More important than air traffic control is to place bank regulation in a public/private non-profit entity

Sir, Gillian Tett discusses the head of the US Council of Economic Advisers’, Gary Cohn, plan to take the air traffic control system away from the Federal Aviation Administration and place it in a non-profit entity, funded by public and private finance. “Canada inspires US reform plans to take off”, April 7.

Sounds like a good idea but, much more important for both America and Canada, would be to place bank regulations in the hands of such an entity… like a BankReg.org!

I mean would BankReg.org have gotten away, like current bank regulators have, with regulating banks without defining the purpose of banks? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, to regulate banks without empirical analysis of what has caused the bank crises in the past? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with making it harder than it always has been for “risky” SMEs and entrepreneurs to access bank credit? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with risk-weighing the Sovereign with 0%, and We the People with 100%, and thereby through the Bathroom Window introducing runaway statism? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with risk-weighing the dangerous corporate AAA rated with 20%, while assigning a 150% risk weight to the so innocuous below BB- rated? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with giving banks incentives to finance the “safe” basements were our unemployed kids can live over those, who though riskier, could provide our kids with the jobs they need in order to also have kids and basements? No way Jose!

I mean would those working in BankReg.org have gotten away, like current bank regulators have, with not having some psychological tests made on them in order to guarantee their suitability? No way Jose!

I mean would BankReg.org have gotten away, like current bank regulators have, with causing the 2007-08 crisis without suffering any consequences for it… in some cases even being promoted? No way Jose! We would have sued and fined its technocrats for their last socks!

I mean would FT have treated BankReg.org as leniently as it has treated the Basel Committee for Banking Supervision, the Financial Stability Board, IMF and other clearly failed bank regulators? No way Jose!

PS. Here are some of my questions looking for answers

@PerKurowski

Gazprom in a public-private partnership?

Sir, in your “Putin’s piste”, July 7, you sort of allude that there might be a public-private partnership between Russia and Gazprom. Nonsense. That is just a public-public partnership that uses private sector flexibility to avoid the constraints that reason imposes on public spending. If Gazprom is anywhere like the Venezuelan PDVSA that I know, then whatever it does beyond their basic oil and gas exploration, production and refining business, is just a way to non-transparently lose or distribute some of their oil and gas profits previuosly made.

What we first need is an insurance that covers the risks of the discoveries.

Sir, Stephen Cechetti argues in “A future of public healthcare for all” July 3 that the advances in genetics and that will be able to provide for better individualized projections of expected health costs will translate into a market failure that will force the private health insurance system into the arms of the public sector. Actually it is not a market failure that will do so since in fact the market could only benefit from knowing more about the risks, it is the market results that will be unacceptable, or at least let us hope so, since if those prognosed as much healthier sneak out from sharing the risks, society could turn much much nastier. For instance, there is nothing to stop a good health prognosis to also influence such variables as the admittance to universities.

Before we put any new safeguard system in place, which will certainly only happen when it is much too late for many, what we most need is an insurance that covers the risks of whatever extra costs we could suffer because of what they discover in our genes, and have everyone subscribe such an insurance, before they are allowed to take any genetic samples

The public private matrix

Sir, strange how terms could seem to evolve! I say this because when reading the title of Gillian Tett’s article “Multi-layered finance a defence against private equity”, April 20, the first thing that comes to mind is who would have thought it possible that FT would imply that some defence against private equity could be needed? Of course, Gillian Tett’s excellent article is perfectly clear what is meant, but then again perhaps using the term “private-private equity” would lessen the chances for confusion, and perhaps even of having it quoted by those who like Hugo Chavez in Venezuela favour the public sector to take control of some private companies. That said, in the matrix of private-private; public-private; public-public; I believe we all agree that the worst, by far, is the fourth quadrangle, that of private-public.

On the article itself, and after we have seen how fairly simple facts such that mortgages should be issued on reasonably sustainable terms were mostly not caught by the rating agencies, perhaps covering it all in some sophisticated multi-layering-finance, contrary to what is said, could in fact make it easier to obtain a credit rating agency’s letters of approval. You see, the worse the tangle, the easier to talk yourself out of it when caught wrong; it is when things are really simple, that the going gets really rough.

The education of your neighbor’s kids is part of your own kid’s education

Sir, Mr Manuel Riesco when arguing “Chile’s experience belies claims of those who believe in superiority of private schools”, February 24 is rightly concerned with “the poorest remaining in the public schools which have deteriorated” but somehow he seems to imply this would be the fault of the private schools, which obviously it is not. As I have always believed that the education of your own children might turn out to be dangerously useless if your neighbor’s children are left behind, I have always been a supporter of public education. Nonetheless, public education can be given through private mechanisms such as the vouchers and so Mr Riesco’s concern should perhaps be why the poorest of Chile have not received a sufficient large voucher to be able to access a private school. And of course this does neither imply that the public schools cannot or should not be good too.