March 18, 2016

FT you’re now inconsistent! You’ve consistently ignored the nannying of banks by the nannies of the Basel Committee

Sir, you hold: “There is a case to intervene when people act in a way that harms those around them, or when it is a case of safeguarding children who cannot take an informed decision and may face bigger risks. If adults take risks with their own health, they should be made aware of the dangers and perhaps nudged into sense, but there is no case for coercion.” “The relentless march of the nanny state” March 18.

Indeed but why then do you keep mum when adult bankers, aware of the ex ante perceived credit risks, are coerced by regulators into considering those risks for a second time, by means of the risk weighted capital requirements for banks?

Can’t you understand that any risk, even if perfectly perceived, leads to the wrong actions, if excessively considered?

If you had two very concerned nannies watching over your children, you might accept them applying the average of their concerns, but never ever the sum of their concerns. Because you know that if they did that, your kids, embracing safety excessively, would grow up seriously disturbed. 

Equally, when now regulators’ risk aversion is added to bankers’ risk aversion, the result is a much disturbed banking system, that embraces excessively what is perceived or has been decreed as safe. Do you get it?

@PerKurowski ©