To reform Bank of England, and other institutions, you need to hire tough professional skeptics.

Sir, DeAnne Julius in “The Bank of England must reform its sheltered hierarchy” November 19 touches on a very dicey subject, namely how institutions need to reform, in order to better prevent disasters like the current crisis from happening, if that is at all possible.

Personally having witnessed in the World Bank a small part of the proceedings when Basel II was being discussed, 2003 till June 2004, I know at least two things that must be avoided.

First, the incestuous relation between those who are regulating and those regulated, in this case between bank regulators and bankers, as it often became very hard to tell who was who.

Second, that insipid politeness that penetrates all mutual admiration networks, where no one considers it appropriate to speak out. When a stupidity is not protested loudly against in a very early stage, it reaffirms itself very fast and becomes an ingrained paradigm that no one dares to question because doing so would be accusing colleagues of being just too dumb. And that you can’t do.

And so perhaps the Bank of England, and the IMF, and the World Bank and most similar institutions could benefit from hiring some professional questioners whose explicit role is not taking anything for granted, and most specially so, that the experts really know what they are doing.

As an example try to trace how on earth a stupid idea like having the capital requirements for banks be based on perceived risks that were already cleared for in the interest rates, in the amounts exposed and in other contractual terms. That double consideration of perceived risk, doomed the banks to overexpose themselves with little capital to “The Infallible”, precisely the kind of over-exposures that can bring about a major crisis, and underexpose themselves to “The Risky”, small businesses and entrepreneurs, precisely those we most need them to expose themselves to.