While regulators think they’ve done theirs with banks, the regulatory distortion of credit allocation is in crescendo.

Sir, according to Steve Johnson “Mark Carney, suggest that global regulators have now cleaned up the banks, with their notoriously high levels of leverage, and had a new target in their sights”, “The big elephant in a small pond effect” February 2.

That is very serious coming from the Chair of the Financial Stability Board because when it comes to regulators, they have definitely not cleaned up their act.

As I have told you many times lately, as a result of regulators increasing the floor level of bank equity requirements, primarily with the leverage ratio, the effective squeeze on those borrowers being discriminated against by means of the credit risk weighted equity requirements, like small businesses, has only gotten worse. If in need you should see the film “The Drowning Pool” to understand visually what is going on.

And in that respect it is clear that the regulatory distortion is in crescendo while it is still being ignored. Sir I wonder how long will it take FT get it? That an AAA rated client cannot get access to bank credit because the bank only has sufficient required equity so as to be able to lend to an “infallible sovereign”?