Comments on: Is the Financial Stability Board the regulator to rule them all? http://blogs.reuters.com/financial-regulatory-forum/2011/05/10/is-the-financial-stability-board-the-regulator-to-rule-them-all/ Mon, 31 Oct 2016 15:40:16 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: PerKurowski http://blogs.reuters.com/financial-regulatory-forum/2011/05/10/is-the-financial-stability-board-the-regulator-to-rule-them-all/comment-page-1/#comment-1819 Wed, 11 May 2011 14:44:30 +0000 http://blogs.reuters.com/financial-regulatory-forum/?p=8403#comment-1819 The absolute central element of the current bank regulations are capital requirements based on perceived risk of default of their clients. The lower the perceived risk is the lower the capital requirement, and, the higher the perceived risk, the higher the capital requirement.

As there has never ever been a bank crisis that has resulted from excessive investments or lending to what was perceived as “risky”, and they have ALL resulted either from fraudulent behavior or the excessive investment or lending to what was perceived as “not risky”, those regulations make no sense whatsoever.

They drive the banks excessively into “safe” sovereign and triple-As, and away from “risky” small businesses or entrepreneurs and who should most be served by the banks.

As long as the Financial Stability Board is not understanding and much less discussing this fundamental regulatory flaw, I do not give one iota about its capability of helping us to resolve this crisis, or to avoid the next. Capisce?

Per Kurowski
A former Executive Director at the World Bank (2002-2004)
http://subprimeregulations.blogspot.com/

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