What the financial sector needs to be stable is a lot of shake rattle and roll.

Sir, Paul Tucker, a deputy governor of the Bank of England holds that “Stability comes before the good things in life”, April 5. Wouldn´t he, typical bank nanny, many other would hold that stability, like in the grave, comes last in life. 

Jest aside, when he writes that the Financial Policy Committee should not use bank capital weights to try to steer the supply of credit to achieve other objectives than stability, as “this is not an exercise in economic or social engineering”, I would just ask if forcing risk-taking out of our banks is not just an exercise in economic engineering? 

The more you allow the economy and the financial sector to shake rattle and roll, the more stable and productive it will be. It is when regulating busybodies interfere, like with setting the capital requirements for banks based on risk, even though theses perceived risks have already been cleared for with interest rates and others… that they doom the banks to overdose on perceived risks and to end up with dangerous obese exposures to what is or was considered as absolutely not risky, like triple-A rated securities and infallible sovereigns, and with anorexic exposures to what is officially considered as risky, like small businesses and entrepreneurs.