January 08, 2010

How do we make sure there is no hanky panky?

Sir in reference to your “Apocalypse later” January 8 may I draw your attention to a recently released Consultative Document by the Basel Committee titled “Strengthening the resilience of the banking sector”. This document in my opinion evidences that the regulators refuse to assume their responsibilities or to accept that their regulatory paradigm of different capital requirements for different “perceived risk” is utterly faulted, and keep on digging us ever deeper and deeper in the hole of us mortals understanding less and less about how our banks are regulated.

Among other the document states that “The Committee is introducing a global minimum liquidity standard for internationally active banks”. This would mean that this category of banks will now have a different set of updated regulations that will imply they are especially safe and so these banks will most certainly need to pay less for deposits and equity, and so these banks will now enter almost formally belong to the “too super big global banks too impossible to fail”.

Sir, how on earth is the world at large supposed to make sure that no hanky panky is going on between the now too super-big banks and the too global and too little accountable to anyone Basel Committee?