How can we get rid of really bad ideas, e.g., risk weighted bank capital/equity requirements?

Sir, reading “African Union-backed ini­ti­at­ive aims to chal­lenge ‘big three’ rat­ing agencies” by Simon Mundy I was reminded of when in an Op-Ed in Venezuela, concerned with that when markets expressed too much trust it doomed my nation to have too large capital/debt inflows setting it up to later be judged as too much distrustful.

I ended that Op-Ed with: The day our governments pay more attention to the opinions of us, their humble subjects, than to those of the glamorous international credit rating agencies, we will finally stand a chance of making it out of our standard “poor and moody” situation. 

When reading “Why bad ideas are always with us” by Janan Ganesh I cannot help to remind you of awful ideas that still remain with us, most certainly because it is in the interest of some few.

January 2003, over two decades ago, you published a letter in which I wrote: 

“Except for regulations relative to money-laundering, the developing countries have been told to keep their capital markets open and to give free access to all investors, no matter what their intentions are and no matter for how long they intend to stay. Simultaneously, the developed countries have, through the use of credit-rating agencies, imposed restrictions as to which developing countries are allowed to be visited.

This Janus syndrome – ‘you must trust the market while we must distrust it’ – has created serious problems, not the least by leveraging the rate differentials between those liked and those rejected by our modern-day financial censors. Today, whenever a country loses its investment grade rating, many investors are prohibited from investing in its debt, effectively curtailing the demand for it just when that country might need it the most.

Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic error to be propagated at modern speeds. Friends, please consider that the world is tough enough as it is.”

Today, Basel’s risk weighted bank capital requirements’ procyclicality is still fully alive and well. Precisely as Mark Twain (supposedly) said: “A banker is a fellow who wants to lend you the umbrella when the sun shines and wants it back when it rains”.

Should we not expect the wider society to get some help eliminating truly bad ideas by e.g., the Academia… and the Financial Times?

What if a Basel Committee had regulated the payouts of casinos?

Sir, in “The risks of fund­ing states via casi­nos” FT, July 3, Martin Wolf writes: “In the run-up to the GFC, the dom­in­ant form of lend­ing was to the private sec­tor, particularly in the form of mort­gages.”

The dominant form of lending was indeed mortgages but that obscures the truth of what really happened.

Mortgages to the subprime sector were packaged into securities which, if obtaining an AAA to AA rating could, thanks to 2004 Basel II, be held by US investment banks and European banks against only 1.6 percent in capital, meaning they could leverage 62.5 times with these. 

As should have been expected, the temptation to package MBS sausages with the worst ingredient, which maximizes profits when then able to sell these as made with pure tenderloin, proved irresistible.

Sir, how long will FT keep being obsessed with minimizing the distortions of the Basel Committee’s risk weighted bank capital requirements?

Casinos? Ask Mr. Wolf whether he believes there would be any casinos left if its regulators ordered these to make higher payouts on safer bets, e.g., red or black than on riskier ones, e.g., a number?

https://subprimeregulations.blogspot.com/2012/12/the-basel-ii-roulette-manipulation.html

In the Eurozone there are many ticking debt bombs.

Sir, I refer to “Europe’s plan: com­plete its single mar­ket” by Barbara Moens and Alice Hancock, FT Big Read June 24, 2025. It states that “Three decades after it was launched, hun­dreds of bar­ri­ers still per­sist within the EU. 

November 1998, few weeks before that launch, in an Op-ed titled “Burning the bridges in Europe”, I wrote: “The Euro has one characteristic that differentiates it from the Dollar. This characteristic makes me feel less optimistic as to its chances of success. The Dollar is backed by a solidly unified political entity, i.e., the United States of America. The Euro, on the other hand, seems to be aimed at creating unity and cohesion. It is not the result of these.”

Years later, during the 2018 Winter Olympics, seeing/hearing Sofia Goggia singing her Italian national anthem with such enthusiasm, that opinion got reinforced. Frankly, now 2025, how many Europeans know and sing EU’s anthem Joy to the World as theirs?

In the referenced Op-Ed I also wrote: “Exchange rates, while not perfect, are escape valves. By eliminating this valve, European nations must make their economic adjustments in real terms. This makes these adjustments much more explosive.”

And that was before I knew that, amazingly, even if none of the Eurozone sovereigns can print Euros on their own, EU’s bank regulators, for Basel’s risk weighted bank capital/equity requirements, decreed a 0 percent risk weight. What ticking debt-bombs! Imagine if US had done so with the debt of its 50 states.

Sir, could Brexit have happened if Britain had also burned its bridges by adopting the Euro? 

Sir, Bulgaria has no idea into what it wants to get into.

Sir, with bank regulations based on the Eurocrats knowing better what to do with credit, for which repayment they’re not personally responsible for, than EU’s private sectors, what chance does Europe have?

 

When will the history of the Basel Committee’s concoctions haunt us?

Sir, I refer to Owen Walker’s “Haunted by his­tory” FT Magazine, August 10. It ends with “Unfor­tu­nately Monte dei Pas­chi will not help to develop and sus­tain Siena as it has done for more than five and a half centuries.” 

Unfortunately, that goes for all banks that were of importance to their localities.

In 1988 regulations known as Basel I was approved. It favored government debt and residential mortgages. That distorted but not too much. Loan officers used to follow the wishes of diverse Medici, must not have been too surprised. But then, in 2004, Basel II hit the banking world. With its risk weighted bank capital requirements so much dependent on credit ratings, the traditional loan officers, like Britain’s beloved George Banks, were thrown out. In came dangerously creative financial engineers. Their mission was now to maximize return on equity, not by good lending, but by minimizing bank capital, meaning bank equity, meaning bank shareholder’s skin in the game; in other words by maximizing leverage.

Not that all loan officers have been saints. Of course not. As in all parts of life, embezzlement and general uselessness was way too often present; but it was localized. Now it has been globalized. Monte dei Paschi’s financial engineers’ use of derivatives fabricated by Deutsche Bank or Nomura is just a minor example of it. A major one is how those securities backed by USA subprime mortgages, that when rated AAA allowed banks to leverage 62.5 times their capital, inundated European banks and caused the 2008 GFC.

How long will it take for the world to wake up to the fact that their expert bank regulators and supervisor, who lately, with all Basel III complexities multiplied in number and complexities, all missed their lectures on Bayesian conditional probabilities. As a consequence, they never understood that if they were going to use risk weighted bank capital requirements, something that for a starter was a bad hubris filled idea, then at least the weights should be conditioned to how bankers could be expected to act when perceiving risks.

Sir, David Rossi’s death, no matter how it occurred, is sad, but not remotely as much as the death of our banking system, that which made the western world prosper beyond belief.

One day our grandchildren will ask: How could our grandfathers so much favor banks refinancing their safer present, instead of financing our riskier future.

PS. Recently I asked ChatGPT which alternative, a leverage ratio or risk weighted capital/equity requirements, would most empower loan officers, and which one creative financial engineers. Here its answer

@PerKurowski

http://teawithft.blogspot.com/2012/07/its-whats-safe-thats-risky.html

https://teawithft.blogspot.com/2016/12/the-way-ft-insists-in-treating-bank.html

Mr. Martin Wolf, what do you mean, is liberalism not broken?

Sir, I refer to “Liberalism is battered but not yet broken” Martin Wolf, FT January 10, 2024.

Since 1988, with Basel I, non-elected by the citizens bank regulators, with risk weighted bank capital requirements, in the name of making our banks safe, have allowed themselves to distort the allocation of bank credit to the economy. 

Wolf opines: “What liberals share is trust in human beings to decide things for themselves.” So, Mr. Wolf, why have you been silent on this clear breach of free market liberalism?

These days, in reference to the farmer’s protests in Berlin I have tweeted/Xd: “Would now John F. Kennedy have wanted to deliver his 1963 ‘Ich bin ein Berliner’ speech? - If the Berlin Wall was still up, would Ronald Reagan now have needed to tell Putin, ‘Tear down this wall’?”

My answer in both cases is NO! US and Russia – West and East Berlin, have been too long exposed to communistic weakening. But it’s coming to an end. More and more nations now need more public debt in order to service their current public debts, and are thereby, de facto, becoming zombie nations.

I pray someone with real political standing would dare to stand up and order: “Basel Committee, tear down your regulations.” I fear that might not happen until this “wall” has crumbled on its own. Those regulations have empowered bureaucracy autocracies, and way too many want to be members or beneficiaries of it. And by the way, if they speak up, they risk not being invited to the World Economic Forums in Davos; and we would not want to risk that, would we?

Sir, how can we make sure to capitalize on the opportunity of artificial intelligence helping to empower a citizens’ democracy? I mean before AI regulators decide to send it to Gulag too.

PS. I tweeted - Xd: "If there’s anything that could help focus on what has happened in the world, and on what’s going on, that is to have a record of all those who, since 1971, have assisted World Economic Forum #WEF meetings in #Davos."

#AI ChatGPT - OpenAI: A question on behalf of FT and Martin Wolf.

 In "Britain needs a growth strategy" Martin Wolf mentions the UK has for too long settled for managing stagnation.

On behalf of FT and Martin Wolf I decided to ask ChatGPT:

"Could bank capital requirements that favors “safe” government debt and residential mortgages over “risky” loans to small businesses and entrepreneurs, doom a nation to stagnation?"

ChatGPT answered:

"The impact of bank capital requirements on economic growth is a complex and debated topic among economists. Capital requirements are regulations set by financial authorities that determine the amount of capital a bank must hold in relation to its assets. These requirements are designed to ensure the stability of the financial system by reducing the risk of bank failures.

If capital requirements heavily favor "safe" assets such as government debt and residential mortgages over "risky" loans to small businesses and entrepreneurs, it can potentially have both positive and negative effects on the economy.

Potential Positive Effects:

Financial Stability: By incentivizing banks to invest in safer assets, capital requirements can contribute to financial stability. This reduces the likelihood of bank failures, which could have broader systemic consequences.

Investor Confidence: Investors and depositors may feel more secure knowing that banks are holding assets that are considered safer, leading to increased confidence in the financial system.

Potential Negative Effects:

Stifling Innovation and Growth: If banks are discouraged from lending to small businesses and entrepreneurs, it could hinder innovation and economic growth. Small and medium-sized enterprises (SMEs) are often drivers of job creation and economic dynamism.

Inequality: Focusing on "safe" assets may exacerbate economic inequality. Small businesses, startups, and entrepreneurs, which are crucial for innovation and job creation, might face difficulty accessing the necessary funding.

Reduced Economic Diversity: A banking system overly concentrated on certain types of assets may lead to reduced economic diversity. This can make the economy more vulnerable to shocks in specific sectors.

Long-Term Stagnation: Overemphasis on "safe" assets might lead to a lack of risk-taking and investment in new ventures, potentially resulting in long-term economic stagnation.

Balancing Act:

It's crucial for financial regulators to strike a balance between stability and promoting economic growth. Prudent capital requirements that consider the riskiness of assets, while still allowing banks to support economic development, can be important. Striking the right balance often involves ongoing adjustments to regulations based on economic conditions and lessons learned from past experiences.

In conclusion, while capital requirements that favor "safe" assets can contribute to financial stability, an excessive focus on them at the expense of riskier but potentially innovative investments could indeed have negative consequences for a nation's economic dynamism and growth. The challenge lies in finding a regulatory framework that mitigates risk without stifling entrepreneurial activity and economic progress."

Thanks!

ChatGPT answered: You're welcome! If you have any more questions or if there's anything else I can help you with, feel free to ask. Happy to assist!

Note: The answers are copied exactly from those given to me by OpenAI

Here my many other questions to ChatGPT – OpenAI on bank regulations

Comment: Way back, 2009, Martin Wolf was kind to publish in his Economic Forum an articled I titled "Please free us from imprudent risk aversion and give us some prudent risk-taking." I stand by it more than ever.

How long will it take for bank regulators to ask AI regulators for a little favour?

Sir, Michael Skapinker writes: “Why did no one speak up “inside Sil­icon Val­ley Bank before it col­lapsed? People thought speak­ing up would leave them vulnerable to vic­tim­isa­tion.” “Listen and you might learn something” FT July 17.

Thought, or knew? 

What should a risk manager know about the risk of informing the board that according to revised models that included the interest rate risk (duration), SVB’ risk weighted capital/equity requirements would increase substantially? 

Would a bank supervisor like to go on record informing his superiors, the regulators, that because of IRR, the 0% risk weighting of long-term US Treasury bonds made no sense?

Sir, instead of exposing humans to victimisation, it seems precisely the moment that we could make great use of artificial intelligence. 

E.g., I asked ChatGPT – OpenAI: “Should regulators and supervisors be aware of risks with US Treasury long-term bonds? 

It answered: “Yes, they should be aware of the duration risk and interest rate risk associated with long-term Treasury bonds held by banks”

But of course, AI could be vulnerable to victimisation too.

I asked Open AI:” Can those who become an Artificial Intelligence regulator, make you or any other AI participants agree with all they want you to agree with?” 

It answered: “Regulators aim to address ethical considerations, potential risks, and ensure responsible AI practices… AI systems don't possess independent consciousness or the ability to willingly agree or disagree with regulations. Their behavior is determined by their programming and the data they have been trained on.”

Sir, you know much to well, that for more than two decades I’ve been vociferating, as much as I can, my criticism against the risk weighted bank capital requirements. Clearly when someone does want to hear, he does not hear. For instance, as Upton Sinclair Jr. explained it: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Therefore, when I heard about OpenAI, I asked it a series of questions. From the answers you must agree I found an ally. I just wonder how long it will take for bank regulators to shut it up. “We can’t have someone questioning the risk weights of 0% government – 100% citizens. Can we?”

How long will it take to FT to really listen to some of its faithful subscribers?

PS. US Treasury long-term bonds still carry a 0% risk weight.

https://subprimeregulations.blogspot.com/2023/04/chatgpt-openai-should-bank.html

https://perkurowski.blogspot.com/2023/07/ai-chatgpt-open-ai-artificial.html

https://subprimeregulations.blogspot.com/2023/06/my-questions-to-chatgpt-openai-about.html

@PerKurowski

To stand a chance, UK must refrain from imprudent risk-aversion and embrace some prudent risk-taking.

Sir, I refer to Martin Wolf’s “The UK’s future depends on improving economic performance” FT, April 15 2023. 

Wolf at the end of it recommended the UK to “reform its pension system, in order to generate more risk-taking capital, create dynamic new businesses.” Why does Wolf not even mention the UK's banks?

From mid 1979 until mid 1980 I practiced at Kleinwort Benson, one of the truly old English Merchant Banks that has since then, as so many others, gone down, disappeared by globalized Basel Committee bank regulations. With the risk weighted bank capital (equity) requirements, knowledgeable and experienced loan officers were substituted by creative equity-minimizing / leverage-maximizing (dangerously creative) financial engineers.

October 2009, in his Economist Forum, Martin Wolf published my: “Please free us from imprudent risk-aversion and give us some prudent risk taking” It began it with “There is not one single reason to believe the world would be a better place because our financial regulators provide additional incentives to those who, perceived as having a lower risk of default, are already favored by lower interest rates, or punish further those who, perceived as more-risky, are already punished by higher interest rates. In fact, the opposite is most likely truer”

Sir, when comparing government debt and residential mortgages with loans to small businesses and entrepreneurs, in terms of how nutritive they could be for the economy, it is not that outlandish to describe it as demand-carbs vs supply-proteins.

In “Credit Suisse: the rise and fall of the bank that built modern Switzerland” FT, March 24, Owen Walker and Stephen Morris write the Schweizerische Kreditanstalt, later rebranded as Credit Suisse, was born out of Alfred Escher’s determination to develop a railway network across the Alpine nation that would link northern and southern Europe. 

Sir, would that Alpine railroad have been built, with a Basel Committee imposing risk weighted bank capital/equity requirements with decreed weights 0% government, 30% residential mortgages and 100% risky projects? 

Would the banks in the City of London have reached the stars with such regulations?

Sir, dare ask Martin Wolf to dare answer that.

@PerKurowski

For our grandchildren sake we must recover the “democratic capitalism” we inherited and lost too much of.

“We have inherited democratic capitalism from the struggles of our predecessors. We must reform and protect it for our descendants.” Martin Wolf, “In defence of democratic capitalism” FT January 21, 2023

Yes, indeed, but Sir, sadly, we’ve already lost too much of it. When I see bank capital requirements with decreed risk weights of 0% government and 100% citizens, I see Hitler/Stalin/Mao/Mussolini decreed weights… I see populism… I see the empowerment of an authoritarian bureaucracy autocracy… I see the dangerous and weakening distortion of the allocation of bank credit.

And that’s why, even to the point of obsession (as Wolf once mentioned) I’ve been fighting the risk weighted bank capital (equity / shareholders’-skin-in-the-game) requirements, first introduced 1988, as Basel I. These allow banks to leverage more their shareholders’-skin-in-the-game, and thereby earn higher risk adjusted returns on equity when financing what’s perceived (or decreed) as safe, than when financing what’s perceived as risky.

That de facto decreed the more creditworthy as more worthy of credit and the less creditworthy as less worthy of credit.

Wolf opines “It is possible for example to limit macroeconomic instability by reducing reliance on debt-fuelled demand and making the financial system more robust”. Yes, but for that Wolf must try to understand that what’s “safe” e.g., government debts and residential mortgages are more like demand-pushing-carbs while, what’s “risky” e.g., loans to small businesses and entrepreneurs, could be classified as supply-producing-proteins.

These regulations were sold as making our bank systems safer. What nonsense. The large exposures that have caused all major bank crises have always been built up with assets perceived (or now decreed) as safe, and never ever with assets perceived as risky.

The real reason for it all was confessed by Paul Volcker in his 1988 autobiography “Keeping at it”: “Assets for which bank capital requirements were nonexistent, were what had the most political support; sovereign credits and home mortgages… A ‘leverage ratio’ discouraged holdings of low-return government securities.”

Were those regulations agreed upon in a democratic way? Absolutely not. For a starter these should not be able to clear the American Founding Fathers’ US Constitution. 

Wolf mentions his family’s history: “In May 1940, as the Nazis invaded the Netherlands, my mother escaped from the country in a trawler hijacked by her father, a self-made fish merchant. Her father, one of nine, asked all his wider family to join them on the journey to England. None did: they were all slaughtered in the Holocaust.”

The morning after, everything’s clear but, the night before, who was the real risk-taker, Martin Wolf’s grandfather or the other eight who stayed behind?

In the same way the morning after a bank crisis, what’s dangerous becomes crystal clear. But what’s usually forgotten by Monday morning quarterbacks, is that the large exposures that caused the crisis were built up with assets perceived (or now decreed) as very safe. 

PS. My first ever Op-Ed 25 years ago was on this subject

FT, on banking and finance who are you to believe, Francis Fukuyama or Paul Volcker?

Sir, Francis Fukuyama in “The war on liberalism” FT March 5, writes:

“Liberals understand the importance of free markets — but under the influence of economists such as Milton Friedman and the “Chicago School”, the market was worshipped and the state increasingly demonised as the enemy of economic growth and individual freedom. Advanced democracies under the spell of neoliberal ideas trimmed back welfare states and regulation, and advised developing countries to do the same under the “Washington Consensus”. Cuts to social spending and state sectors removed the buffers that protected individuals from market vagaries, leading to big increases in inequality over the past two generations.

While some of this retrenchment was justified, it was carried to extremes and led, for example, to deregulation of US financial markets in the 1980s and 1990s that destabilised them and brought on financial crises such as the subprime meltdown in 2008.”

Paul A. Volcker in his autobiography “Keeping at it” of 2018, penned together with Christine Harper, with respect to the risk weighted bank capital requirements he helped to promote and which were approved in 1988 under the name of Basel I wrote:

“The assets assigned the lowest risk, for which capital requirements were therefore low or nonexistent, were those that had the most political support: sovereign credits and home mortgages. Ironically, losses on those two types of assets would fuel the global crisis in 2008 and a subsequent European crisis in 2011. The American “overall leverage” approach had a disadvantage as well in the eyes of shareholders and executives focused on return on capital; it seemed to discourage holdings of the safest assets, in particular low-return US government securities."

Sir, in reference to advising developing countries with the “Washington Consensus”, in November 2004 you kindly published a letter in which I wrote:

“Our bank supervisors in Basel are unwittingly controlling the capital flows in the world. How many Basel propositions will it take before they start realizing the damage they are doing by favoring so much bank lending to the public sector? In some developing countries, access to credit for the private sector is all but gone, and the banks are up to the hilt in public credits.”

So, there are two completely different bank systems:

Before 1988, one in which banks needed to hold the same capital against all assets, credit was allocated based on risk adjusted interest rates and the market considering the bank’s portfolio, accurately or not, values its capital.

After 1988, one risk weighted capital requirement banks where credit is allocated based on risk adjusted returns on equity, something which clearly depends on how much regulators have allowed their capital to be leveraged with each asset... clearly favoring government credit, which de facto implies bureaucrats know better what to do with (taxpayers') credit than e.g., small businesses and entrepreneurs. Communism!

Sir, I am of course just small fry, not even a PhD, but, if you have to choose between describing what has happened in the financial markets since 1988 as a “deregulation”, as Fukuyama opines, or an absolute statist and politically influenced misregulation, as Volcker valiantly confesses, who do you believe?

Sir, is this topic taboo… or just a too hot potato for the “Without fear and without favour” Financial Times?

PS. In Steven Solomon’s “The Confidence Game” 1995 we read: “On September 2, 1986, the fine cutlery was laid once again at the Bank of England governor’s official residence at New Change… The occasion was an impromptu visit from Paul Volcker… When the Fed chairman sat down with Governor Robin Leigh-Pemberton and three senior BoE officials, the topic he raised was bank capital…”

@PerKurowski

For inflation, where the money supply goes, matters a lot too

Sir, I refer to Martin Wolf’s “The monetarist dog is having its day”, FT February 23.

Yes, the money supply impacts inflation, no doubts but, when it comes to how much, that also depends on where that money supply goes.

If central banks inject liquidity through a system where, because of risk weighted capital requirements, banks can leverage more, meaning easier obtain higher risk adjusted returns on equity with Treasuries and residential mortgages, than with loans to small businesses and entrepreneurs, does that not favor demand over supply?

It does, and you should not have to be a Milton Friedman to understand that sooner or later that can only help inflate any inflation.

Wolf holds that “Central banks must be humble and prudent” Yes, and that goes for bank regulators too.

“Humble” in accepting there are huge limits to their knowing what the real risks in an uncertain world are; and “prudent” as in knowing bank capital requirements are mainly needed as a buffer against the certainty of misperceived credit risks and unexpected events, and not like now, mostly based on the certainty of perceived credit risks.

@PerKurowski

If we want public debt to protect citizens today and tomorrow, it behooves us to make sure it cannot be too easily contracted.

Sir, I refer to John Plender’s “The virtues of public debt to protect citizens” FT February 7, 2022.

Sir, as a grandfather I do fear debt burdens we might impose on future generations, but I’m absolutely not an austerity moralist. I know public debt is of great use if used right but also that the capacity to borrow it a reasonable interest rates (or the seigniorage when printing money), is a very valuable strategic sovereign asset, especially when dangers like war or a pandemic appear, and which should therefore not be irresponsibly squandered away.

In 2004, when I just finished my two-year term as an Executive Director of the World Bank, you published a letter in which I wrote “Our bank supervisors in Basel are unwittingly controlling the capital flows in the world. How many Basel propositions will it take before they start realizing the damage, they are doing by favoring so much bank lending to the public sector?”

1988 Basel I’s risk weighted bank capital requirements decreed weights of 0% the government and 100% citizens. It translates into banks being allowed to hold much less capital - being able to leverage much more, with loans to the government than with other assets.

Of course, governments, when their debts are denominated in the currency they issue, are, at least in the short-term and medium term, and in real terms before inflation might kick in, less risky credits. But de facto that also implies bureaucrats/ politicians/apparatchiks know better how to use taxpayer’s credit for which repayment they are not personally responsible for than e.g., small businesses and entrepreneurs. And Sir, that I do not believe, and I hope neither you nor John Plender do that.

Such pro-government biased bank regulations, especially when going hand in hand with generous central bank QE liquidity injections, subsidizes the “risk-free” rate, hiding the real costs of public debt. In crude-truth terms, the difference between the interest rates sovereigns would have to pay on their debts in absence of all above mentioned favors, and the current ultra-low or even negative interests they pay is, de facto, a well camouflaged tax, retained before the holders of those debts could earn it.

But of course, they are beneficiaries of all this distortion, and therefore many are enthusiastically hanging on to MMT’s type Love Potion Number Nine promises.

@PerKurowski

I am a whistleblower on Basel Committee’s monstrous mistakes, but FT might not have seen my 2.375 letters either

Sir, Ben McLannahan discussing whistleblowers and the fake-account scandal at Wells Fargo writes: “One even wrote an email in exasperation to John Stumpf, the former chairman and chief executive. (He said he had not seen it.)” “Providing incentives for whistleblowers will improve bank culture” October 21.

Well I have been denouncing, for over a decade, among other with 2.375 letters to FT, this one not included, that the risk weighted capital requirements for banks concocted by the Basel Committee for Banking Supervision and supported by the Financial Stability Board, and not questioned by for instance IMF, is a dangerous monstrosity.

Not only does it distort the allocation of bank credit to the real economy, but it also does so for no good purpose at all, since major bank crises never result from excessive exposures to something that was perceived as risky when booked.

Perhaps one of these days its editor, and many of its columnists, will also argue they never saw these letters.

If someone who like me has argued consistently and extensively against these globally imposed regulations, cannot be helped by a Financial Times to at least obtain from the regulators clear and unequivocal the responses to his objections, then it could seem those regulators might also be using some very insidious pressures to silence those who “Without fear and without favour” are supposedly best equipped to give whistleblowers some voice.

PS. Here again is an aide memoire with some of my objections.

@PerKurowski ©