Ms. Gillian Tett, if anything, banks are even more dangerous than in 2008

Sir, because the incentives provided by the (credit) risk weighted capital (equity) requirements for banks remain in place, these still guarantee that banks will grow dangerously large exposures, against little capital, to whatever is considered to be “absolutely safe”, and very little exposures to what could be considered as “risky”

Yet Gillian Tett writes: “though the banking system may be safer than it was before 2008, parts of the markets may have become more dangerous for unwary investors”, “Markets are parched for liquidity despite a flood of cash” October 17.

No! Ms. Tett, the banking system is not safer than it was before 2008, if anything, it is even more dangerous… even for wary investors.

Ms. Tett I know you are an anthropologist, and you therefore perhaps not know too much about finance, but, ask your financial advisor about the medium and long term safety of a portfolio that avoids taking any risks… ask him if for instance diversification is a good thing… and then extrapolate his answer to the banks, and to the chances of our young not becoming a lost generation.

FT, for the time being, forget the unaccountable bankers… we’ve got a much bigger problem at hands.

Sir I refer to your “Hold Britain’s banks to higher standards: New rules on personal accountability are tough but necessary” October 9.

In it you write: “The regime also brings in a new criminal offence of reckless misconduct that causes a financial institution to fail. This would carry a sentence of seven years’ imprisonment and an unlimited fine”,

And then you state: “Those grumbling about perverse regulation should acquire some perspective. Blowing up the nation’s physical infrastructure would carry the severest penalties. Recklessly damaging its financial plumbing can be just as damaging, but has been punishable at most by social opprobrium and a moderation of compensation from previously outlandish highs. No top banker has been punished for the enormous losses that caused the crisis.”

But, as you very well know, I hold bank regulators as the prime responsible for the crisis, having approved incredibly distorting credit-risk weighted capital (equity) requirements which they did not and have yet not been able to understand. And so, if I am right, is not the regulators lack of accountability so much worse? If I am right, and a banker responsible for a failed bank should get seven years... how many years in prison do these failed regulators deserve?

And FT, dare look at it… don’t turn away cowardly. The unrepentant chairman of the Basel Committee when Basel II was approved, is now the General Manager of the International Bank of Settlement; the unrepentant former chairman of the Financial Stability Board, is now the President of the European Central Bank; the current unrepentant chairman of the Financial Stability Board is also Governor of the Bank of England; and the clearly unrepentant current chairman of the Basel Committee is also the Governor of the Swedish Riksbank.

And FT don’t tell me you are unaware that there is a 100 percent correlation between what got banks in trouble and what these regulators allowed the banks to hold against extremely little equity… only because they perceived these assets, ex ante, as “absolutely safe”, and because of their hubris they never doubted their perceptions.

And FT, don’t tell me you are unaware of that secular stagnation, deflation, mediocre economy and all similar creatures, are direct descendants of that silly risk aversion displayed by our unaccountable to anyone failed bank regulators.

So FT, forget the bankers… if only for the time being... we got a much bigger and serious problem at hands.

Do I feel these bank regulators should be jailed? Of course not! I just feel they should go home, in shame, put on their dunce cap, and then beg the forgiveness of all those young who because of them will now become part of a lost generation.

PS. And, by the way, when journalists and columnists of an important paper withhold important arguments only because they do not like the messenger, or the messenger does not stroke their ego sufficiently, does that have no implications when it comes to personal accountability?

We are now paying the costs of financial crises without reaping the progress from it.

Sir, John Authers’ refers to several books on financial crises in “Human nature means financial crises are price of progress” April 28.

I can bet that if Authers reread those books, he would be able to ascertain that during the buildup of the high exposures to those assets that were going to exploit in the next crisis, these assets were always considered as “absolutely safe”. No exception! No excessive build up of exposures to assets considered as “risky”… simply because that is also human nature. And that is one reason for which the current risk weighted capital requirements for banks, less risk-less capital, more risk-more capital, are as dumb as they can be.

And Authers’ also writes that “many great innovations through the centuries have been accompanied by manias and crashes. So we must accept crises as a cost of progress…” And that points at the second reason for why the current risk weighted capital requirements for banks, are as dumb as they can be. These by allowing banks to earn higher risk adjusted returns on equity when lending to the “safe”, stop the banks from opening those “risky” doors behind which the real surprising nuggets of luck that keeps our civilization from moving forward, most often hides.

I just saw Patty Lupone in an extraordinary HBO documentary “YoungArts MasterClass” telling some young gifted kids that the most important advice she could give them was to “take risks and be not afraid of failures”. Sir, but our current bank regulators in their pathological aversion of failures, do not allow our banks to take the risks that we, as a civilization, cannot afford not to take… namely the lending to “risky” medium and small businesses, entrepreneurs and start-ups. In the name of the Lost Generations who will pay for this…damn them!

Will there be a real ECB audit of European banks, or just another nail in the coffin of a lost generation?

Sir you write: “By some accounts [the ECB audit] is expected to reveal that eurozone banks need between €50bn and €100bn”, “ECB needs help on its big bank audit” November 4.

No! That would be what European banks might need if they are just to survive, treading water, refinancing some of Europe’s at least for the time safer sovereigns. But, if banks are going to help to put Europe’s future on their books, like loans to medium and small businesses, entrepreneurs and start ups, then they need new regulations, and many times that amount of capital.

Frankly any ECB audit that does not also include understanding and calculating what also needs to be on European bank balances, will just amount to another nail in the coffin of a generation of young Europeans, lost by an insane and extremely risky regulatory risk aversion

And Sir, FT, for whatever reasons, withholding the truth, shares the responsibility for that tragedy.