Blefuscu’s and Lilliput’s bank regulators at war

Sir, John Plender’s “UK’s banking climate is making the US look attractive”, April 6, refers to the debate about the basic capital requirements for banks, whether the 7 percent proposed in Basel III or the 16-20 percent championed in this case by David Miles of the Bank of England.

Pure Blefuscu and Lilliput war material. The current crisis had nothing to do with the basic capital requirements and all to do with that these where applied in such a way that discriminated incredibly much in favor of what officially was perceived as having a low risk of default, the triple-As, even though the market already discriminated in its favor.

Three years into the crisis and regulators do no still know what hit them? How on earth can we allow the regulators to produce a Basel III after that incredible box-office flop of Basel II?