More toughness is needed in Basel in order to get bankers moving instead of the Congress.

Sir I much appreciated Peter Thal Larsen’s “Withdrawal unavailable” December 6. At long last someone has given enough importance to how minimum capital requirements imposed by the Basel Committee is a constrain on new banking business, among other because they force the banks first to dry up any already spilled milk. Official efforts to get the bank credit moving should of course start with introducing modifications of those capital requirements, unfortunately our so risk adverse regulator wimps do not even dare to enter that terrain. When the going gets tough we need to call in the tough!

Instead of having a Congress requests such ridiculous things like the senior management of the automotive industry driving to Washington in order to access new credit, the Congress should be asking the banks about what they would need to start putting that kind of automotive risk on their books again.

Finally, when Thal Larsen quotes Robert Self of Credit Suisse saying that the appetite for yields drove a lot of demand for mortgage backed securities, this is just not so. The yields themselves were nothing to write home about and the risk-reward ratio was deemed to be attractive only because these securities had triple-A ratings. Without these ratings no one, and I mean no one, would have purchased these securities. Moreover without those triple-A ratings we would not even be in this crisis.