Society is still unaware of the real costs of lessening risks and promoting the stability of its banking system.

Sir, John Gapper’s “Regulators are finally catching up with banks”, July 4, in reference to some possible new costs resulting from recent new regulations announced this week by the Fed, just shows how little it is yet understood what is the real “price society and the financial system pays from lessening risks and promoting stability.”

The first cost, is the current bank crisis. It resulted from allowing banks to hold exposures to what was perceived as absolutely safe against absolutely minimum equity, and so that, when some of the perceptions turned out to be wrong, banks were caught with their pants down holding no capital.

The second cost, which could be even larger than the first, are all opportunities lost because of the introduction of regulatory risk-aversion, and which has certainly impeded many small and medium business and entrepreneurs to assist in creating jobs for our youth.

Current bank regulations which still include discrimination based on perceived risk, do not promote stability in the banking system, but the stiffness that causes fragility. Also there is no banking stability worth to write home about, without a sturdy and healthy real economy.

Gapper also refers to Jamie Dimon, chairman and chief executive of JPMorgan Chase, once describing Basel III as “anti-American”. Indeed it is anti-American, but not for the reasons that Dimon probably refers to, but because, in “the Home of the Brave”, these regulations favor “The Infallible” and discriminate against “The Risky”.