If banks had self-regulated, current extreme high bank leverages would never existed. Basel Committee´s regulations enabled these.

Sir, in “Barnier’s revolution”, September 23, you write that “Brussels is right to end self-regulation” in this case of benchmarks, like the Libor. But we should forget that having other selves regulating, does not guarantee by a long shot better results.

For instance, if the banks had been self-regulating, instead of falling in the hands of the Basel Committee the current financial crisis would not have happened. I say this because there is no imaginable way banks would allow each other to hold capital in accordance to ex ante perceived risks, since they would all have been asking each other… “What if those ex ante perceptions, ex post turn out wrong?”

For instance can you imagine European banks with 30 to 50 times to 1 debt equity ratios, if there had not been a regulator who vouching for these enabled it all?

And in the case such as the Libor, I would still believe that self-regulation which explicitly accepts responsibility is still the best way to go. The quotes of Libor which created the scandal were quotes lower than the real Libor, which implied that the interest rates banks could charge their borrowers were lower than what they should be, and so any bank, sufficiently aware now of what shenanigans were going on, would most certainly raise all hell if that was repeated.

And besides, since some regulators did not mind at all low Libor quotes, since these inspired tranquility, one should also be highly suspicious of what other types of selves can be present in non-self-regulation.

God save us from regulator hubris!