Where have all the bank risks gone?

Sir, Prof Stella Fearnley, January 22, reacting over Gillian Tett´s column about the explosion in structured finance (“The unease bubbling in today’s brave financial new world”, January 19) advances with some humility the possibility that “passing the risk around does not get rid of it”. 

The bank regulators in Basel should take heed since having on the contrary arrogantly presumed they could simply get rid of risks and although they might indeed have managed to eliminate some, they now seem utterly befuddled asking themselves…. where all the bank risks have gone? Also, sad to say, even in the case of risks eliminated, no one has any idea of at what cost, as we all would benefit from remembering that any risk avoided could just as well have been a valuable opportunity lost.

Prof Fearnley ends up expressing the hope “that none of my savings are being used for circular gambling” while expressing the criteria that “if the returns look too high, they probably are.” and though she has a clear point, let us also not take for granted that the opposite, low returns, do necessarily mean lower risks.

When will they ever learn?