Omniture

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Per Kurowski

How could anyone be surprised by finding that “The share of bank credit to the business sector has nonetheless declined in part because lagging investment spending has curbed corporate loan demand, and also because of the availability of financing in bond and equity markets”? The only thing that has been on the agenda of the Banking Regulators in Basle for the last 15 years has been to avoid banking crisis at any cost even if it entails that the banking system gives up its responsibility for growth through credits and for the democratization of capitals through the distribution of opportunities.

How could anyone be surprised by finding that “In some countries risk adverse banks have held government securities rather than lend to the corporate private sector”? The Banking Regulators in Basle have been for the last 15 years substituting the eyes of a very few credit rating agencies for the millions of eyes of the markets and these credit rating agencies will always be biased to give a better rating to a nation than to a private corporation within that nation.”

How could anyone be surprised by finding that “However foreign banks raised political concerns because of perceived high profits and were also difficult to supervise because parent banks' global goals and information flows did not always coincide with the needs of host country supervisors”? The Banking Regulators in Basle have been for the last 15 years trying to create a system where they could monitor everything form their centralized offices which of course made it impossible to admit the existence of something as hard to measure as the very special local interest of a local banker.

How could anyone be surprised by finding that “Banks increasingly relied on systematic risk assessment procedures and quantitative risk management techniques, with lending being influenced less by government direction or special bank relationships with borrowers. However, challenges still arose from lack of data on loan histories for estimating default probabilities, and risks related to liquidity and credit risk transfer”? The Banking Regulators in Basle have been for the last 15 years trying to drive out risk from where risk should be and substituting the let your credit rating agency know your client for the all important you have to know your client. Now the risk is going elsewhere and as we bury the banks in their spotless risk free tuxedos, the explosions are going to surface elsewhere.

What I did not find in this brief resume, though it might be in the full document, was some words about how the Banking Regulators in Basle have over the last 15 years managed to reduce more and more the number of banks and thereby getting us closer and closer to that mother of all systemic risks we know as putting all your eggs in the same basket.

What I did find though was some incipient and quite refreshing humility in accepting at least the possibility that all the good results monitored until now might not be a consequence only of the arduous work of the bank regulators but that it could also be the result of some specially favorable macroeconomic coincidences, and I would dare to suggest the consequence of building anew upon the rubbles of the banking crisis of the early nineties.

This is no marketing effort but if you want to read more about this issue please pick up a copy of my book Voice and Noise at the Infoshop and if you cannot afford that book and work at WB, or somewhere close please send me an email at perkurowski@gmail.com and I see what I can do. How unemployed central-planners managed to reincarnate as banking regulators in Basle and arrogantly interfere in the financial flows is not only a sad story but also probably the best reason ever why the Bank should be extremely wary of harmonizing too much with the Fund.

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