February 06, 2013

The fiduciary duty of financial journalists includes drawing attention to violations of the bank regulators fiduciary duties… capisce FT?

Sir John Kay writes “The reputation of finance has been degraded by the actions of few. But the few have been running the show” and I totally agree with him, though let me be clear, he refers to some few bankers, and I refer to some few bank regulators, “A Swansea ballboy¸ a union leader and the duty of bankers”, February 6.

If “fiduciary standards describe how people should behave when they manage the affairs of others” and if “in a sector as extensively regulated as financial services [where] the main determinant of behavior is the rule book”, is it not so that the absolutely highest fiduciary standards should then have to be expected from those who write the rule books for banks?

The whole package of Basel Committee bank regulations is in my mind in total violation of a regulators' fiduciary duties. Not only does it give banks immense incentives to create excessive and exposures to what is perceived as absolutely safe and which has always been the source of bank crises, but also, by discriminating against “The Risky” it hinders the banks to perform their most important societal duty of allocating economic resources efficiently.

And let me also remind you that one very important fiduciary duty of financial journalists is to, “without fear and without favour”, draw their readers’ attention to violations of bank regulatory fiduciary duties… capisce John Kay, and all you others in FT?