If you forget for a minute Mr Calomiris high dose of ideological arguments, it is not easy to find real arguments in his note. I do not find convincing the argument that state financial institutions (SFI) are bad because their past performance has been poor, and because their officials are not trained in credit analysis. This is not only simplistic, but also absurd. We all know about the disastrous experience of many countries with SFIs, but little has been said about the successful experience of few SFIs in some others. It is interesting to understand what has gone right in these SFIs, and why these SFIs have added some value to the financial development of these countries. In the past few years, the performance of privately owned banks has not been an example around the world, and it is understandable that policymakers in the future do not want to leave the huge fluctuations in credit allocation to privately owned banks, which only conduct their business based on short term return maximization. Since they may operate on a longer term horizon, SFIs may play an important role in smoothing the credit cycle and avoiding abrupt disruptions in credit allocation due to short-term decisions of privately owned commercial banks. SFIs are not the panacea either, but under certain conditions, they can be welfare improving. In order to operate properly SFIs need to have a proper mandate, a proper structure of governance, adequate systems of risk management, properly designed performance measures, and need to be supervised as commercial banks. Few SFIs around the world operate under these conditions, but these countries have been successful in weathering the crisis compared to the ones that did not have these tools. The World Bank add little value to our client countries simply by saying that SFIs are evil, as counties are logically moving in that direction. We would add much more valuable input by explaining the risks of having SFIs and how to mitigate them.