FT, instead of standing by “expert infallible regulators” who failed, you should try to stand beside “The risky”

Sir, in your “Stand by Liikanen” February 4, you write that “Making retail banks safe is a precondition for prosperity”. This is wrong for two reasons. 

First, in order to make the system of retail banks safe, what you might really need is to make it much riskier for the retail banks, so that they fail more rapidly and do not accumulate too much bad assets on their balances. 

And second, if you look for making the retail banks too safe, then you might very well kill all your chances of prosperity. 

In this respect I would recommend you to read John Kenneth Galbraith’s Money: Whence it came, where it went” (1975). In it Galbraith speculates on the fact that one of the basic fundamentals of the accelerated growth experienced in the western and south-western parts of the United States during the past century was the existence of an aggressive banking sector working in a relatively unregulated environment. Banks opened and closed doors and bankruptcies were frequent, but as a consequence of agile and flexible credit policies, even the banks that failed left a wake of development in their passing. 

Galbraith also refers to the banks’ function of democratization of capital as they allow entities with initiative, ideas, and will to work although they initially lack the resources to participate in the region’s economic activity. In this respect Galbraith holds that as the regulations affecting the activities of the banking sector are increased, the possibilities of this democratization of capital would decrease. There is obviously more risk in lending to the poor. 

And clearly, current capital requirements for banks which are much higher for what is perceived as risky than for what is perceived as absolutely not risky, do without any doubt discriminate against those “risky” who usually act on the margins of the real economy, and is thereby really killing our chances of prosperity. 

So FT, wake up! Don’t you find it curious at least that someone like me who has openly criticized current bank regulations for over a decade, even calling the regulators dumb and stupid, has not seen even one little effort by the regulators to refute my arguments?