Sir FT Bank regulations were not lax at all. They were, and still are, extremely dangerous.

Sir in your “A weak hand on casino banking”, December 11, you write “Lax regulation did little to discourage rash behavior”

No! You are wrong Sir. Allowing banks to leverage 60 times or more their equity with assets only because these are perceived as absolutely safe, has nothing to do with lax regulations, and all to do with dangerous regulations that encouraged rash behavior.

With the laxest regulation of them all, meaning no regulation at all, some other crisis might have happened but not the current one, a really free market would never ever have permitted such leverages.

And since you make a reference to casino banking, let me remind you that it was the regulators who, with their risk-weighted capital requirements, altered all the pay-out ratios on the different casino bets, and thereby created the distortions in the allocation of bank credit to the real economy that led to the current chaos.

And where do you get to know that “the financial system is now safer that it was four years ago”? Do you mean you think so because it is holding more infallible sovereign assets against less capital?