From Basel II into Solvency II… has the European Parliament lost it?

As reported by Nikki Tait and Paul J Davies, April 23, not only do the higher risks have to pay higher insurance rates because the market so demands it, but now they have to be additionally penalized in order to compensate for the higher capital requirements for higher risks that will be imposed on the European insurers by the European Parliament; as a result of something called “Solvency II” and which sounds and reads frightfully similar to Basel II.

Do they never learn? Now again, what will result from all this is increasing the incentives for disguising as being of lower-risks and for having the regulators go to sleep in the belief that all has been taken care of. Who is going to measure the risks? The insurance risk rating agencies? Start praying!

Europe has the sovereign right to guard its interests even when doing it stupidly.

Sir Paul J. Davies and Nikki Tait report “Concern over Brussels rating agencies plan”, December 1. What can one say? If a Hugo Chávez feels he needs a Banco del Sur to make a difference in this world why should not Europe want to have their Credit Rating Agency de Europa? And, with respect to that ´This introduces an extra-territorial approach and will be seen as protectionism” why should Europe also not have the right to try their best to see that the next subprime swampland where the credit rating agencies will surely take us again, sooner or later, lies not in California but in old Europe?

If Europe accepts the possibility that the credit rating agencies do introduce a bias is that in itself not a prime reason for asking the Basel Committee to eliminate completely the role of the credit rating agencies in setting the minimum capital requirements for the banks?

Are the regulators incapable of learning?

Sir in “Brussels stiffens bank capital requirements”, October 2, Nikki Tait reports that there is legislation coming that will “require credit rating agencies to register and meet standards if they wish to operate in Europe.” Does this mean that now at long last we will be able to really trust the credit rating agencies? Are the regulators incapable of learning?