Financial Times, what would happen if you had to charge those you do not like five times more for FT than those you like?

Sir, “what on earth can anyone do to get loans flowing to small business”, asks Gillian Tett in “Big corporate cash piles can help fund small businesses”, February 8. (Since I have explained it to her in so many letters, I might soon think she has a fundamental problem in understanding, and give up on her, but, since I am a very patient teacher, here it goes again.)

Tett argues that some economists blame the decrease in bank lending to small businesses on “tighter capital rules”, This completely fails to describe the argument correctly. The problem is “tighter capital rules” for banks when lending to the small businesses than when lending to what is perceived as much less risky.

What happens now is that a bank can leverage its capital with the net expected margins produced by “The Infallible” much more than what they can leverage those same margins when lending to “The Risky”. For instance Basel II allows a bank leverage of 62.5 to 1 when banks lend to someone with an AAA to AA credit rating, but only 12.5 to 1 when lending to for instance a small business without a rating.

And so when Tett writes “if the capital adequacy rules we loosened, banks themselves would provide loans to small companies” she ignores that what really needs to happen is that capital requirements on “The Infallible” must be brought to the same levels as those of “The Risky”. That is the only way to eliminate what from all points of view is simply a distortive, stupid and odious discrimination against those already discriminated by banks and markets on account of being perceived as “risky”.

In fact that discrimination is something akin to the Financial Times being forced by some authority to sell FT at a price which is FIVE times higher for the readers FT does not like, or know, than the price it normally charges its “friendly FT readers”, and all this according to what some few officially empowered “Worthy of FT´s friendship” raters rate. Would not some FT subscriptions simply disappear?