FT if this is the way European banks “derisk”, there is no doubt that Europe is getting to be much riskier.

Sir, Patrick Jenkins writes “banks have derisked since the crisis, cutting loans to companies and individuals…amplified their investment in sovereign bonds” “Time to force banks to kick their easy money habit” November 28.

To me anyone calling a reduction in loans to citizens and private sector and an increase in loans to the sovereign as a process of “derisking”, is either a communist or has no idea what he is speaking about.

And the “Funding for Lending” schemes that Jenkins refers to as a way of solving the “weak supply of credit to smaller business”, will not make a dent to a problem which derives from those insane capital requirements for banks where these, in marginal terms, under Basel III, need to hold 7 percent in capital when lending to a European, but zero percent when lending to its sovereign.

No Sir, if European banks are “derisking” this way, there is no doubt that Europe is getting to be a much riskier place.

Don´t you find something to be very wrong when banks are given so many incentives by the Regulator of Nottingham to lend to King John and not to Robin Hood?

No, it is the courtesy of the regulatory agencies

Sir, John Plender in “A stretched credit cycle, a more savage downturn” May 22, gives a very clear explanation of the blissful-ignorance-bubble when he mentions the fact that many of the positions “are not marked to market” but instead “marked to model”. Where he is wrong though is when he says that “Credit is being mispriced courtesy of credit rating agencies that are insensitive to market risk.” For that we should thank our financial regulators who by ordering the market to listen to the credit rating agencies created a totally new form of non-market market risk.

And please, why does Plender have to say that “high finance has never been more sophisticated”? when in fact many of us suspect we might be living the period where never have high finance people understood so little of what they really were up to.

Stop right there! Who is the real complacent here?

Sir, does the Bank of International Settlements (BIS) really think they will now have done their part by warning the hedge funds?, May 21. BIS mentions problems such as “some erosion of counter party discipline” and “other signs of complacency” on behalf of the investment banks. Well if the regulators in BIS do not know that those risks are a fundamental part of any human behaviour then they are either totally incapable of supervising the banks they have themselves over the last few years fallen into the mother of all the complacency behaviours.

Let us pray it stays with a headache

Sir, after reading Gillian Tett’s “A headache is in store when the credit party fizzles out” May 19, it is clear we should all go down on our knees and pray for that she is right, in that it is only a headache that is in store for us.

As for myself I have serious doubts that the consequence of this blissful-ignorance-bubble resulting from our hide-and-not-seek the risks with derivatives, is unfortunately going to be much more painful than that. When that day comes though, before putting the sole blame on the poor bankers earning their luxurious daily keep, I suggest we look much closer at the responsibility of our financial regulators.