It’s sad when we need to remind regulators to prepare for the unexpected

“The time to prepare for the next threat is now”, that’s how Bill Emmott ends his “How to build global resilience after the pandemic” FT, May 25.

Sir, Mark Twain, supposedly, said: “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it looks to rain”

Today, if alive, with respect to Basel Committee’s risk weighted bank capital requirements, Mark Twain would have opined: “A bank regulator is a fellow who allows banks to hold little capital when the sun shines, so these can pay lots of bonuses and dividends and buy back lots of stock, but wants banks to hold much more capital, the moment the rain starts”

PS. Emmott writes “But there must be an international accord on debt restructuring, akin to the Brady Plan in the early 1990s.” I lived through that restructuring. It was made feasible by developing countries being able, because US$ interest rates were high, to very inexpensively purchase US$ 30 years zero coupon bonds issued by the US, in order to guarantee the repayment of the principal of their debts. In a world of ultra-low, even negative interest rates, what’s the price of such bonds?

@PerKurowski

Though meteorologists announce rain, regulators allow banks to operate as if the sun shines.

Sir, Tommy Stubbington writes: “A coronavirus-linked credit rating downgrade by Fitch prompted speculation that Rome was headed for ‘junk’ territory” and “Italy is the most heavily indebted major eurozone country, and yet it can fund itself for free”; “Italy’s interest-free bonds enjoy strong demand as buyers bet on ECB support” October 14.

Mark Twain (supposedly) said: “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it looks to rain” and, if now revisiting banking, Twain could just as well opine: “A bank regulator is a fellow that allow banks to hold little capital when the sun is shining, so banks can pay high dividends and buy back stock, but wants banks to hold much more capital, the moment it starts to rain”

But, Twain, in the case of Italy, or any other Eurozone over-indebted sovereign, would not be entirely correct, because even though credit rating meteorologists now warn about heavy rains, EU authorities still decree sunshine, and even though Italy cannot print euros on its own, they allow their banks to hold its debt against zero capital.

Sir, does Stubbington ignore this? I’m not sure, but Upton Sinclair also held that “It's difficult to get a man to understand something, when his salary depends on his not understanding it.” That could perhaps apply to him… and, sorry, perhaps to you too Sir.

https://teawithft.blogspot.com/2019/06/the-still-ticking-0-risk-weight.html

Loony risk-weighted capital requirements block entrepreneurs’ access to fair credit.

Sir, Eric Schmidt writes“Right now, the UK, the EU and the US share a growing problem: we are experiencing a market failure in the way we support entrepreneurs.” “Our narrow view of entrepreneurs squanders talent”, November 28. 

Absolutely! But some market failures are government produced. 

If a bank lends to someone wanting to buy a house, something perceived as safe, the regulators allow it to hold much less capital that if it lends to an entrepreneur, something perceived as risky. 

So if a bank lends to someone wanting to buy a house, something “safe”, it will be able to leverage its capital much more than it can do if it lends to an entrepreneur, something

So if a bank lends to someone wanting to buy a house, something “safe”, it will be able earn much higher expected risk adjusted returns on its equity than it can do if it lends to an entrepreneur, something “risky”. 

But was it always this way? Of course not! This happened when bank regulators introduced the risk weighted capital requirements for banks. That which is based on that truly loony concept that what bankers perceive as risky, is more dangerous to our bank system than that what bankers perceive as safe. 

Since then millions of credit requests have been either negated or if approved, have had to support a higher than needed interest rate. 

Schmidt also writes about the need to “drop the tunnel vision promoted by many academic and professional specialisations”.

Absolutely! I have often argued that had there been: 

a plumber or a nurse disturbing the regulators’ group-think with an innocent question like “what has caused big bank crises in the past?” 

or a professional that had taken a course in conditional probabilities, 

or someone (incorrectly) quoting Mark Twain with “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain”, 

or a golfer asking “why would you assign more handicap strokes to good players taking these away from lousy players like me?”, 

then the 2008 crisis would not have happened… and Lehman Brothers would still be alive and kicking.

God make us daring!

@PerKurowski

Even after the crisis there has been no change in who are represented when deciding on bank regulations.

Sir, Sarah O’Connor writes: “If we want groups to make fair decisions, our best shot is to make the groups representative of the people who are subject to those decisions.” Hear hear!, “Diversity coaching from the Olympic dressage event” August 22.

In the matter of bank regulations, where were all those who perceived as risky by the banks, like entrepreneurs, suffered the Mark Twain realities of bankers lending you the umbrella when the sun shines and wanting it back if it looks like it could rain?

Had they been present perhaps regulators would have understood the concept of conditional probabilities, and therefore had realized that assets perceived by bankers as risky become safer, not riskier; while assets perceived by bankers as safe become riskier, not safer.

Can you imagine how much tears, sufferings and lost opportunities that would have saved the world, primarily our young?

The saddest part of the story is that even after the crisis should have evidenced to all the regulators had no idea of what they were doing, there has been no changes at all in who are being represented when analysis and decisions are taken, so they still keep seeing and considering the risks in the same or quite similar way, the bankers are perceiving the risks. 

How good it would have in the Basel Committee some representation of the young who know that risk taking is the oxygen for the development they need, and that the older do not have the right to “safely” extract all equity from the current economies.

@PerKurowski

In terms of estrogen and testosterone, are there differences between bank exposures to what is perceived risky, and risky excessive exposures to what is perceived as safe?

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain” Mark Twain

Sir, Cordelia Fine writes: “Risk management in financial institutions is too important to be guided by scientific ideas well beyond their sell-by date. Blaming financial misadventures on a testosterone-fuelled male drive distracts us from what’s more likely to make a difference: regulation and culture. The best in-house antidote for bankers selling junk products and regulators bending to conflicts of interest isn’t women; it’s a dismissal slip”, “The Testosterone Rex delusion” March 3.

Absolutely! But with reference to the risks taken on by the banks that caused the 2007/08 crisis, that dismissal slip should foremost be given to regulators for having the ex ante perceived risks of banks assets substitute for the ex post dangers to our banking system.

And with reference to the absurd low response of the economy to the extremely high stimulates provided, the regulators should also be given that dismissal slip, for ignoring the purpose of banks, something that includes the efficient allocation of credit to the real economy.

Fine references Swedish journalist Katrine Marçal with whether “an investment bank named Lehman Sisters could handle its over-exposure to an overheated American housing market.” That is an ex post description that has little to do with the ex ante perception of the risks, and clearly less to do with bankers wanting to lend when it rained.

If some testosterone is needed to understand that risk-taking is the oxygen of development, and so the need for banks to also lend to those perceived as risky, like to entrepreneurs, then the regulators showed a fatal lack of it.

Their risk weighted capital requirements, more ex ante perceived risk more capital – less risk less capital is as dangerously nonsensical as can be. These only guarantee that when the true risks for our banking system happens, namely the dangerous overpopulation of safe havens, banks will stand there with especially little capital.

By allowing banks to leverage much more with assets perceived, decreed or concocted as safe, like AAA rated securities, like residential mortgages, like sovereigns (Greece) they allowed banks to earn the highest expected risk adjusted returns on equity on what was perceived as safe. Mark Twain could have said that made bankers wet dreams come true; and that was, while playing, the music to which Citigroup’s Chuck Prince held bankers had to dance.

And so, since what the members of the Basel Committee and the Financial Stability Board and most of their colleagues have really proven, is to be suffering from an excessive risk aversion, what would then Cordelia Fine opine, in terms of testosterone and estrogens?

God make us daring!

Here is an aide memoire on the major mistakes with the risk weighted capital requirements

@PerKurowski

How can expectations be high when you discriminate against the future, on account of it being riskier than the past?

Sir, John Kay writes: “It is not because interest rates are too high that eurozone consumption is sluggish but rather because expectations are so low. Fiscal austerity and the aftermath of the global crisis have dimmed the employment prospects of a generation of young Europeans. Low interest rates have as intended pushed up the prices of long-dated bonds and houses” “The twisted logic of paying for the privilege of lending”, September 10.

Frankly, how can expectations not be low, when we have regulators that order banks to hold more capital against what’s perceived as risky, the future, a job to be created; than against what is perceived as safe, the past, a house that has already been built?

And Kay writes: “There are obvious requirements for investment in the eurozone — to provide power through cleaner energy plants, to improve roads and relieve overcrowding on trains, to build houses, to accommodate tens of thousands of recent refugees and above all to fund the new businesses that will promote innovation on the continent.”

Yes, but, if so, why do we not have capital requirements for banks based on those purposes?

Mr. Kay, I tell you, it is not “dysfunctional capital markets, rather than any excessively high interest rates, that are behind an investment shortfall across Europe”. It is totally dysfunctional bank regulations.

Mr. Kay also reminds us of the “aphorism that people will lend you money so long as you can prove you do not need it”. But Sir, that is what Mark Twain told us long ago: “The banker lend us the umbrella when the sun shines and wants it back when it looks like it could rain”; and which is precisely why the Basel Committees’ risk weighted capital requirements for banks don’t make sense.

Mr. John Kay, wake up!... and you too Sir.

@PerKurowski ©

Those who have no business interfering should not be allowed to use that a consequence was unintended as an excuse

Sir, Robin Wigglesworth writes: “Overlaying safeguards on an immensely complex financial system may have the unintended consequence of making it more intricate and therefore more fragile” "Regulators seek ways to stem fragility caused by hyper-fast trading", November 7.

Again there is that reference to “unintended consequence” which seems always ready to serve as an excuse for any kind of dumb and mindless interfering. An example:

Never have bank crises resulted from lending out too many umbrellas when it rained, they have all resulted from lending out too many umbrellas when the sun was shining radiantly.

But nevertheless bank regulators decided that, in order to make banks safe, they had to give them even more incentives to lend out the umbrella when the sun shines and to take it back hurriedly when it looked that it might rain. And so they imposed credit-risk weighted capital requirements for banks; more risk more capital – less risk less capital.

And of course the result was excessive bank exposures to what was perceived as safe, this time aggravated by banks holding specially little capital against it… was that an unexpected consequence?

And of course the result is excessive few bank exposures to what is perceived as risky, like SMEs and entrepreneurs, something very dangerous for the real economy… is that also an unintended consequence.

And then the regulators decided that a few human fallible credit rating agencies were going to decide on the riskiness of credits.

In January 2003, in a letter published in the Financial Times I wrote: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic errors, about to be propagated at modern speeds”

And yet many present the ensuing disaster with the AAA rated securities backed with mortgages to the subprime sector in the US as an “unintended consequence”. Have they no shame? Are we so dumb we allow them to get away with that?

@PerKurowski ©

Its quite peculiar how regulators believe that banks want to pursue risky assets and shy away from the safe?

Sir, Robin Wigglesworth writes: “The very fact that the industry is fretting over illiquidity lessens the chances of any debacles, and it is already exploring various solutions to the challenge.” “The great liquidity fright and how the market will adapt”, July 13.

I agree that should be the case, but that is not how current bank regulators are seeing it.

If the risk of an asset is perceived as high, then the regulators seem to consider this presents a special attractiveness for banks, and therefore they must impose higher capital requirements for holding these assets. If on the contrary an asset is perceived as safe, then regulators believe these assets become unattractive to banks, and they therefore impose very low capital requirements for holding these assets.

Strange reasoning eh? It is like if Mark Twain had said that bankers love to lend you the umbrella when it rains and not when the sun shines.

@PerKurowski

And the pedigree of the AAArisktocracy, thanks to Basel Committee, is worth much more than the markets ever intended.

Sir, I refer to Gillian Tett’s “Why ‘pedigree’ is the buzzword for elite employers” May 23, in order to comment on the exaggerated importance given to other pedigrees… like credit ratings.

A good credit rating pedigree naturally results in easier, cheaper and more abundant access to bank credit… and that is how it should be.

And some even thought that some market participants, like the bankers, went overboard considering that credit risk pedigree. For instance, Mark Twain has been quoted holding that a banker is the one who lends you the umbrella when the sun shines and wants it back as soon as it looks its going to drizzle a bit.

But then, in 1988 with Basel I, and later in 2004 with Basel II, some too frightened bank regulation bureaucrats, told bankers that was not enough, and that they had to consider that same credit risk pedigree in their capital [equity] too.

And as you can understand any pedigree, no matter how good and correct it is, if it becomes considered too much, will generate the wrong response to that pedigree.

And so Boom! with that manipulation, a tremendous distortion was introduced into the markets of bank-credit… and which has had the real economy suffering from too much and too cheap credit to the AAArisktocracy, which includes the “infallible sovereigns”, and too little and too expensive credit to “The Risky”, like SMEs and entrepreneurs.

And I must say I find it fascinating how an anthropologist like Gillian Tett, writing in the Financial Times, does not find the introduction of such regulatory risk-aversion, to be interesting enough to comment on it. There’s got to be something more to it.

PS. I admit without problem to an obsession against these bank regulations that are destroying the world where my grandchildren will want to find good jobs in. What I do not understand is others´ obsession in ignoring this problem. 

@PerKurowski

Creativity needs a chair in any mutual admiration club to somewhat dent any ongoing groupthink

Sir I agree with Gillian Tett in that “A degree of creativity should be on the college curriculum” March 21. But that must also include making sure that creativity has a chair wherever important decisions are taken.

I say it again… had there for instance been some genuine representation in the Basel Committee of historians, and why not of anthropologists, these would have questioned the wisdom of the risk-weighted equity requirements for banks that have so completely distorted the allocation of bank credit to the real economy.

At least the chance of having someone able to quote Mark Twain in that “bankers are those who lend you the umbrella when the sun shines and want to take it away as soon as it looks like it is going to rain” could have given those central-banker-regulators some second thoughts, while they were doing their groupthink, in their cozy mutual admiration club.

@PerKurowski

Could an app which controls bank regulators’ natural sissy instincts, be the solution for our unemployed?

Sir I refer to Lisa Pollack’s “It’s only natural to seek an app for everything” of December 24.

It really shed lights on how we could perhaps obtain better bank regulations, not-withstanding regulators natural wishes to impose on our banks a so dangerous and distorting risk adverseness.

An app, that we could perhaps call Basel IV, would for starters reverse regulators automatic beliefs that what is perceived as risky is risky and what is perceived as safe is safe, for a much more correct: what is perceived as risky is actually quite safe, as it is what is perceived as absolutely safe that contains the greatest dangers.

Then since regulators seemingly cannot refrain from the meddling that distorts, this app would immediately convert all of their risk weighting into a neutral one and the same capital requirement for all bank assets.

And finally remembering what Mark Twain said about the bankers being those willing to lend you the umbrella when the sun shined, and wanting it back when it looked like it could rain, the Basel IV app would impose an extra capital requirement, whenever a bank had too much of its assets in AAA rated assets, housing and real estate finance, or loans to infallible sovereigns.

And so hopefully this Basel IV app would also neutralize bank regulators who are only concerned with the safety of the banks… as if shining and healthy banks could survive among the rubbles of a destroyed real economy.

Let us pray Santa brings us such an app a.s.a.p. That would bring our young ones what they most need now… namely better expectancies for finding good jobs.

Bank regulators should never trust bank meteorology but prepare for when it fails

Sir, John Kay ends his “Spotting a banking crisis is not like predicating weather” August 16, mentioning “we are better at avoiding drizzle than financial crises”. I do not agree, the two events are not comparable.

First, if you listen to a report on bad weather, you might take shelter, but you cannot influence the weather. But, if for instance the IMF would suggest a probability of a crisis in the banking sector somewhere, it could help to make that crisis a certainty.

Then of course are the consequences. I am sure John Kay has found himself under a surprising drizzle many times, only that he does not remember it, because, unless it happens for instance during a wedding party on a lawn, it really does not mean so much. A banking crisis is, on the contrary, usually, unfortunately, a too memorable event.

Because it is relevant to the theme of banking and weather, and it further explains my arguments, I include below an extract from my opinion “The ‘Mistake’ that dares not speak its name”, which was published in The Journal of Regulation and Risk North Asia, Summer 2013.

---

Mark Twain wrote that: “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain”.

And the weatherman could predict sunshine or rain, and he could be right or wrong.

If rain was announced and it rained, no problem for the banker, as he had either never lent the umbrella or had already taken it back. If rain was announced, but the sun shined, the banker may have lost some good tanning opportunities, but that’s about all. If sunshine was announced, and the sun shined, there are of course no problems for the banker.

But, if sunshine was announced, and it rained, then the bankers would be in serious trouble. And this could be why Mark Twain also said: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so”.

PS. You can find the whole opinion here, and of the whole Journal here

Defeatism you can really write home about

Sir, Chris Giles, in “Why Sir Mervyn has taken a walk on the supply side” January 24, considers going for more “supply side” economics and abandoning “demand side” stimulus as something “too defeatist. Frankly, he has no idea of what real defeatism is. 

Mark Twain said “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain”. The capital requirements for banks based on perceived risk imposed by the Basel Committee's bank regulators only makes real sure that bankers will be ever so more anxious to lend you the umbrella when the sun is shining, and immensely faster to demand its return, as soon there is the slightest indication that it could possibly rain.

And that my friend, that is defeatism you really can write home about.

Bailouts and the socialization of losses is not the responsibility of banks but of governments, and what banks really must do, is to relearn the ancient art of lending to “The Risky”

Sir, James Grant writes “Banks need to rediscover the ancient art of caution” December 14, and mixes up any ex-ante behavior of banks, which is their responsibility, with the ex-post socialization of their losses, which is entirely the responsibility of governments. 

Also, were not our current predicaments so sad, it would almost be funny when Grant preaches “A good banker lent against the collateral of short-dated commercial bills, not heaven forfend-property”, and as if implying that the banks had been out on a very risky bungee-jumping tour. 

Does Grant really believe that holding triple AAA rated securities backed with mortgages, and to which the banks were authorized by their regulator to leverage their equity 62.5 to 1, so safe were these, and for which there was an immediate mechanism to obtain liquidity by selling these in a market that very much demanded these securities… evidenced a lack of caution? Is it not an excessive regulatory risk-adverseness against all perceived as “The Risky” and which drove the banks excessively into the arms of “The Infallible”, precisely the spot where all bank crises have always originated. 

No, the problem is that bank regulators, with their capital requirements based on perceived risk, gave the honest bankers an additional motif to behave just like Mark Twain describes them, namely those who lend you the umbrella when the sun shines and want it back when it looks like it is going to rain. And as a consequence banks got caught with excessive exposures to “The Infallible” with no capital at all. 

On the contrary, what bankers must now with urgency relearn, is the art of lending to “The Risky”, like unrated small businesses and entrepreneurs but, for that to happen, we first need to rid ourselves of nervous regulatory nannies who want banks to deal exclusively with “The Infallible”, triple-A rated and sovereigns (like Greece).

God make us daring!

Gillian Tett does just no get it!

Sir, Gillian Tett writes “Stern sermons and looser rules won’t get banks lending more” October 12. She does, not or wants not to really get it. 

It is simply not just a question of banks lending “more”, or having these as an alternate QE money injection in the economy so to say, but, primarily, to get the banks to lend better, in terms of what the economy most needs. That is known as searching for a more “efficient economic resource allocation”. 

Right now, because of capital requirements (plus now, to make it worse, also liquidity requirements) which are based on ex-ante perceived risks, and made stricter by the big scarcity lack of bank equity, banks tend to lend to “The Infallible” and avoid lending to “The Risky”. The latter include of course the small businesses and entrepreneurs. 

And so, what the British regulators are currently doing, at long last, thank God, with their “quietly loosening bank rules”, is discreetly trying to reduce the regulatory discrimination against “The Risky”. That it is hard for them to be too forthright about it is sort of understandable, because that would signify having to admit how stupidly they behaved earlier.

Frankly, on the face of it, it would seem to me that Gillian Tett could learn much more about banker behaviour from Mark Twain than from Phil Coffey.

Some are waking up to the colossal failings of Basel bank regulations... when will FT?

Sir, Shahien Nasiripour and Tom Braithwaite report “US regulators urged to outdo Basel III rules” October 5. In it they mention that “some like Jeremiah Norton, a director on the FDIC´s five man board, have voiced doubts about the proposed risk-weighting scheme, which links capital levels to assets risk”. Might he have tried to answer some of my wicked questions on bank regulations? Like: 

1st: When do banks most need capital, when the risky turn out risky, or when the “not-risky” turn out risky? 

2nd: If bankers do as Mark Twain says, namely “lend you the umbrella when the sun shines and wanting it back when it rains”; and all bank crisis ever have result from excessive lending to what was perceived as “not risky”; and the perceptions of risk have already been cleared for in the interest rates and the amounts of the loans, then what is the logic behind allowing banks to hold less capital requirements when they engage in what is perceived as “not risky”, as current bank regulations do? 

3rd: What economists can be so dumb not understanding that if you allow banks to leverage 60 times or more their bank equity for some assets and only 12 times for other, producing thereby vastly different returns on equity, you will drastically distort the economic efficient resource allocation that banks are supposed to perform? 

More sooner than later, everyone is going to wake up to the fact that our current bank regulations are built upon absolutely insane foundations. And then of course, the silence of the Financial Times on this issue is going to be a source of immense embarrassment for the paper and especially for those responsible of, notwithstanding its motto, ordering its silence on it, during so many years.

Defining the purpose of banks, would be good regulatory behavior

Sir, Bradley Fried writes that when the Commission of Banking Standards resumes it work, it needs to look at the human behavior of the bankers, “Banks have to learn to compete on good behavior”, September 10. And he is more right than he imagines. 

Had for instance regulators been as perceptive about the behavior of bankers as Mark Twain, with his their wanting to lend you the umbrella when the sun shines and take it away when it rains, they would never have come up with such daft regulations as their capital requirements for banks based on perceived risk. Or, if they had still used perceived risks, then perhaps they would have set these totally opposite to the current ones, the lower the perceived risk the higher the capital requirement. 

But let us hope bank regulators also learn to compete on good behavior, and come understand that, when you regulate something, it is good behavior first to define its purpose. 

John Kay, we all wish regulators had regulated based on bankers’ behavior

Sir, John Kay in “Finance needs trusted stewards, not toll collectors” July 23, writes of a new regulatory approach introduced in the 1970s and 1980s “based on behavioral regulation”. 

Not so, though we sure wish they had done just that. If so, regulators would have set the capital requirements for banks based on how bankers behave with respect to perceived risk, instead of as they did, based on the perceived risks.. and as if no one was perceiving these. 

And if regulators knew bankers as well as Mark Twain did, “those who lend you the umbrella when the sun shines and want it back when it looks like it is going to rain” then they could have set the capital requirements slightly higher for what is perceives as absolutely not risky, instead of the immensely lower, and then the world would not have fallen into this “safety” trap crisis.

Credit rating agencies are just only other weathermen

Sir, imagine the old Mark Twain banker, he who wants to lend you the umbrella when the sun shines but wants to take it back as soon as it seems like it is going to rain. That banker would clearly be taking notice of what the weathermen had to say, to set the interest rates, the amounts of the loan and the other terms.

But what would happen if the regulators also told the banker that if the weatherman spoke of sun his bank was required to hold little capital but, if of rain, it had to hold more capital?

Obviously that would doom the Twain banker to choke on sunny expectations (AAAs and infallible sovereigns), and avoid possible rains (small business and entrepreneurs) like the pest… only to find out, too late, that weather reports are not always accurate.

Patrick Jenkins writes “Rating agencies still so relevant they need regulating” June 26. If he had understood the horrible consequences of the excessive and outright unmerited relevance given to the credit ratings, when deciding the capital requirements for banks, he would not be arguing for regulating these agencies but on reducing their relevance. Is the weathermen regulated?

PleaseFT, read the letter I wrote and that you published January 11, 2003

What we need to check is the bank regulators testosterone levels to see if it is sufficient.

Sir, I am not sure about the applicability to banks of Gillian Tett´s “Regulators should get a grip on traders´ hormones” March 16, since Mark Twain´s “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain” would indicate that the testosterone level of bankers is far from being abnormally high. 

But what might behoove us is to test the regulators hormones. When these decided that even though banks were already clearing for perceived risks of default of borrowers by means of interest rates, amounts exposed and other terms, they should also consider those same perceptions for their capital requirements, they most definitely evidenced what would seem to be a severe case of lack of testosterone. 

As a direct consequence of the risk-adverseness of the regulatory nannies, we are now suffering from obese bank exposures to what was officially perceived as absolutely not risky, like triple-A rated securities and infallible sovereigns, and anorexic exposures to what was officially perceived as risky, like the small businesses and entrepreneurs.