Simpler and equitable across the board bank rules, are safer because these distort less… it is as easy as that!

Sir, Nicholas Brady is absolutely right in that “We need much simpler rules to rein in the banks”, August 27. In fact he is much more right about this than what he realizes. Most, perhaps all current discussions on bank regulations relate to their effectiveness or not, from the perspective of making our banks safer. Very few, almost none, absolutely not FT, analyses these regulations from the perspective of how these so fatally distort the real economy, primarily by making the banks oversensitive to how risks are officially perceived. 

For instance, small unrated businesses and entrepreneur are normally considered much riskier than an AAA rated client, and so they have naturally to pay higher interests and get smaller loans. But on top of that, small businesses and entrepreneurs are additionally slapped by the consequences of the regulatory discrimination which occurs when bank regulators force bank to hold more capital when lending to them than when lending to an AAA rated, and therefore end up having to pay even higher interest and getting even smaller loans. 

Simpler and equitable across the board rules, are safer because these distort less… it is as easy as that! 

FT, please don't be so thick-headed and take notice!