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Below some examples of how financial regulators set the capital requirements for the banks depending on whom they lent to. Sovereigns rated AAA to AA were given a risk weight of 0% which results in a cap.req of zero percent. Corporations rated AAA to AA were given a risk weight of 20% which results in a cap.req of 1.6 percent. Small businesses or entrepreneurs, unrated, well they were risk-rated at 100% which results in a cap.req of 8 percent. It is not that 8 percent is high but, when given the opportunity of zero or 1.6 percent capital… where did you think the banks went? Should regulators not known that sovereigns and AAA corporations have the capital markets and that the first role of our banks is to help those small businesses or entrepreneurs who provide dynamism to the economy and the jobs we need, and to support them on their way to the capital markets? Should regulators not know that in a world of coward capitals those perceived as being low risk are already favored by lower interest rates and do not really need the assistance of further benefits given to them by regulators? Should regulators not have known that by adding another layer of benefits to the AAA they created a stampede that turned safe-havens into dangerously overcrowded havens? Should regulators not have known that sooner or later credit rating agencies would make mistakes or be captured? Does all the above not say something about the kind of regulators we have? Is it not within the realm of possibilities that all what happened was that we had the bad luck of falling into the lap of some truly inept regulators? And though I agree with most said in this very long post how come the whole issue of the necessary risk a society needs to take to go forward is not even mentioned? Please leave the quest of financial stability to the IMF, the voice of the World Bank should be about development… and that voice has been absent the last couple of decades, pushed away to the fringes of microfinance, just because some thought that “harmonizing with the IMF” was a good idea.