If keeping current bank capital/equity requirements, how can you dream of MAGA?

Sir, Elon Musk and Vivek Ramaswamy write: “Most legal edicts [that] aren’t laws enacted by Congress but ‘rules and regulations’ promulgated by unelected bureaucrats”, “The DOGE Plan to Reform Government” WSJ, November 20

Among these “edicts” the most important, and in that respect the least discussed, is the risk weighted bank capital/equity requirements, that with lower decreed weights for government debt and residential mortgages than for loans to small businesses and entrepreneurs, distorts the allocation of bank credit. De facto it implies:

That bureaucrats know better what to do with credit, for which repayment they're not personally responsible for, than small businesses.

That residential mortgages are more important for the economy than small businesses and entrepreneurs.

That refinancing the “safer” present has priority over financing the riskier future.

Questions: 

Was this how America became great? 

With this what chances do the authors, and the elected president, give to the possibilities of a MAGA? 

Does this “edict” conform with the wishes of America’s Founding Fathers?

Why do not Wall Street Journal’s reporters pose THE QUESTION at WEF in Davos 2016?

I refer to Wall Street’s World Economic Forum “Outlook 2016”, January 20, 2016.

Like for instance when Lingling Wei and John Hilsenrath write “Global Economy Loses Steam” The Wall Street Journal, January 20, 2016.

How on earth could not the Global Economy lose steam with regulators who, in an effort to make banks safer, have decided banks should be allowed to earn much higher risk adjusted returns on equity when lending to what is ex ante perceived or deemed to be safe, like to “infallible sovereigns”, AAArisktocracy or housing, than when lending to “risky” SMEs and entrepreneurs. That is the direct result of the risk weighted capital requirements.

“The future is here. It just needs a big push”, writes Christopher Mims. Indeed but why not start by removing the hurdles? As is, with this regulatory credit risk aversion, banks are no longer financing the riskier future they are only refinancing the safer past.

And all that distortion for no good reason, since major bank crisis never result from excessive exposures to something ex ante perceived as risky, but always from too big exposure to what has turned out to be erroneously perceived as safe.

What a shame that, with so many good journalists present in Davos, no one makes THE QUESTION

PS. Another version of THE QUESTION

@PerKurowski ©