The mother of all the systemic risks is believing that the systemic risks are under control.

Sir if systemic risk is strictly defined as the issue of institutions being too large for a financial system then I fully agree with William Donaldson’s and Arthur Levitt’s “Tackling systemic risk is no job for the status quo” November 20. But, if we by systemic risk also mean the risks that can be introduced to the system, then I would not want to see a “systemic risk oversight board” (SROB) be in charge of it, precisely because of the systemic risk that the belief that systemic risks have been controlled represents.

Have the regulators not learned their recent of what happened to them so recently when they appointed the credit rating agencies as their sentries, and then went to sleep? Don’t the regulators know that they were the ones who introduced the systemic risk of having the system believe that default risks were accurately measured?