January 31, 2015

The bank regulators in the Basel Committee are also in urgent need of some statistical education.

Sir, Tim Harford writes: “the cure for “bad statistics” isn’t “no statistics” – it’s using statistical tools properly” and makes a good case for that “a little bit of statistical education for the legal profession would go a long way” “Making a lottery out of the law”, January 31.

The same goes for bank regulators. For regulatory purposes they insist on considering the riskiness of bank assets; while the statistic series that should really matter to them, are the ones relative to when bankers have been wrong in perceiving the credit risks. 

And that single mistake, much worse than jailing a poor innocent, is taking the Western world down.