I am a whistleblower on Basel Committee’s monstrous mistakes, but FT might not have seen my 2.375 letters either

Sir, Ben McLannahan discussing whistleblowers and the fake-account scandal at Wells Fargo writes: “One even wrote an email in exasperation to John Stumpf, the former chairman and chief executive. (He said he had not seen it.)” “Providing incentives for whistleblowers will improve bank culture” October 21.

Well I have been denouncing, for over a decade, among other with 2.375 letters to FT, this one not included, that the risk weighted capital requirements for banks concocted by the Basel Committee for Banking Supervision and supported by the Financial Stability Board, and not questioned by for instance IMF, is a dangerous monstrosity.

Not only does it distort the allocation of bank credit to the real economy, but it also does so for no good purpose at all, since major bank crises never result from excessive exposures to something that was perceived as risky when booked.

Perhaps one of these days its editor, and many of its columnists, will also argue they never saw these letters.

If someone who like me has argued consistently and extensively against these globally imposed regulations, cannot be helped by a Financial Times to at least obtain from the regulators clear and unequivocal the responses to his objections, then it could seem those regulators might also be using some very insidious pressures to silence those who “Without fear and without favour” are supposedly best equipped to give whistleblowers some voice.

PS. Here again is an aide memoire with some of my objections.

@PerKurowski ©

I am a whistleblower, on lousy bank regulators, and FT, not withstanding its “Without fear and without favours”, also ignores me.

Sir, William D Cohan writes about the travails of “Wall Street whistleblowers”, May 31. In it he writes about “how little the regulators charged with keeping watch over the Wall Street banks seem to care about holding them in any way accountable”. The same can be said about how little those in charge with keeping watch over the regulators, like the Financial Times, seem to care little about holding them in any way accountable.

Since years back I am a whistleblower, on the Basel Committee for Banking Supervision, accusing it for having designed absolutely useless and even dangerous bank regulations. And though very few can demonstratively prove to have alerted from a reasonably high position bureaucratic post about what was wrong, the silence with which FT has met all my comments, has been deafening.

Just as an example, in a written formal statement at the World Bank, as an Executive Director I warned “

We believe that much of the world’s financial markets are currently being dangerously overstretched through an exaggerated reliance on intrinsically weak financial models that are based on very short series of statistical evidence and very doubtful volatility assumptions.”

And FT itself published one letter, in January 2003, in which wrote: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic error to be propagated at modern speeds. Friend, please consider that the world is tough enough as it is”; and another letter, in October 2004, in which I asked “How many Basel propositions it will take before they start realizing the damage they are doing by favoring so much bank lending to the public sector (sovereigns)?” 

But, just in case, am I arguing that anyone of the regulators has committed and illegal act for which they should be jailed? Of course not! Only that they have been so dumb that we need to parade them all down Wall Street, wearing dunce caps – or cones of shame… in order to increase our chances that the regulators think twice next time they feel as Masters of the Universe… and perhaps they should be joined in the parade by the editor of FT.

PS. Here is the link to my over 1.300 letters to FT on the subject.

PS. One day perhaps there will be a whistleblower within FT willing to explain it all :-)

Whistleblowers of the world unite!

“Managers need to listen before disaster strikes” writes Michael Skapinker March 17. Everyone agrees none argue against it and still it is almost impossible to achieve most often because what management and others would qualify as disaster varies dramatically. Sometimes the only real disaster is the pure possibility of a disaster being acknowledged.

But what can we do? Let me have a go at it. Since a corporate climate that is unreceptive to whistle blowers could hide a time bomb credit rating agencies should never be able to give more that a B- to any company that does not achieve some minimum results in a yearly secret internal ballot held on various governance issues.

That could help some managers to start listening.