But bankers still have to dance to the same lousy music still being played

Sir, John Plender is close to understanding what has happened when he writes “The Basel capital adequacy regime of the late 1980s was a lowest common denominator exercise… in pursuit of high returns on equity, banks ran down their capital to absurdly low levels”, “Radical reform transformed City’s role in global finance” April 10.

But he is not fully there yet. What was even worse than running down the capital to absurdly low levels was that bank regulators, with their Basel II, in June 2004, allowed this to happen in a way that discriminated based on perceived risks, credit ratings, risks that had already been cleared for by other means, and that completely distorted common sense out of the banks favoring "The Infallible" and discriminating against "The Risky"

And bankers to survive, and not be bought out or simply fired, had to dance to that lousy music while it played… and, unfortunately, since the discrimination based on perceived risk persists, they still have to dance to the same lousy music.