Regulators must stop feeding banks bad cholesterols, and making these communist agents.

Sir, in “Waiting for growth” August 13, you write: “The sclerosis in UK’s balance sheets is clogging up the financial arteries through which central bank cash multiplies” yet again you refuse to even hint at the possibility that those truly dumb capital requirements for banks based on perceived risk, ex ante of course, represents the heavy doses of bad of cholesterol that regulators have been feeding the banking systems for quite some time now, UK’s included. To even discuss “direct monetisation of spending”, without cleaning up bank arteries , is just irresponsible. 

And just a few weeks ago, in “More bad news for banks and clients”, July 13, you also wrote “The industry must take its utility function seriously”, and also blithely ignored top mention the fact that the regulators have not defined the purpose of the banks, and are therefore actually with their regulations interfering with their utility function, as we believe that to be. At this moment no matter how lost banks might seem, they know more what they are there for than regulators do. If in doubt, just consider the extremely lenient capital requirements for banks when lending to “infallible sovereigns”. That cannot satisfy any reasonable capital allocation purposes, unless of course you are a communist state and you want your banks to be your agents.