John Kay is utterly lost!

Sir over the years I have often commented on John Kay’s articles, sometimes I have agreed, sometimes I have disagreed. But now I have been utterly disappointed discovering that Mr. Kay does not really know what he is talking about. In “Narrow banking can help protect the taxpayer” September 16 he writes “An 8 per cent capital cushion is inadequate as the amounts for winding up these banks will show”. Absolutely wrong! For those credits not perceived as risk-free and for which the banks took their ordinary precautions the 8 per cent equity requirement was most probably quite sufficient. What was highly insufficient was the only 1.6 percent capital requirement allowed by the regulatros for any operation involving an AAA rated security or client.

It was not the risky which provided the explosive material for this crisis but the not-risky, something that Mr Kay proposes we pursue even more, burrowing ourselves into narrow banks, so that once again we can feel the bliss of believing we are safe… so that once again we place ourselves further away from the risks we need to take in order to move forward.

No, Mr. Baby-boomer Kay, move over and let the future take over, even if it entails risks.