To restore confidence in banks you need first to restore the banks self-confidence

Sir in “Need for action on the banking panic” September 26, you open with a “Banks are not to be trusted” and you mention that this is the view of the public and policymakers, and that something needs to be done. You then propose very sensible steps, all with which I fully agree, but you leave out the vital task of rebuilding the self confidence of the banks, and that was effectively lost when the regulators declared the banks not trustworthy and imposed on them the credit rating agencies as the risk measuring experts.

My first action as a regulator would be to tell the markets…

“Hold it there, those that really got us all into trouble were the credit rating agencies and we are very sorry we empowered them so much. Therefore, effective immediately we suspend all the regulations that assign a formal role to the credit rating agencies. Truth be said, admittedly late, we do believe that the banks are more capable if they have all the authority to decide on their own what is best for them.”