Are the regulators pulling our legs?

Sir Tom Braithwaite reporting that “US banks face more sweeping overhaul” June 27 writes about setting “aside more capital against their riskier… operations”. Or he has misunderstood it or the regulators have to be pulling our legs.

As this crisis resulted in its entirety from assets that having been deemed safe, because the credit rating agencies said so, were allowed to be financed by the banks against extremely low capital requirements, what we obviously need is higher capital requirements on any operations perceived as not risky.

To place additional capital requirements on operations that are perceived as risky and for which therefore there is already a traditional lack of capital and will to finance, has no logic. Not only did those riskier operations have nothing to do with originating the crisis but they might quite probably also represent our best ticket out of this crisis.