There´s no reason for any risk-weighting of bank assets, after risk-adjustment has already taken place in the price and terms of these

Sir, Brooke Masters, your Chief Regulation Correspondent writes: “capping total leverage has a disproportionate impact on banks that provide basic services to the wider economy such as financing overseas trade. Because these are low-risk activities, they require very little capital under the risk-weighted-assets system, but under the leverage ratio they are treated exactly the same as high-risk derivatives and speculative loans.”, “Leverage ratio has the power to help banking tree thrive” February 14. Let me make the following comments. 

First, and as this crisis has so clearly proven, let us be crystal clear on the fact that “they require very little capital” does not by any means turn these into “low-risk activities”. 

Second, in terms of capital requirements, what is wrong with “low-risk activities” being treated “exactly the same as high-risk derivatives and speculative loans”? Have not the banks already cleared for differences in perceived risk by means of different interest rates, amounts exposed and other terms? It is precisely the double dipping into perceived risks, that have saddled our banks with excessive exposures to what is has officially been perceived as not-risky and created equally dangerous underexposures, like for instance in lending to small businesses and entrepreneurs, only because the latter have officially been deemed more risky by some wimpy bureaucrats. 

Basel Committee, please stop infantilizing our banks!

Greece’s infantilization is nothing when compared to that of our banks.

Sir, you write that the eurozone’s approach to help Greece has been to infantilize it, “Let Greece stand on its own feet”, February 11. This is absolutely correct and very worrisome but, why do you in FT insist on ignoring the much more tragic and serious infantilization of our whole banking system? 

In essence by means of the interest rate and the size of the exposure, grown up bankers should be able to act on what they perceive as the risk of default of borrowers without any interference. But, the regulators, in a sublime nanny-like effort to keep the banks out of trouble, imposed capital requirements which allow the banks to hold much less capital when the perceived risk are low than when these are high. 

As a direct result, we now have our banks drowning in dangerous excessive exposures to what was perceived as not-risky, like triple-A rated securities and infallible sovereigns (like Greece); and maintaining equally dangerous underexposure to what is perceived as risky, like in lending to small businesses and entrepreneurs. 

A Western world which has prospered because of its willingness to take risks is now shivering in fright and huddling taking refuge in whatever safe-ports are left… and these safe-ports are of course becoming more and more dangerously overcrowded.

FT wake up!