Bank regulators, rock stars? We wish, I bet you rock stars would not have messed it up this way!

Sir, Patrick Jenkins, in “Banks adapt to being kept in check” September 9, quotes “one top regulator who is close to Mark Carney, the new governor of the Bank of England” and the current chairman of the Financial Stability Board” saying “Regulators are the rock stars these days”. If so, what a sad class of rock stars we have.

Three of the problem circles in Jenkins’ “nucleus of the banking crisis” are directly related to bad regulations.

“Low capital”, indeed, how could it be otherwise when Basel II authorized banks to hold only 1.6 percent or even zero capital against so many of their assets.

“Bad investments/trading”, indeed, if you as a bank were allowed to leverage your equity 62.5 times to 1, only because something had an AAA rating provided by human fallible credit rating agencies, you were bound to get into trouble.

“Bad lending” indeed, I bet you that none of our real rock stars would have thought it a great idea for banks, like those of Cyprus, to lend to Greece against only 1.6 percent in capital.

And also when Jenkins quotes Douglas Flint, chairman of HSBC saying “It’s the system’s asset concentration – principally in government debt and in mortgage debt – that can be dangerous” he is directly spelling out what should have been the expected results of Basel I, of Basel II and, unfortunately it would seems, of Basel III too.

But the worst consequence of these faulty regulations, by which banks are allowed to earn much higher risk-adjusted returns on their equity when lending to “The Infallible”, than when lending to “The Risky”, does not even appear on the bank’s balance sheets. The worst consequence, in my opinion, is all those many loans to “The Risky”, the medium and small businesses, the entrepreneurs and start-ups, which were denied by the banks, only because of these capital requirements. Those credits, if approved, could have delivered the next generation of sturdy jobs that our young ones so much need.

And so the bank regulators are now the rock stars? Forget it! Truth is that if any modest social sanction existed, and journalists did their jobs, instead of sucking up to the regulators, they would be paraded down the main avenues wearing dunce caps.