And what about the plan we need to deal with the too dumb, or too wimpy, or too communist to regulate regulators?

Sir, Brooke Masters and Chris Giles report in “US and UK unveil plan to deal with failed banks” December 10. Of course we need an action plan to deal with failed too big to fail banks, those banks which were fed by the regulators with the growth-hormones of ultra small capital requirements. But, just as important, or even more so, is a plan to deal with the too dumb to regulate regulators? 

As I have argued for years, any regulators who have not understood that what is perceived ex ante as risky does not pose any major dangers for the banks, because where the real threats always lie is in what is perceived as absolutely safe, are just too dumb to regulate… that is unless, with their high capital requirement for banks when lending to the “risky” citizens, and almost non-existent capital requirements for banks when lending to the “infallible” sovereigns, they are not bank regulators at all, but only communist infiltrators, and in which case we need of course to get rid of them even faster. 

We need regulators who understand that there is nothing safe without the risk-taking of the risky. In other words we need regulators who know about the importance of praying “God make us daring!”

If only the UK was rated BB+ to B-…

Then a UK small business would be able to compete with the government on equal grounds for bank credit, because only then would the bank have to post the same capital for both.

The nannies in the Basel Committee decided to hand out, through very low capital requirements for banks, generous incentives for these to go and play in “safe” places, even though, as regulators, they should have known that financial and bank crisis only occur where the perceived safety attracts the excessive volumes that pose a risk for the system… swamp land with alligators might now and again eat up a citizen, but never pose a threat to a nation.

But on top of it all, the Basel nannies also turned out to be communists in disguise, as they ordained that if a bank gave loans to a sovereign rated AAA by their risk kommissars then the bank needed no capital at all… and what small business can compete with that?

More than two years after the crisis started we read in a report by Brooke Masters and Patrick Jenkins that Lord Turner is now announcing tougher bank capital regime. But since he, like Basel III, does not mention a review of the arbitrary and regressive risk-weights that were the real causes of the disaster, we can only conclude he is not really fit to be a regulator, at least not in war time.