How can you call the mother of all bank credit distortions an “opiate of ‘light touch’ regulation”?

Sir, Jonathan Ford refers to an “opiate of ‘light touch’ regulation before the financial crisis” “The right balance of banking regulation is still some way off” March 2.

He has no idea. How on earth can you call a regulation which restrict banks to leveraging their equity 12 times to 1 in the presence of something perceived as risky, but allows a 60 and even higher leverage for something perceived as absolutely safe, “light touch”?

Ford speaks about power passing to regulators after 2008. Wrong! Already with Basel I regulators gamed the equity requirements for banks in favor of the sovereigns, meaning the governments, meaning their bosses.

Yes Mr. Ford there is “the risk of starving some parts of bank’s business that, while costly to run and consumptive of capital, are of high social value”. But who decided the rates of capital (equity) consumption, the regulators with their “light touch”?

PS. Mr. Ford, give us one single bank crisis resulting from an excessive exposure to something that was perceived as risky, when banks placed that asset on their balance sheet.