FSB reports: “G20 reforms are building a safer, simpler, fairer financial system”. What a triple lie!

FSB reports to G20 Leaders on progress in financial regulatory reforms, and it starts with: G20 reforms are building a safer, simpler, fairer financial system

“Safer”? Major bank crises do not result from excessive exposures against what is perceived risky, but always from unexpected events or excessive exposures to what was ex ante perceived, decreed or concocted as safe, but that, ex post, turned out to be very risky.

In the FSB video they say “A safe banking system needs enough capital to absorb unexpected losses” and so my question is: So why require capital based on expected risks?

“Simpler”? Don’t be ridicule! Just have a look at the Basel Committee’s absurdly obscure “Minimum capital requirements for market risk” of January 2016, and on its consultative document for a "simplification" of July 2017.

The FSB video does not really even dare to explain the "simpler" factor.

“Fairer”? Forget it! The discrimination in the access to bank credit in favor of those perceived, decreed or concocted as safe, like the Sovereigns and the AAA-risktocracy is still alive and kicking; just like that one against “the risky”, the SMEs and entrepreneurs. It is an inequality driver.

No wonder the FSB video has the comments disabled.

G20 you want to understand what is wrong with current bank regulations? Start here!

Regulatory risk aversion distorts credit and causes dangerous bank exposures to what is perceived, decreed or concocted as safe.

Mark Carney, Governor of the Bank of England, and the Chair of the Financial Stability Board, on April 7, 2017 gave a speech titled: “The high road to a responsible, open financial system”. 

Carney said: “The pillars of responsible financial globalisation eroded prior to the global financial crisis. Regulation became light touch and ineffective…. few participants were exposed to the full consequences of their actions as governance and compensation arrangements focused on the short term.”

But to call regulations that as a pillar has risk weighted capital requirements for banks, which allow banks to leverage assets differently because of perceived or decreed risk, “light touch”, is pure nonsense. And if there is anything as focused on the short term, that must be regulations that give banks incentives not to lend to the “riskier” future, but to take refuge in refinancing the “safer” past and present.

Carney bragged: “The system is safer because banks are now much more resilient, with capital requirements for the largest global banks that are ten times higher than before the crisis and a new leverage ratio that guards against risks that may seem low but prove not.” 

Since that “ten times higher” refers to capital in relation to risk weighted assets, and he has no way to ascertain the ex ante risk perceptions will coincide with the ex post realities, that number may or may not be true. The improvement might come from banks shedding a lot of safe “risky” assets and taking on more exposures to potentially risky “safe” assets. Finally, mentioning “a new leverage ratio that guards against risks that may seem low but prove not”, amounts to admitting they had no idea what they were doing before.

Carney opined: “The financial system is simpler. As banks have become less complex and more focused, they are lending more to households and businesses and less to each other. A series of measures are eliminating toxic and fragile forms of shadow banking while reinforcing the best of resilient market-based finance. And more durable market infrastructure is simplifying the previously complex – and dangerous – web of exposures in derivative markets.”

He wishes!

But when I object the strongest is when Carney states “The financial system is fairer because of reforms that are ending the era of “too big to fail” banks and addressing the root causes of a torrent of misconduct.”

Fairer? With regulators favoring those who perceived as safe were already favored with easier access to bank credit, and increasing the obstacles for those who perceived as risky already found it harder to access bank credit, has nothing to do with fairness. It is just odious regulatory discrimination.

Bank regulators, de facto, decreed more inequality.

FSB’s Mark Carney is no one to lecture us on inequality, lack of opportunities and intergenerational divide

Mark Carney, the Governor of the Bank of England, in a speech titled “The Spectre of Monetarism” December 5, 2016 said: 

“For both income and wealth, some of the most significant shifts have happened across generations. A typical millennial earned £8,000 less during their twenties than their predecessors. Since 2007, those over 60 have seen their incomes rise at five times the rate of the population as a whole. Moreover, rising real house prices between the mid-1990s and the late 2000s have created a growing disparity between older homeowners and younger renters...  At the same time as these intergenerational divides are emerging, evidence suggests that equality of opportunity in the UK remains disturbingly low, potentially reinforcing cultural and economic divides.”

But Mark Carney is also the current Chairman of G20’s Financial Stability Board and, as such, one of the primarily responsible for current bank regulations… the pillar of which is the risk weighted capital requirements for banks.

That piece of regulation decrees inequality resulting from negating “the risky”, like SMEs and entrepreneurs fair access to bank credit. 

That piece of regulation favors the financing of “safe” basements where jobless kids can stay with their parents over “riskier” ventures that could provide the kids in the future the jobs, so that they had a chance to become responsible parents too.

That piece of regulations is a violation of that holy intergenerational bond Edmund Burke spoke about.

Carney also said: “Higher uncertainty has contributed to what psychologists call an affect heuristic amongst households, businesses and investors. Put simply, long after the original trigger becomes remote, perceptions endure, affecting risk perceptions and economic behaviour. Just like those who lived through the Great Depression, people appear more cautious about the future and more reluctant to take irreversible decisions. That means less willingness to put capital to work and, ultimately, lower growth.”

If any have suffered form “affect heuristic” that is the bank regulators. Mixing up ex ante perceptions with ex post possibilities, these decided on “more risk more capital – less risk less capital”, without: defining the purpose of banks “A ship in harbor is safe, but that is not what ships are for.” John A Shedd; or looking at what has caused bank crises in the past “May God defend me from my friends, I can defend myself from my enemies” Voltaire

Mark Carney also said “For two-and-a-half centuries, the prices of government bonds and the prices of equities tended to move together: the typical bull market entails rising equity prices and falling bond yields, with the reverse in bear markets. Since the mid-2000s, however, this pattern has reversed and bond yields have tended to fall along with equity prices”.

He is not able to connect that to the fact the risk weight given to sovereign debt is 0%, as compared to one of 100% for We the People… and that capital scarce banks therefore shed “riskier” assets in favor of public debt. As statist, Carney also ignores the fact that regulation has subsidized public borrowings, paid of course by negating credit opportunities to SMEs and entrepreneurs.

Must one go on a hunger strike in order to get some contestability from the Basel Committee or the Financial Stability Board?

Here follows my linked four tweets to bank regulators

The ex post risk of Basel Committee’s bank capital requirements, based on models based on ex ante risk perceptions, is huge!

All these capital requirements do is to seriously distort the allocation of bank credit to the real economy, for no good purpose at all.

Bank capital requirements should be based on ex post risks that considers the risks of models based on ex ante risks perceptions.

Mario Draghi, Mark Carney, Stefan Ingves, Janet Yellen, Martin Gruenberg...  Capisci?

When and where did the last bank crisis resulting from excessive exposures to something ex ante believed risky occur?

I don't know. Ask the regulators in the Basel Committee on Banking Supervision and the Financial Stability Board. 

I mean they must have much data on this because, without it, why would they impose credit risk weighted capital requirements for banks, knowing that carried the huge cost of distorting the allocation of bank credit to the real economy?

I mean that if they use the theorem that what's perceived as risky is riskier to the bank system than what is perceived as safe, then they are indeed using a loony theorem.

Or did they not look for the data?  Or did they not understand it?

Mark Carney, if you are so concerned about climate change risk, suggest capital requirements for banks should depend on it.

We read: Speaking at the COP21 Paris Climate Change Conference Mark Carney, FSB Chair, said “The FSB is asking the Task Force on Climate-related Financial Disclosures to make recommendations for consistent company disclosures that will help financial market participants understand their climate-related risks. Access to high quality financial information will allow market participants and policymakers to understand and better manage those risks, which are likely to grow with time.” 

Bullshit! If Mark Carney was really concerned about environmental sustainability (and about job creation for our young) he would suggest to base the capital requirements for banks on that, instead of as currently basing these on nonsensical credit risks that are anyhow cleared for by banks.

Frankly, if there is a real need for a Task Force, that should be one to determine the regulatory stupidities that distort the bank credit allocations to the real economy. Such Task Force might very well suggest getting rid of regulators like Mark Carney.

PS. As I have said before... if climate change regulation is to be handled by a task force in any way similar to the Basel Committee... then we're toast. 

Overreacting to ex-ante perceived risks, whether credit or climate change related, is NOT in BoE’s remit.

Mark Carney, the Governor of the Bank of England, recently expressed some warnings on climate change, and specifically about the risks with “stranded fossil fuels”. 

I criticized that, considering the dangers that overreacting to perceived risks poses.

I got an official, very courteous and kind reply from the Public Enquiries Group of BoE. Unfortunately it is clear that they have not understood what I am referring to… it could be my fault... English is not my mother tongue.

And so here I will try to explain it again, briefly, with a reference to what is happening to banks.

Banks act on ex ante perceived credit risks, by means of setting risk premiums, the amounts of exposures and other contractual terms.

But bank regulators (Mark Carney is the current chair of the Financial Stability Board) decided to also act, on precisely the same ex ante perceived credit risks, by setting their capital requirements for banks.

And so we now have TWO bank reactions related to the same ex ante perceived credit risks. 

This results, of course, in that banks will hold more of assets perceived as “safe” than what those ex ante credit-risk perceptions would validate; and hold less of assets perceived as “risky”, than what those ex ante credit-risk perceptions would validate. 

In other words there is now a dangerous distortion in the allocation of bank credit to the real economy.

And I am sure that overreacting to ex-ante perceived risks, whether credit or climate change related, is NOT in BoE’s remit.

And I have seen no specific government policy approving of it. Would Winston Churchill have ever said: “We need twice the walls we need to keep out the ex ante risks we perceive"? Or, "We need to build one more Maginot Line on top of the other!"?

And so, back to my letter to BoE: The market is already worried, on its own, about “stranded fossils fuel assets” and so when big powerful BoE comes along and starts implicating that it also worries about those assets, and so it might conceivably do something about it, that again could provoke a dangerous overreaction to the ex ante perceived risks of stranded fossil fuels.

Do I make myself clearer now?

PS. When there is an overreaction then the only way ex ante perceived risks are correctly acted upon, is when these are adequately misperceived. That is how crazy all is.

PS. Of course, since climate change has much more long-term risk implications that are harder to clear for in the markets, allowing banks to hold less capital when financing sustainability, so that banks earn higher risk adjusted returns on equity when financing sustainability, could serve as a good stimulus that though distorting does so in the right direction.

A public letter to Mr. Stefan Ingves, the chair of the Basel Committee for Banking Supervision

Mr. Stefan Ingves.

There are cowards and there are braves, ranging from extreme cowards to stupidly foolish braves, but that has less to do with how these perceive risks, and much more to do with how they assume and manage risks.

And then there are those blind to risks… so blind they do not even see a credit rating.

The Basel Committee’s risk weighted capital requirements for banks, based on precisely the same perceived risks (credit ratings) that seeing banks can already see, have clearly been designed for blind bankers.

I do not know how many such blind bankers there are, and if they exist they should not even be allowed to be in business. But, your risk weighted capital requirements, sure poses a big problem for all other banks, and for the economy in general.

Since non-blind banks already clear for any perceived credit risk, by means of interest rates and size of exposure, to force them to again, now in the capital, clear for exactly the same perceived credit risk, gives credit risk perceptions a double weight.

And any perceived risk, even if perfectly perceived, if excessively considered, leads to the wrong action.

In the case all credit risk ratings were perfect… that would then mean banks would lend more than what they should, to what is perceived “safe”, and less than what they should, to what is perceived "risky". And that misallocation of bank credit must be bad for all, especially for the real economy.

Also if credit ratings indicate a “safe” asset to be safer than what it really is, then of course a bank could collapse. Indeed this is precisely the stuff all major bank crises have been made of. No crisis has resulted from too much exposures to something ex ante perceived as risky.

Of course, if a credit rating is imperfect, in the way of informing the asset to be less risky, or less safe, than what it really is, then you might have helped banks to nail it. I doubt though your intention was really to base it on credit ratings being adequately wrong.

Mr. Stefan Ingves, may I suggest the following?

For once think of the purpose of banks being that of allocating credit efficiently to the real economy; and then go back to the drawing board, to see what non-distortionary capital requirements for banks you can come up with.

While doing so, may I suggest you remember that the purpose of the capital requirements for banks, is to cover for some unexpected losses, and not like now, for the expected credit losses?

You could still use credit ratings, if that helps you to save face… but, instead of basing it until now on those credit ratings being correct, why not require banks to have for instance 8 percent of capital against all assets, based on the risks of credit ratings, and other risk perceptions, being wrong... and other risks like that of cyber-attacks.

Please Mr. Ingves... wake up! The risk with banks has nothing to do with the risk of their assets, and all to do with how they manage the risk of their assets… Don’t make it harder than it already is for banks to manage credit risks correctly.

Yours sincerely,

Per Kurowski

PS. Could you please send a copy of this letter to Marc Carney, the current chair of the Financial Stability Board? It could also be of interest  to BIS's Jaime Caruana, ECB's Mario Draghi, and Fed's Janet Yellen. 

BoE´s Mark Carney should mind his own business, as a bank regulator managing risks he has no right to throw stones.

Mark Carney, the current Chair of the Financial Stability Board, has recently been warning many about the financial risks that could be derived from climate change, like leaving a lot of fossil fuels stranded. He should first take better care of his own risk management responsibilities. In that area he has not earned the right to throw stones.

Regulators allow banks to hold much less capital against what, from a credit risk point of view, is perceived as safe than against what is from a credit point of view ex ante perceived as risky.

That means that banks can earn much higher risk adjusted returns on equity when lending to what is perceived safe, than when lending to those perceived risky, like the SMEs and entrepreneurs.

That is a huge economic risk, because the risky need to have fair access to bank credit in order to help the real economy to avoid to stall and fall.

That is a huge financial risk, because it guarantees excessive exposures against little capital, to precisely that of which great bank crisis are made of, that which ex post can come up as having been erroneously perceived as absolutely safe.

Should not the Financial Stability Board discuss the risk that the Basel Committee has no idea about what its doing?

The Financial Stability Board plenary met in London to discuss policy measures to end too-big-to-fail, concerns on market liquidity, shadow banking, derivatives, misconduct risks, audit and climate change.

For me, the number one issue they should discuss is whether their colleagues in the Basel Committee have the faintest idea of what they are doing and whether it is not hight time for capital requirements for banks to be set based on the risk their regulators are loony... or are smoking something not so good.

Mark Carney: Would the Magna Carta include risk-weights like these: King John 0%, AAA-risktocracy 20% and Englishmen 100%?

With the Basel Accord of 1988 (signed one year before the Berlin wall fall) bank regulators assigned a 0% risk weight for loans to the sovereign and 100% to the private sector. Some years later, 2004, with Basel II, they reduced the risk-weight for loans to those in the private sector rated AAA to AA to 20%, and leaving the unrated with their 100%.

That introduced a considerable regulatory subsidy for the bank borrowings of the infallible sovereign (government bureaucrats) and for those of the private sector deemed almost infallible. And that taxed severely the fair access to bank credit, of those deemed as risky, like SMEs and entrepreneurs.

Reading Mark Carney’s interesting: “From Lincoln to Lothbury - Magna Carta and the Bank of England” I felt like asking him what he would think the Magna Carta would have to say about these risk-weights.

When are we going to get regulators concerned with banks allocating credit efficiently to the real economy?

I just wonder… because clearly current bank regulators do not care one iota about that.

If they did they would not have concocted their silly credit-risk-weighted equity requirements for banks which allow banks to earn much higher risk adjusted returns on equity lending to “the safe” that when lending to “the risky.”

And that of course means banks will lend much too much to "the safe" and much too little to "the risky"

Current credit-risk-weighted capital (equity) requirements for banks, besides being stupid and dangerous, are immoral

This is what the current bank regulators have decreed, on their own, without any real consultations:

The lower the perceived credit risk of an asset, the lower the equity a bank has to have against it… and so of course, the higher the perceived credit risk of an asset, the higher the equity a bank has to have against it.

It is stupid: because never ever have major bank crises resulted from excessive bank exposures to what is perceived as risky, these have always resulted, no exceptions, from excessive bank exposure to something perceived as save.

It is dangerous (even from a national security perspective): because allowing banks to leverage their equity, and the support they receive from taxpayers, differently based on perceived risks, will seriously distort the allocation of bank credit to the real economy and thereby weaken it.

And it is immoral: because having those perceived as risky and who already, precisely because of those perceptions, have less and more expensive access to bank credit, to have even lesser and even more expensive access to bank credit, is an odious and immoral regulatory discrimination, which kills opportunities and increases inequality.

What Europe most needs, Europe does not get, courtesy of their bank regulators.

Where would that liquidity injected by the ECB’s QE printing machine best be put to use in Europe? Since there is a limit to how much you can inflate demand by inflating the value of existing assets, without any doubt, what Europe most needs now is for that liquidity to flow by means of bank credits to SMEs entrepreneurs and start-ups, those who stand the best chance of producing something new to advance the European economies. 

But no, that is not going to happen, not as long as Europe’s bank regulators, Mario Draghi, Stefan Ingves and Mark Carney included, have anything to say about it. 

Those regulators dangerously blocked the fair access to bank credit to anyone perceived as risky from a credit point of view, because they do not dare European banks take the risk of lending to these. That they have done by means of portfolio invariant credit-risk weighted equity requirements for banks. 

Those equity requirements work like hallucinogens on banks, intensifying their perception of credit risk, making what’s perceived as safe look much safer yet, and what is perceived as risky so much riskier.

It’s insane. It demonstrates the Basel Committee, Financial Stability Board, ECB, Mario Draghi and so many more are way over their heads in Europe.

Look at ECB, European banks, pension funds, widows and orphans, all scrambling in order to lay their hands on the ever smaller inventory of safe assets, those which by means of negative interests, are now so "absolutely safe" they already guarantee you a minimum haircut. 

What did we in the Western world do, to deserve getting saddled with so dumb bank regulations/regulators?

The pillar of current bank regulations issued by the Basel Committee for Banking Supervision is “the risk weighted capital requirements for banks”.

For those interested, a more accurate name would be “the portfolio invariant credit-risk-weighted equity requirements for banks”

In essence it signifies that the more the ex ante the perceived credit risk is, the more equity banks need to hold.

That does not make any sense! It is never what the perceived credit risk is that constitutes any real risk for a bank and much less for a banking system. It is only how wrong banks could have perceived the risks to be, which represents the real risk.

If something is perceived as safe and turns out risky, everything is ok.

If something is perceived as risky but turns out to be less risky, then that is only good news.

If something perceived as risky turns out to be even more risky, then that is bad, but at least in that case one can suppose the balance sheet exposures to be lower, and that the bank has been receiving higher risk premiums that partly compensate.

But, if something perceived as safe turns out ex post to be risky, that is where the real dangers lie.

And so we can only conclude in that: the safer a bank asset may seem the more dangerous it becomes… and which is 180 degrees opposite of what current regulators think.

And that mistake also stops the banks from financing precisely those our society most need to be financed, in order to move forward, namely "the risky" small businesses and entrepreneurs.

What did we do to deserve that?

Carney first stop supporting risk-weighted equity requirements for banks, those that discriminate against “the risky”.

“We have had to start reinvesting in social capital to rebuild trust in the system” holds Mark Carney… the Chairman of the Financial Stability Board.

Mr. Carney, before you have a right talk about social capital, you should stop supporting those antisocial distorting credit-risk-weighted equity requirements for banks, which so odiously discriminate against the fair access to bank credit of those perceived as “risky”… those whose small diversified bank borrowings anyhow never ever constitute a real risk to the banking system.

Real banking risks do not revolve around what is perceived “risky”, as experts think, but around the “absolutely safe”

What happened with the experts swearing by geocentrism, or the Ptolemaic system, that with the cosmos having Earth stationary at the center of the universe, when Galileo Galilei, Nicolaus Copernicus, Tycho Brahe and Johannes Kepler, convinced the world of the heliocentric model, that with the Sun at the center of the Solar System?

I ask it curious to know of what will happen with all those experts in the Basel Committee, the Financial Stability Board the IMF and places like the academia and the press; like for instance Mario Draghi, Stefan Ingves, Jaime Caruana, Mark Carney, Olivier Blanchard, José Viñals, Martin Wolf and so many other; when it is finally realized that the real serious risks in banking do not revolve around assets perceived as “risky”, as they all think, but around assets perceived as “absolutely safe”.

These regulators’ silly portfolio invariant credit risk based capital (meaning equity) requirements for banks, by impeding the fair access to bank credit of “the risky”, like small businesses and entrepreneurs, not only distorts and hurts the real economy; but they also guarantee major system crisis, since banks are then doomed to, sooner or later, to get caught with their pants down (meaning little equity), with huge exposures to something which was perceived as “infallible” but which has turned into something very risky… often precisely because of too much credit at too low interest rates.

Should it be "More risk more equity – less risk less equity" as these regulators argue?

No! I prefer no distortion, but, if anything, then just the opposite.

These current regulators they all confuse the world of ex-ante perceived risks with the world of ex-post realized dangers.

These regulators have never heard or understood Mark Twain’s “A banker is he who lend you the umbrella when the sun is out, and wants it back as soon as it looks like it is going to rain”

20% credit risk weighted total loss-absorbing capacity (TLAC), is an assassination of the real economy

Mark Carney of the Financial Stability Board has just mentioned the possibility of 20% credit risk-weighted total loss-absorbing capacity for banks TLAC.

That, when lending to for instance one of the AAAristocracy who carries a risk weight of 20%, means the bank would need to hold 4% in TLAC.

But, when lending to a small business, which carries a risk weight of 100%, then the bank would need to hold 20% in TLAC... 5 times more! ...16% more!

This will of course mean that banks will lend too much to “the infallible” at too low interest rates, and never more to small businesses and other “risky” unless at extremely high relative interest rates.

That means in effect an assassination of the real economy

Why do bank regulators deny their children the risk-taking by banks that benefitted them?

“Mark Carney has pledged that taxpayer money should never again be used to prop up banks.” 

And the price for achieving that by discriminating against the "risky", will foremost be paid by the poor, increasing the inequalities. Good job!

Why Europe should be scared having the ECB, under Mario Draghi, being the supervisor of its 120 most significant banks.

Why?

Because Mario Draghi, as the former chairman of the Financial Stability Board either likes it, or has not understood that: 

If you allow banks to have much lower capital (equity) when holding, from a credit risk point of view only, "absolutely safe" assets than when holding "risky" assets; then you allow banks to earn much higher risk adjusted returns on equity on assets perceived as “absolutely safe” than on assets perceived as “risky”… and then banks will lend too much at too low interests to those perceived as “absolutely safe”, and too little at too high interests to those perceived as “risky”, namely the medium and small businesses, the entrepreneurs and start-ups…namely, as they say, those tough risky risk-takers Europe most needs to get going when the going gets tough.

And, for more clarity, because Mario Draghi is not capable to understand that secular stagnation, deflation, mediocre economy and all similar obnoxious creatures, are direct descendants of silly risk aversion.

And, for more clarity, because Mario Draghi does not understand that Europe was built up with risk-taking and that, without it, it will fall and stall.

Just look now at the ECB doing all its expensive “Comprehensive Assessment of all significant banks in the euro area by the ECB”, and worrying exclusively about not finding anything risky on bank’s balance sheets, and not one iota about all those loans that should be there, had it not been for this sissy and odious discrimination against what is ex ante perceived as risky. 

As you see Europe, Mario Draghi is really dangerous for your future. And especially so if you are young and about to run the risk of belonging to a lost generation.

Now if you are a European just concerned with making it a couples of months, or perhaps some few years more down the line, because you subscribe to the philosophy of “après nous le deluge”, then keep Mario Draghi, because then he really is your man.

PS. Europe, keep an eye open on Stefan Ingves, the chair of the Basel Committee, and on Mark Carney, the current chair of the Financial Stability Board... they are just as dangerous.

“Too defined and too encompassing to go wrong regulations” is riskier than “Too big to fail banks”

Mark Carney the Chairman of the Financial Stability Board, in his Statement delivered to the International Monetary and Financial Committee Washington, DC, 11 October 2014, makes no reference whatsoever to the distortions credit risk-weighted capital requirements have in the allocation of bank credit to the real economy. 

And so Carney at least, evidences he has not learned anything from this crisis, or that he absolutely agrees with the idea of banks dangerously overpopulating safe havens and withholding completely from exploring any riskier though perhaps of us more productive bays. 

As you can read, still not one single word about the purpose of our banks… banks just standing there, without any other purpose, seems perfectly all-right to him. 

“A ship in harbor is safe, but that is not what ships are for.” John Augustus Shedd, 1850-1926

Mark Carney also refers to the fact that one of the goals of the Basel Committee is to set out its plan to address excessive variability in risk-weighted asset calculations. He seems still not able to understand that, the lack of variability in risk-weighted asset calculations, by leveraging the consequences of errors made in their calculations, is also a possible horrendous source of systemic risk.

Really how can someone worrying about too big to fail banks, simultaneously preach a one set of can’t go wrong regulations? What’s the difference between too big to fail banks and too defined to go wrong regulations?

In short Mark Carney, and the rest of regulators out there, have not been able to understand that even if their risk-weights are based on perfect risk perceptions, applying these to bank capital requirements is wrong, because these “perfect” risk perceptions should already be cleared for banks in the interest rates, in the size of the exposures and in the other terms that apply.

Mark Carney…and you other regulators out there… stop being so stubborn… you should not concern yourselves with the risk of bank assets, which is the concern of bankers. You instead must concern yourselves with the fact that the banks could perhaps not manage those risks… something that, as they say here in Paris, is pas la meme chose. 

You regulators you do not solve anything for us managing the risks of banks because you yourself then become our largest systemic risk with banks… and, I am sorry, but, I at least, see absolutely no reason to trust some central bankers to know what risks should or should not be taken out there in the real world, for my grandchildren to have a great future. And much less so when you all, with your Basel II, have already proven yourself to be huge failures.

Sincerely I find your hubris of believing yourself capable of being the risk managers of the world quite disgusting. 

Look around you… I would hold that capital requirements based on potential of job creation ratings, sustainability of planet earth ratings, and good governance and ethics ratings of governments, though distorting, would do so in a better directions than your credit ratings, which in fact promotes inequality and exclusion.