October 27, 2012

When accessing bank credit some players are allowed five strikes while others only one

Sir, Robin Harding writes about Ben Bernanke and Sir Mervyn King being great fanatics of baseball and cricket respectively “Central bankers are right to take up the bat and ball” October 27. 

I do not know about cricket but, the current capital requirements, based on ex-ante perceived risks, one or the pillar of current bank regulations, would, if translated to baseball, signify the following: 

A batter who is perceived by one of the few authorized batting rating agencies as an extremely good batter, a Babe Ruth, one of “The Infallible”, the AAA rated, sovereigns like Greece, would be allowed five strikes instead of the ordinary three before he is called out, and, lousy batters like me, and perhaps like you, “The Risky”, the small businesses and entrepreneurs, would be called out after just one single strike. 

And let me assure you that would not do baseball, or us, any good, just as that has not done our banking system, and "The Risky" any good. And so let us at least make certain that when Bernanke leaves his post, he does not go into regulating baseball.