Sorry FT… it just seems like the same dumb old banking to me!

Sir in “Brave new banking” March 3 you write that “financial markets were guided less by an invisible hand than by the hands of a blind”. That blind was and is the Basel Committee’s paradigm of capital requirements for banks that discriminate based on perceived risks. You yourself say that “More credit is good when channeled to productive investments” and yet that is not what Basel I, II, or III hold… those regulations hold exclusively that more credit is good when channeled to “not risky” proposals.

Patrick Jenkins, Megan Murphy and Haig Simonian report Oswald Grübel, ex of UBS, saying “If in one part of the world you have an 8 per cent capital requirement, and in another part of the world, 19 per cent… you know where the business is going”. He is absolutely correct, just as is: “If in order to lend to small businesses you need 8 per cent capital requirement, but when lending to triple-A rated securities, or Greece you only need 1.6 per cent … you know where the credit is going”

Sir (please get it!) the 8 percent capital requirement established in Basel 1 and II when lending to what is perceived as risky has proven to be sufficient to cover the losses incurred when banks lend to what is perceived as risky, so there is no need to increase those requirements. What originated this crisis lies exclusively with operations a priori perceived as “not risky”. Before that is realized and fully corrected for, which means eliminating all regulatory discrimination that is layered on top of market discrimination … it just seems like the same dumb old banking to me.

More than two years after and they haven´t got it yet!

Sir, this financial crisis was caused primarily because regulators by means of imposing different capital requirements for banks depending on the perceived risk of default created huge incentives for the banks to excessively pursue what was AAA rated.

In what Brooke Masters and Megan Murphy describe about the new Basel rules, “Suspense over”, August 19, evidences that the regulators, more than two years after the crisis got on its way, do still not understand the problems that their arbitrary regulatory discrimination causes.

In the proposed regulations there are some steps toward lowering the overall leverage possibilities of a bank, but there is not one word about eliminating the discrimination that, on the margin, where it counts, decides so much about where and at what cost bank credits go.