Bank regulators, the Basel Committee, created a nuclear bomb, Basel II, the AAA-bomb, which exploded,

Sir, John Kay writes with respect to financial regulations that “Shorter, simpler, linear chains of intermediation are needed, and loose coupling that gives every part of the system loss absorption capacity and resolution capability.”, “The design failures that lead to financial explosions” November 13. I could not agree more.

And with respect to his nuclear simile let me just note that in 1999, in an Op-Ed, I wrote:

“The possible Big Bang that scares me the most is the one that could happen the day those genius bank regulators in Basel, playing Gods, manage to introduce a systemic error in the financial system”.

And indeed, with Basel II, they fabricated a bomb; I have called it the AAA-bomb.