I am sure that for Europe’s young unemployed, all 123 European banks failed EBA’s and ECB’s stress tests… dramatically.

So now the European Banking Authority (EBA) has announce the stress test of 123 European banks… and we are informed that 12 failed. Bullshit! They all have failed. 

For instance, ECB's Vitor Constancio says “the vast majority of banks proved resilient”… and I just have to ask him… What’s good about a resilient bank that completely fails to intermediate credit correctly? ... or, as John Augustus Shedd (1850-1926) so well phrased it: “A ship in harbor is safe, but that is not what ships are for.”

It is not what’s on the balance sheets of the banks of Europe that should most concern us… it is what has been condemned by bank regulators from being on the balance sheets of banks in Europe that should really make us tremble… namely all the loans to medium and small businesses, entrepreneurs and start-ups. 

And that so extremely risky prohibition to take risks, that which has effectively castrated European banks, was imposed by the regulators, by means of their so tragically unwise credit risk weighted capital (meaning equity) requirements for banks.

And, to top it up, that will not make our banks safer in the long term... since there have never ever been major bank crises which have detonated because of excessive exposures to what, ex ante, was perceived as risky, as these have always resulted from excessive bank exposures (against too little bank equity) to what was, ex ante, perceived as absolutely safe.

NOTE: I am a happy husband, father and grandfather, with no scandalous past. 

I have a long and quite successful carrier as a financial and strategic private and public sector consultant and, in 2002-2004, I was an Executive Director at the World Bank. 

I have studied in Sigtuna SHL Sweden, Lund University, IESA Caracas, London Business School and London School of Economics. 

Since 1997 I have published over 800 Op-Eds in some of the most important newspapers in Venezuela. 

I have had many letters and articles on banking regulations published around the world. And few can claim having warned in such precise terms about the impending banking disasters as I did between 1997 and 2007. 

And I stake all my professional reputation, and the loving trust my family has shown me over the years, on the fact that current bank regulators of the Basel Committee, and of the Financial Stability Board, have been wrong. Not a pardonable 15 degrees wrong, but an unpardonable 180 degrees totally wrong.

Performing the asset quality review of European banks will ECB’s staff have the guts to call out the mistakes of Mario Draghi?

If the European banks’ asset quality review is going to serve any real purpose, the ECB must dare to question everything.

Foremost that should mean not having to accept at face value those ludicrous low risk-weightings concocted by the neo-Sherriff of Nottingham, the Basel Committee, in order to induce banks to lend more and cheaper to the King John’s of Europe, and to its AAAristocracy; and to lend less to Robin Hood and his small businesses and entrepreneurial friends… while arguing all the time that this regulatory nonsense would make banks safer.

And so, in its review, ECB needs to identify the risk of all excessive exposures to any “absolutely safe assets”, like of the loans to the “infallible sovereigns”. 

And ECB also needs to identify all those really productive European “risky” bank assets, like loans to small businesses and start-ups, and that should have been on bank balances, but unfortunately are not... only because these have basically been prohibited by the regulators senseless risk adverse risk-weighted capital requirements.

But Mario Draghi, the current President of the ECB, was also for many years the chair of the Financial Stability Board; and is therefore very much to blame for these very wrong incentives given to the banks… those that signified that banks could earn much much higher risk-adjusted returns on their equity when lending to "The Infallible" than when lending to "The Risky".

And so do you really think ECB's staff  will dare get down to the truth? Even if that truth implies their ECB’s boss credentials are not good? Or will they still try to leave Europe in blissful ignorance of why Europe is going down, down, down... as it is giving the incentives to avoid keeping taking the risks which made it into what it is.

Mario Draghi, you should not be the president of the European Central Bank.

Mr. Draghi, you are there fundamentally covering up, with other people´s money, your own mistakes, as one of the bank regulators who with so much hubris thought they could be the risk managers of the world; and thereto concocted those so stupid capital requirements for banks which are immensely lower for exposures to what is perceived as absolutely safe than for exposures to what is perceived as risky. 

That effectively castrated the banks which in Europe are of such extreme importance for allocating economic resources efficiently; and that effectively created the current crisis by pushing banks into excessive exposures to what you and your colleagues, trusting so naively the credit ratings, considered to be absolutely safe. 

Frankly, someone who has been able to authorize banks to invest in securities with an AAA to AA rating, or lend to Greece, holding only 1.6 per cent in capital, and thereby authorizing the banks to leverage their capital 62.5 to 1 for that kind of exposures to “The Infallible”, does not seem to have the qualifications needed to be the president of the ECB. 

Frankly, someone who at the same time required banks to hold 8 per cent in capital when lending to “The Risky”, and does not understand what that implies in terms of discriminating against those actors who though perceived as risky, play such a fundamental role on the margins of the real economy, like our small businesses and entrepreneurs, does not seem to have the qualifications needed to be the president of the ECB. 

Wherever and whenever, I dare you to in public answer some very simple questions that I have for years now repeated over and over again. Just in case you want to plead ignorance on it, here you can find some of the material that would be in the exam. Be my guest. 

And just for your information I am not someone crazy or unstable. I am a professional with a long and successful experience, but at the same time very anxious about the Western World in which my grandchildren will have to live in… and here but a sample of what I warned you all about, but that the banks regulators' little mutual admiration club preferred to ignore.

And just for your information I am taking this for me quite uncomfortable route, only after in vain having tried to capture your attention so as to help you correct your mistakes. You probably hoped that by just ignoring me, the problems would go away. Sorry, not to happen. 

Why me, you might ask. Because you Mr. Draghi, having been the chairman of the Financial Stability Board for so many years, best represents the promotion of the failed; since many other of your colleagues have only been given a chance to have a go at it again with Basel III, something which of course is also sheer lunacy. But, if there is someone else more deserving of my criticism, please advice, I have no problems. 

Am I not aware of how delicate the situation of Europe is so as to make this type of public letter? Yes, of course I am, but I am also absolutely convinced that if Europe does not rid itself of this loony discrimination against “The Risky”, those who helped it become what it is, then the Europe we love will sadly be gone forever. And you are not authorized to do that!

God make us daring!

Per Kurowski