What would make a Negro slave on a cotton plantation in 1800 America, not feel being discriminated against?

Sir, I refer to Luke Johnson’s valedictory essay for the FT “A farewell after eight years championing founders” January 28.

The following Johnson writes is extraordinary: “I believe independent ownership of business assets is incredibly important if we want a vibrant economy. Founders possess animal spirits and optimism that contribute disproportionately to innovation, job creation and tax generation. They are the essential ingredient for a more prosperous society, together with the rule of law and sound property rights. These inventors, mavericks and would-be tycoons exist to take risks most of us seek to avoid in our careers.

Start-ups renew industry and society, and pioneer and implement new technology that established institutions shun, because it would upset their cosy oligopolies. Crony capitalists — whose annual conference was held last week in Davos — are not entrepreneurs, but corporate managers who hate free markets and the idea of proper competition, while squandering most of their time on office politics and games of patronage.”

How extremely sad then that Luke Johnson completely missed out on how bank regulators, with Basel I favoring the “infallible sovereigns”, and with Basel II favoring the AAArisktocracy… impeded the fair access to bank credit of his “risky” risk-taking entrepreneurs.

What is it that makes those who should most see a distortion and discrimination in order to fight it, not seeing it?

What would Luke Johnson, Richard Branson, President Reagan and Lord Keynes say about Basel Committee’s risk aversion?

Sir Luke Johnson refers to that if entrepreneurs such as the Virgin founder, Richard Branson “did not take big gambles, society as a whole would be worse off” “The Virgin Galactic crash and the need for risk-takers” November 5.

And Johnson also writes: “pride and arrogance are required if the status quo is to be challenged with radical new ideas; after all, weak characters give up too soon – harried by regulators, safety obsessives and the overcautious. Change is never easy, but it must be embraced unless we want a life of stagnation and retreat.”

And he quotes President Reagan in that: “The future doesn’t belong to the fainthearted; it belongs to the brave”, and John Maynard Keynes in that: “If the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die.”

Well contrast all that to the fact that current bank regulators, with their credit-risk-weighted equity requirements, are telling the banks that if they lend to what is perceived as absolutely safe, then they will be able to earn much higher risk adjusted returns on equity than if lending to what is perceived as risky.

I am doing what I can, but FT, how is it that you cannot find it in yourselves to protest regulations that slowly but surely, creating artificial risk-aversion, are killing our economies and perhaps even our civilization?

Luke Johnson. Who would be your favorite contender for the title of the mother of all start-up slayers?

Sir I would not argue one iota with Luke Johnson’s “Contenders for patron saint of start-ups” July 30.

That said it would be interesting to see who he opines is the number one contender for start-ups' slayer?

Clearly it has to be one prominent bank regulators, like Mario Draghi, Stefan Ingves, Mark Carney, Jaime Caruana or any other of those who concocted the venom against star-ups we know as the risk weighted capital requirements for banks.

Because of that the start-ups, usually perceived as “risky”, relatively to those perceived as “safe”, now have to pay even higher interest rates, get even smaller bank loans and have to accept even harsher terms than they used to.

And sadly the only result of that mumbo-jumbo regulation is that now our banks run the risks of too much exposure to what seems absolutely safe, while renouncing to the benefits of diversifying when lending to those who seems risky.

There is Sir, as you surely must understand, no future in such silly risk-aversion!

But, Luke Johnson, how do we get the Basel Committee to understand it has hit regulatory rock bottom?

Sir, the Basel Committee’s bank regulators, by allowing Cypriot and other banks to lend to Greece against only 1.6 percent in capital, which basically means allowing for a 62.5 to 1 debt to equity leverage, helped to cause both Cyprus and Greece to hit bottom.

But, in Luke Johnson’s “How to find some value in hitting rock bottom” September 18, we find no clue about how we could make sure that the Basel Committee understands and acknowledges it has hit regulatory rock bottom?

I mean these comfy regulators do not pay or suffer much direct impact from the damages they produce. In fact, after their Basel II flop they have even been authorized to follow up with a Basel III, using the same script of capital requirements based on ex-ante perceived risk. Hell, neither Hollywood nor Bollywod would allow something so dumb.

Much of our nations’ “desire and dreams” were killed in the laboratories of bank regulators

Sir, Luke Johnson quotes Professor Edmund Burke, from his book “Mass Flourishing” believing “that the ‘glorious history of desire and dreams’ has run out of steam”, “The small start-ups are as vital as the starts” August 28.

Of course it has. How could it not, with bank regulators who allow banks to finance the “absolutely infallible”, the AAAristocracy, against much less capital than when lending to the small risky start-ups… and which means that the banks will earn a much higher risk adjusted return on equity when lending to the former, than when to the latter.

As I had the opportunity to do in a letter yesterday I would also suggest Luke Johnson to compare today’s banking with how, in Mary Poppins, Mr. Banks and his colleagues describe their Fidelity Fiduciary Bank

If you invest your tuppence, wisely in the bank, safe and sound

Soon that tuppence, safely invested in the bank, will compound

And you'll achieve that sense of conquest, as your affluence expands

In the hands of the directors, who invest as propriety demands

You see, my friend. You'll be part of railways through Africa.

Dams across the Nile. Fleets of ocean greyhounds.

Majestic, self-amortizing canals. Plantations of ripening tea

All from tuppence, prudently, fruitfully, frugally invested.

We used to pray for in our churches “God make us daring!” Clearly our bank regulators never attended mass.

In banking, margins paid by big “infallible” guys are worth much more than those paid by little “risky” guys

Sir, Luke Johnson writes “Margins give the little guys a chance” March 6. That might be, but absolutely not when accessing bank credit.

Because of the capital requirements for banks based on perceived risks, the risk and cost adjusted margins paid to the bank by the little guys, “The Risky”, Luke’s entrepreneurs, are worth much less than those same margins paid by the big guys “The Infallible”, simply because the banks are authorized to leverage the latter many times more.

This distortion has castrated our banks. Our current bank regulators completely ignored the fact that our economies became prosperous, not by silly risk-avoidance, but by intelligent risk taking.

And as result our economies are ingesting more of what is perceived as “safe”, carbs and fats, while dangerously ignoring to take sufficient “risks”, that protein which helps it to grow muscles and become sturdy, and our economies are becoming obese and flabby.

Yes we need young who understand that “risk” is the Yin of the Yang “safe”.

Sir, Luke Johnson writes “Europe cannot afford to become a theme park for ageing baby boomers obsessed with nostalgia dreaming of glory day… ruled by cadres of old men who cling to power and wealth like grim death” and “We all need an infusion of youthful vigour” December 5. 

Absolutely! And where we should start is by removing those completely senile regulators in the Basel Committee who believe you can make our banks safer by avoiding what is perceived as risky, failing to understand that “risk” is the Yin of the Yang “safe”, and that for banks, what has always been most dangerous, is almost exclusively what is perceived as absolutely safe. If you really wanted to inject some vigour into Europe, think more in terms of capital requirements for banks that are higher for “The Infallible” and lower for “The Risky”. 

On what I totally disagree with Luke Johnson is on wanting “the Rolling Stones… greedy sexagenarians, to leave the stage”. In their case they are not there, except for us wanting them to be there, just like we love our well worn old warm slippers. 

PS. By the way there are some real rusted oldies in FT too, blocking ideas, and it could benefit all of us if they were to sit down and have a chat with Luke Johnson about this topic.

A 62 years old male

But we still trust many proven fools.

Sir Luke Johnson in “Rough diamonds dazzle as entrepreneurs” May 27 vents the frustration many of us share with him when he says “I hope we never again trust overpaid fools who think they know best thanks to bogus theories”. Unfortunately, we will... just as we still trust the regulators in Basel with their bogus theories that they can control banks through capital requirements that depend on risk assessments made by third parties... just as we still allow our regulators to allow our banks to lend our deposits to the government without any capital requirement whatsoever.