Mr. Daniel Tarullo, first, stick to your area!

Sir, according to Robin Harding and Michael MacKenzie, in “Fed urged to weigh new moves to boost economy” October 21, Daniel Tarullo, whose “main area of focus is banking supervision and regulation rather than monetary policy” refers to that the US Federal Reserve “should consider large-scale purchases of mortgage backed securities if the economy does not improve”. 

As most of these securities have already seen their values adjusted in the market, I cannot see what good that would do… unless it is part of a huge plan of restructure all the underlying mortgages in accordance of their market value, not something totally senseless, but that would certainly require a major administrative effort and the consideration of moral hazard. 

Much easier it would be for Mr. Tarullo to concentrate on his area and push, for instance, for the immediate drastic reduction in capital requirements for banks, when lending to any business with total liabilities, for instance, below a level of 10 million dollars. That would be a good way to start alleviating the damages done to all small businesses and entrepreneurs by the fact that bank are allowed to lend to others perceived as not-risky, with much lower capital requirements. 

PS. In case you want more details, here´s a video that explains a small part of the craziness of our bank regulations, in an apolitical red and blue! http://bit.ly/mQIHoi