It’s high time, decades late, for a small business or entrepreneur to sue bank regulators.
Below a letter to the editor that was ignored.
Favoring with regulations the access to credit of the “safe”, e.g., government debt and residential mortgages, over that of the “risky”, e.g., small entrepreneurs, de facto implies discriminating against the latter.
When will a small business or entrepreneur take the regulators to court for that? He could have artificial intelligence witnessing in his favour.
With respect to the risk weighted bank capital requirements ChatGPT – OpenAI opined: “Risk weights can lead to discrimination against riskier borrowers because banks may be less inclined to lend to them or may charge higher interest rates to compensate for the higher capital costs.”
And for the society at large, that would not at all be a frivolous lawsuit.
Less inequality: “The function of credit is, in fact, remarkably egalitarian. It allows the man with energy and no money to participate in the economy more or less on a par with the man who has capital of his own.” John Kenneth Galbraith “Money: Whence it came where it went” 1975.
Free competition: small entrepreneurs, to gather the initial strength they need to later access capital markets, count on family, friends, and the credit from the small local bank around the corner.
The judge could opine these regulations have a greater purpose, namely to avoid a bank crisis: For that ChatGPT – OpenAI could again be called in as a witness and opine: "The most dangerous risks to the banking system revolve around what’s perceived as risky can be compared to the geocentric model of the universe.” - "The most dangerous risks to the banking system revolve around what’s perceived as safe, and can be compared to the heliocentric model of the universe… if risk is perceived as safe, it may lead to complacency and a failure to recognize potential risks, leading to dangerous consequences."
PS. Here are the sources for what I argued above.
Posts
