October 18, 2012

The west also depends on restoring the equal access to bank credit opportunities.

Sir, Raghuram Rajan holds that “The west’s legitimacy rests on restoring opportunity” October 18. He is correct, but he ignores what in my concept is one of the greatest opportunity killers ever. 

Bank regulators decided, I guess basically on their own, to give the banks incentives to lend more and cheaper to those ex-ante perceived as The Infallible, and make it harder and more expensive for “The risky”, the small businesses and entrepreneurs, to access bank credit. 

And, doing so, they were not only immorally negating the latter equal opportunities, but, worse, they were simultaneously condemning our own economy to turn flabby and fall. 

If regulators are so scared they cannot visualize banks taking the quite manageable risks on “The Risky” our economy needs… why do they not commit hara-kiri on their own, and leave us alone? 

What the regulators have done, and are still doing, is only making our banks build up unmanageable and very unproductive risks on “The Infallible”… including of course on the “infallible” sovereigns.