March 23, 2013

Does Gillian Tett suffer from blind faith in the experts?

Sir, Gillian Tett analyses “The blind faith in wishful thinking” of bankers with respect to those securities baked with mortgages to the subprime sector which collapsed in 2007, March 23. 

But again Tett refuses to refer to what having regulators allowing banks to leverage the expected risk adjusted margins of those AAA rated securities on their equity, a mindboggling 62.5 times to 1, must have done to feed any blind faith. Talk about hype!

The pillar of all Basel bank regulations are the capital requirements based on perceived risk, and which are crazy in that they clear for risks already cleared for. 

Has Tett, as a journalist asked any of the regulators to explain to her the rationale behind those capital requirements, in terms beyond of what that fuzzy “more-risk-more-capital less-risk-less-capital, it sounds logical” provides? 

Is she not curious? Or is it that she herself suffers from blind faith in the experts?