We might need to parade current bank regulators down our avenues wearing cones of shame.

Sir, Patrick Jenkins writes: “Bill Coen, secretary-general of the Basel Committee on Banking Supervision… said auditors should be given responsibility for checking banks’ calculations [so as to have] another line of defence to ensure assets are [given] the proper risk weighting”, “Metro Bank sparks call for external checks on loan risks” February 4.

I totally disagree, auditors look at ex post realities, on what banks have already incorporated into their balance sheets, What most matters are the ex ante perceptions of risk. 

Jenkins opines here “The error at Metro was to put some loans into standard risk-weighting buckets, determined by the UK regulator”. Sir, I ask, is that not evidence enough that we should get rid of current bank regulators?

If somebody is to blame, that is precisely the Basel Committee who with its risk weighted capital requirements for banks decided that what bankers perceived ex ante perceived as safe, was so much safer to our bank system than what they perceived as risky.

Basel Committee’s Bill Coen should be asked to explain the rationale of a standardized 20% risk weight for what, rated AAA, is dangerous to our bank systems, and 150% for what, rated below BB-, becomes so innocous. 

Jenkins opines: “The error at Metro was to put some loans into standard risk-weighting buckets, determined by the UK regulator”. Sir, I ask, is that not evidence enough that it behooves us to hold our bank regulators very accountable, perhaps even by parading them down our avenues wearing cones of shame? Perhaps hand in hand with those unable or unwilling to question them.

@PerKurowski

“You have to rely on audited financials” “You have to rely on credit rating agencies”. Same old dumb story! (excuse)

Sir, Chris Nuttal and Richard Waters, with respect to Hewlett Packard’s messed up acquisition of Autonomy, quote Meg Whitman, HP’s CEO saying, “But in the end, you have to rely on audited financials and we did.”, “Blame game thrusts tech group’s due diligence under the spotlight” November 22.

How wrong! The first responsibility of anyone in Whitman’s shoes should be… "Is there anyway something like this could be worth this much and, if so, let us ascertain those conditions are valid, no matter what anyone else opines."

Hers is precisely the same defensive argument put out by bank regulators with their “in their end you have to rely on credit rating agencies”.

The truth is that if we shareholders, citizens and taxpayers don’t put an end to this stupidity and lack of accountability, it will put an end to us.

The way I look at things bank regulators like Mario Draghi and Lord Turner, are just about the same as failed CEOs like Meg Whitman.

About financial trust and integrity

Sir, Henry Paulson is absolutely right when he says that “The key test of accurate financial reporting is trust” May 17, but he totally ignores the most fundamental origin of trust, which is being able to look someone in his eyes.

If something is needed now in terms of trust in the financial sector that would be to de-corporatize the auditing process, so as to allow us to find next to each auditing statement the name and photo of the responsible auditor, or the names of the jointly responsible auditor team, and who are all willing to be held accountable and responsible for what they say, and will not run and hide behind any anonymous corporate veil. When Paulson mentions that “our markets must retain the integrity” he seems to have forgotten that integrity is inherently an issue of personal responsibility, impossible to delegate.