Richard Lambert, before concerning himself with bankers’ education should think about bank regulators’

Sir, I refer to John Gapper’s “There is no such thing as the banking profession” February 13.

There Gapper writes that an option favored, among others by Sir Richard Lambert, head of UK’s Banking Standards Review, “is to encourage bankers to take professional exams and rebuild their sense of pride and identity. Bad bankers might be struck off by professional bodies”

Good idea, but what about the professional exams for bank regulators which right now seems of even urgent importance.

You know Sir I hold this because bank regulators who decide to use perceived risk of expected losses to set the capital requirements for banks, that which is primarily to cover for any unexpected losses, evidence they do not know what they are doing. With their amateurism they not only created this crisis, by making banks create dangerous exposures to what is “absolutely safe”, but they also keep us from getting out of the crisis, by de-incentivizing banks from lending to “risky” medium and small businesses, entrepreneurs and start-ups.

So please, enroll regulators in a Bank Regulations 101 course… as fast as possible. With their distortions they have put the current generation on the track of becoming a lost one.

Without a banking sector capable of assuming risks, there cannot be a recovery

Sir, Richard Lambert ends “Britain’s banks are too fragile for political games” July 4, with “The economy cannot recover in the absence of a stable banking system: nothing can be more urgent than that.” He is correct, but neither can the economy recovery with a banking sector with capital scarcity that, as a result of the capital requirements based on ex ante perceived risk, is basically ordered to avoid the risks associated with a recovery of the economy. 

The way you are going, with those highly distortive capital requirements, all our banks are doomed to end up gasping for oxygen and capital on the last officially perceived safe beach… in the best case, for the UK, gilts, but also, perhaps, the US Treasury or the Bundesbank. 

And the Financial Times is not capable to warn about this?

Regulators should take the beam out of their own eyes

Sir, Richard Lambert makes a reference to a research paper by Andrew Haldane, the Executive Director for Financial Stability, and Richard Davies of the Bank of England where they evidence an increasing short-termism in the pricing of company shares and conclude by blaming it all on a market failure, “Sir Ralph´s lessons on how to end short-term capitalism” May 23.

Short-termism is indeed a serious problem that derives from human weaknesses, but Messrs Haldane and Davies should start by taking the beam out of their own eyes. The mother of all short-termism is how the bank regulators, on top of how the market favors those perceived as less risky, also, by means of their risk-weights which determine the effective capital requirements for banks, shamelessly layer on their own favoritism of the same.

For a starter that regulatory short-termism created our current crisis by pushing our banks excessively into sovereigns and triple-A rated business. Also those regulations make it much more difficult harder and much more expensive for our small businesses and entrepreneurs to access bank credit… and if that is no short-termism what is?

http://subprimeregulations.blogspot.com/2019/03/my-letter-to-financial-stability-board.html

Though that could also be good news

Sir, Richard Lambert scares us with his news about how “Too many people are tuning out of the news” November 1, until we reflect upon the sad fact that in some cases that could in fact be good news, given the very low quality of some of the news.

Richard Lamberts news