Citigroup’s Chuck Prince said: “As long as the music is playing, you’ve got to get up and dance”, but bank regulators insist on playing the same 30 years old song.

Sir, Andrew Hill worries about how many of today’s banker class remember it, let alone worry, about the complacency expressed in Chuck Prince’s “As long as the music is playing, you’ve got to get up and dance. “James Gorman, chief executive of Morgan Stanley “Amnesia dooms bankers to repeat their mistakes” June 24.

Hill hopes Gorman “is experienced enough to have detected the echoes of 2007 in the current soundtrack of rising share prices and lowering regulatory burdens… and that he teaches “more of his younger, fresher-faced staff to recognize the tune and know when to bow politely and leave the dance floor.

As for me I would much rather prefer the regulators stopped playing that very same old song of the “risk weighted capital requirements for banks”, composed in 1988 by the Basel Accord, and otherwise known as “You earn higher returns on the safe than on the risky”. That song drove bankers into an intense maniac polka, in pursuit of the very high expected risk adjusted returns offered on what was perceived (houses), decreed (Greece 0% risk), or concocted (AAA rated securities) as safe.

PS. Hill refers to John Kenneth Galbraith’s The Great Crash 1929 account of the willful errors and self-interested speculation of the great investment banks. But Galbraith also wrote “Banks opened and closed doors and bankruptcies were frequent, but as a consequence of agile and flexible credit policies, even the banks that failed left a wake of development in their passing.” Money: Whence it came, where it went” (1975)

@PerKurowski

And what about the composers?

Sir, John Gapper in “A bruising game of musical chairs”, November 15, beats up on some financial sector dancers like Citibank’s Chuck Prince but keeps totally mum about those composers in Basel who wrote the score of the “minimum capital requirements”, picked the conductors and the musicians, the credit rating agencies, who were to perform the music to which the bankers were ordered to dance. As much as I could object the generous severance checks to the dancers much more do I object that our bank regulators are not held accountable and are now almost expected to dig deeper in the hole we find ourselves and which can only lead to even wilder dancing.

And what about the composers?

Sir, John Gapper in “A bruising game of musical chairs”, November 15, beats up on some financial sector dancers like Citibank’s Chuck Prince but keeps totally mum about those composers in Basel who wrote the score of the “minimum capital requirements”, picked the conductors and the musicians, the credit rating agencies, who were to perform the music to which the bankers were ordered to dance. As much as I could object the generous severance checks to the dancers much more do I object that our bank regulators are not held accountable and are now almost expected to dig deeper in the hole we find ourselves and which can only lead to even wilder dancing.