September 18, 2013

But, Luke Johnson, how do we get the Basel Committee to understand it has hit regulatory rock bottom?

Sir, the Basel Committee’s bank regulators, by allowing Cypriot and other banks to lend to Greece against only 1.6 percent in capital, which basically means allowing for a 62.5 to 1 debt to equity leverage, helped to cause both Cyprus and Greece to hit bottom.

But, in Luke Johnson’s “How to find some value in hitting rock bottom” September 18, we find no clue about how we could make sure that the Basel Committee understands and acknowledges it has hit regulatory rock bottom?

I mean these comfy regulators do not pay or suffer much direct impact from the damages they produce. In fact, after their Basel II flop they have even been authorized to follow up with a Basel III, using the same script of capital requirements based on ex-ante perceived risk. Hell, neither Hollywood nor Bollywod would allow something so dumb.