miserable” who had the good fortune of being taken out of their precarious position by a Jean Valjean banker.

The bank inspectors have no idea of what they are doing, and in their fanaticism in pursuing “risk”, their mistake in Basel II of capital requirements based on perceived risks, is now being compounded in Basel III, with the addition of liquidity requirements also based on perceived risk.

When will the Javerts of banking supervision realize what they are doing and jump?

The confession of a "monstrous" banker

George Banks (the first)

Dear Per

I thought it was a good thing for my bank to purchase AAA rated securities collateralized with mortgages to the subprime sector, and to lend to A+ rated Greece, since in both cases my regulator only required me to hold 1.6 percent in capital against these assets, and which meant that my bank could leverage its capital 62.5 times to 1. 

More so, was my bank not to engage in these operations, it might lose out to other banks who by doing so would earn much higher returns on equity… to such an extent that they might even end buying up my bank, and then I would find myself in the awkward position of having to work for a too-big-to fail bank. 

What should I have done? What would you have done? Did that turn me into a vile bankster? Per, help me some even want to put me in jail!

Your banker friend 

George Banks III

PS. My answer

Dear George

Don't feel bad. I have not held you responsible for any of this mess for even a second. 

As an Executive Director of the World Bank, in a formal written statement in October 2004 I warned: “I believe that much of the world’s financial markets are currently being dangerously overstretched, through an exaggerated reliance on intrinsically weak financial models, based on very short series of statistical evidence and very doubtful volatility assumptions”

And in January 2003 in a letter published by the Financial Times I had written: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic errors, about to be propagated at modern speeds”

And yet I really doubt that, if in your shoes, I could have put a stop to the purchase of the highly rated securities, or convinced any bank colleagues that they should incur in the costs of a special check up to see if their credit ratings were correct or not.

That said I do condemn though the regulators, those who created the temptations of the 60 to 1 or more authorized bank leverages. I can guarantee you that, in the absence of these loony regulations, there would never ever have been such a demand for these so subprime securities which created this crisis, or to indulge in excessive bank lending like to Greece. The Basel bank regulators, hopefully unwittingly, let us at least pray for that, they were the real vile Lucifers in this disaster.

Your non-banker friend that with much fondness remembers your ancestor George Banks

Per

PS. George perhaps this would, way back, have also made your ancestor to go and fly a kite instead.

Who can explain the absolute absurdity of Basel II bank regulations?

If bankers knew how to manage risks perfectly there would be no need for bank capital. But, since they don’t, the regulators naturally require banks to have some capital. 

But when bankers get it wrong managing risks that are perceived as high, this does normally not cause any problems. In that case the exposures to the high-risks are small, the terms of contract quite strict and the interest rate already includes a high risk-premium. 

It is when bankers’ get it wrong managing risks which are perceived as almost non-existent, that shit really hits the fan. In this case the exposures are huge, the risk-premiums low and the contract terms quite often too generous. 

And so it would seem that any prudent regulator would ask the bank to have some reasonable capital, let us say 8 to 10 percent, especially against all the assets perceived as “absolutely not risky” 

But what did the Basel regulators do with Basel II? They decided that if a bank lends to one of “The Infallible”, the potentially really problematic lending, it can do so holding only 1.6 percent in capital, 5 times less than the 8 percent capital it is required to have when lending to “The Risky” the usually non-problematic lending. 

Who can explain such absurdity? And why is such absurdity not even debated?

Mamma Mia! The Basel I, II and III bank regulations are 180° wrong!

What is perceived as “risky” is never really risky in banking because by means of charging higher risk premiums (interest rates) allowing for smaller exposures and imposing stricter terms, the damages that result when “risky” turns out to be risky are usually small and very containable.

Not so when what is perceived as “absolutely not risky” turns out to be very risky. In that case total mayhem results, and indeed all bank crises ever have resulted precisely from that. 

In this respect a bank regulator, if he knew what he was doing, could with some logic contemplate the idea of higher capital requirements for banks for assets perceived as “not risky” and somewhat lower for assets perceived as “risky”. 

But what a regulator could absolutely not do, if he knew what he was doing, was what they did in  Basel I, Basel II and are doing in Basel III, which is allowing for much lower capital requirements for assets perceived as “absolutely not risky”. In other words the regulators are 180° wrong. In other words they are making sure that the bank crises, whenever these occur, as a result of something ex ante considered to be “absolutely safe” turning out to be risky ex post, will be bigger than ever. 

Can this be true? Yes! Just try to ask a bank regulator the following question and you will see his eyes go foggy. “Dear Mr. Bank Regulator, can you explain to me what risks the current capital requirements are to cover for, and which have not previously been covered for in the interest rates, in the amounts of exposure and in the terms of the contract?” 

How could it be the regulators got it so wrong? It is a long story but the short version of it is that this sort of thing happens when you allow experts to toy around in the lab in a mutual admiration club without any adult supervision and not accountable to anyone. 

But it is even worse. Not only are Basel I, Basel II and III regulations totally useless when it comes to stopping major crisis, they even stimulate those disasters to happen. By allowing banks to earn higher returns on equity when lending to “The Infallible” than when lending to “The Risky”, Basel II and III introduce distortions which makes it impossible for the banks to allocate economic resources with any degree of efficiency. 

But they say that Basel III is better? Yes much better, but only if you completely ignore what was wrong with Basel II. In reality Basel III, now also imposing liquidity requirements based on perceived risks; and knighting the too-big-to-fail-banks as Globally-Systemic-Important-Financial Institutions (which de facto classifies the rest as unimportant) will just make all much worse. 

Tax-payers, caveat emptor, our banks are regulated by experts gone crazy and berserk, and who think that if they just ignore my arguments their mistake will never have existed!