Thanks to credit risk weighted equity requirements, borrowers and banks now share the objective of fooling regulators.

Sir, Tracy Alloway refers to the transformation of unsafe loans into super-duper “safe” ones “eBonds that strip out risk would be financial alchemy at its oddest” February 7. She misses out on what I would hold to be the most important incentive for such process.

Borrowers have of course always been interested in selling themselves to the banks as having a very low credit risk, in order to negotiate lower risk premiums.

And bankers used always to be very interested in questioning the creditworthiness of borrowers, in order to obtain higher risk premiums.

And that struggle helped to allocate bank credit efficiently to the real economy.

But then came regulators with their credit-risk-weighted equity requirements for banks and changed the priorities for the banks.

Now more important for the risk adjusted return on bank equity than the negotiation of risk premiums with borrowers, is dressing up the credit operation in such a way so as to make it seem as safe as possible, so as to allow the highest possible leverage of bank equity.

In other words regulators, instead of fully exploiting the tensions between borrowers and lenders, managed to align both of these with the objective of fooling them. Not too bright doings Basel Committee!

The assistance by tech jerks could increase the Piketty inequalities.

Sir, Tim Harford defends the apps for obtaining a “reservation at a popular restaurant… something that have always been valuable but they have been hard to buy and sell” arguing that “none of the people hoping to secure a reservation at a Michelin-starred restaurant is poverty stricken”, “Lessons from tech jerks”, July 26.

Yes indeed but let us not forget that even the one-percenters or less, have to compete for the one-percenters-of-the-one-percenters, and as this new service will extract a higher price, we are again confronting a service that mostly benefits the plutocracy. In fact they will probably pay less for this reservation service that what they currently pay the concierge of the hotel where they reside… and so this can only help to drive up even more the Piketty-inequalities we are told to abhor.

Now on the positive side… when these Michelin-starred restaurants run their own auctioning of reservation system… perhaps they find it profitable to open up for instance early morning shifts… and then some non-plutocrat gourmets and gourmands like me could perhaps have a better chance of finding a seat… and hopefully the real chefs will then perform especially well for their real admirers.

But while, we are on the subject of jerks, let me again remind you that the worst ones are the bank regulators who discriminate against the fair access to bank credit of those who, because they are perceived as risky, are already being discriminated against… the #JerkRegulator