Friday, August 17, 2012

You will not get the jobs you need while bank regulators discriminate against the safe perceived as risky.

Current capital requirements for banks are lower when these lend to those officially perceived as not-risky and that amounts to an outright discrimination of those officially perceived as “risky”, the small businesses and entrepreneurs. As a consequence, these safe-risky, have to pay much higher interest rates and get smaller loans on tougher terms than they would have had without this regulatory distortion. It is not right for this to be happening in a land that prides itself to be brave, and much less will it help America (or Europe for that matter) to get the jobs it needs. 

Stop it! Start working immediately for one and the same capital requirement for banks on any type of assets, to any type of client.

And please, don´t worry. Those perceived as risky have never ever caused a major bank crisis, and your regulators should know that.