BoE’s FSB' Mark Carney should not be allowed to use Brexit cost estimates to distract us from the distortion of bank credit costs.

Sir, you write: Bank of England’s Mark Carney has come out with a “suggestion that average household incomes are £900 lower than they were expected to be before the Brexit referendum.” “A necessary statement of the obvious from Carney” May 26

But Carney is also chair of the Financial Stability Board, and he therefore belongs to those regulators who do not care one iota about distorting the allocation of bank credit to the real economy, since they are convinced banks will be safer with their risk weightedcapital requirements… all as if the health of the economy is not the most important pillar of a stable bank system.

First try to calculate how much more credit has been given to fairly unproductive but “safe” sectors, like housing, compared to with how much less credit has been given to potentially much more productive but “risky” ends, like loans to entrepreneurs. And then try to come up with a bill for that. Clearly that must have cost and keeps on costing the average household income inBritain, many multiples of £900; and the regulators are not in the least being held accountable for that.

But Sir, since FT has also steadfastly kept silent on the costs of misguided credit allocations, you might also share the same interest in distracting with Brexit 

@PerKurowski

The costs of political statements and of regulatory decisions, should as much as is possible be transparently measured

Sir, your “The hard questions of fossil fuel divestment” of October 9, daringly raises some very timely questions that might not be so political correct, at least not for the high-priests of environmental protection. Hear, Hear!

If there is one detail I miss, that is perhaps about the need to set up a small procedure by which anyone could at least measure the on-going financial opportunity cost of that fossil fuel divestment. That could be quite easily done by keeping track on what those fossil fuel investments would have produced, and then compare these to the returns on the current portfolio.

Of course, as you end up writing, “It is a political statement”, but the costs of these should also be measured, as transparently as possible, which goes for regulatory decisions too.

The Basel Committee for Banking Supervision decided initially on a basic capital requirement of 8 percent. What has been the cost of then adjusting that capital requirement based on what is ex ante perceived or decreed as safe? Will we ever know? Will ever someone try to find out? Or will the cover-it-up forces prove to be overwhelming?

@PerKurowski