The Basel Committee’s credit-risk-avoiding-banks-driven-growth is a populist, fraudulent and dangerous prospectus

Sir, Philip Stephen writes “Greece should not be given a free pass, but the lesson of the post-crisis years has been that governments can go only so far in cutting budgets and improving competitiveness when their economies are shrinking and living standards are in free fall. Austerity-driven growth was always a fraudulent prospectus.” “The stand-off that may sink the euro” January 30.

Yes, but... the Basel Committee requires banks to have more equity when lending to what from a credit point of view is perceived as risky than when lending to what is thought to be safe.

That implies that the regulator, unless totally irresponsible or inept, which is of course a distinct possibility, believes that you can allow banks to earn much higher risk-adjusted returns on equity on what is perceived as safe (or can be dressed up as safe) than on what is perceived as risky, and still get the sufficient risk-taking the economy needs to grow.

I think that promising safer banks by means of methods that distorts the allocation of bank credit to the real economy, is dangerous, even criminal populism. And on this I have written to you more than a thousand letters over the last eight years.

But your absolute silence on this issue, unless there is fear and favoring involved, which is of course always a remote possibility, indicates there must be a total consensus in FT on that such risk-weighted equity requirements for banks, are entirely compatible with the purpose of banks helping to improve the competitiveness of their economies. Why do you not want to explain to me how you arrive at such conclusion? Please.