November 16, 2012
Sir, Robin Harding reports “Bernanke says overcautious banks are slowing recovery”, November 16. Frankly, for someone like Bernanke, who belongs to the nanniest and sissiest bank regulatory establishment ever, this is either a bad joke or an insult to our intelligence.
Our current bank regulators allowed banks to leverage their equity amazingly much when holding assets perceived as absolutely not risky, “The Infallible”, and therefore to shun away completely, from anything officially perceived as “The Risky”, because these could of course not provide the banks with an equal expected risk adjusted return on equity… and now Bernanke is calling the banks overcautious? Come on!
If Bernanke want banks to return to their normal level of caution, all he has to do is to make the capital requirements for banks the same for all assets… and so clearly the ball is in the regulators hands.