Mr. Bob Diamond. Is not a level playing field for borrowers in the real economy accessing bank credit, even more important?

Sir, Bob Diamond, a banker, holds that “A level [regulatory] playing field… is essential to ensure banks have consistent and predictable financial targets” “‘Too big to fail’ is still a threat to the financial system”, September 16.

But, is not a level playing field for when the actors in the real economy access bank credit even more important? Because, there is no level playing field there as long as bank regulators allow for different capital requirements based on perceived risk.

Currently banks are earning much much higher risk-adjusted returns on equity when lending to “The Infallible”, like to some sovereigns, housing and the AAAristocracy, than when lending to “The Risky”, like to SMEs, entrepreneurs and start-ups.

And that as you of course would understand, but that bankers prefer to conveniently ignore, causes, consistently and predictably, our banks to lend too much, at too low interest rates and in too lenient terms to “The Infallible”, and too little, at too high rates and in too strict terms to “The Risky”. And that is a distortion inflicted on the real economy, and therefore also a threat to the financial system.

Sorry, Gillian, try acting like a better financial journalist

Sir, Gillian Tett holds that “banks need to redefine why they exist. A new sense of mission and modus operandi is required, “Don´t just say sorry, Bob, try acting like a steward” July 3. 

But in a much similar vein, I could also ask Gillian Tett to try acting as a better financial journalist, and inform her readers that, in all the bank regulations produced by the Basel Committee, there is not one single word that pertains to what the purpose of the banks is and, notwithstanding that, the regulators still gladly proceed to regulate, totally unencumbered. 

Ms. Tett also mentions Mr. John Taft of Royal Bank of Canada´s request that banks act as wise stewards of the nation´s cash. How are they supposed to do that? Ms. Tett must know by now that function has already been usurped by the bank regulators who, with great hubris, act like the self appointed risk managers of the world, and allocate, in a very haphazardous way, the risk-weights which determine the capital requirements for the banks… and thereby really determine the directions of the nation´s cash. 

Over to you Ms. Tett, try to inform your readers more completely.