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May 01, 2008


Per Kurowski

Does prudence in banking really have to mean purposelessness?

What is more prudent for the bank regulators, to work exclusively at avoiding the default of banks and the occurrence of a bank crisis, or to ascertain that the banking system serves a purpose for the society?

These days when it has been demonstrated that the bank regulators are failing in their self imposed limited scope of functions; and indeed through the creation of the current structure of minimum capital requirements for the banks and the appointment of the credit rating agencies as risk commissars have themselves contributed to create new systemic risks, is it not time for us to take a big step back and, before digging us deeper in our regulatory hole, ask ourselves what is the purpose of our banks?

Aren’t you as fed up as me having a purposeless banking sector? If we absolutely have to live with risk avoidance based regulatory system, can’t we at least start measuring units of default risk in terms of decent jobs created, youngsters educated or environmental threats avoided?

Risk is the oxygen of development and so please let us not kill risk taking!


Persaud doesn't solve the problem; he shifts the problem. How are risk-based premiums to be set for institutions with portfolios bursting with exotic, opaque financial instruments with no track record? The Glass-Steagall model simply said if you want a lifeguard to come save you when you get in trouble, then stay inside the well marked, bright red buoys. If you stray beyond, you swim in the deep waters at your own risk. Now the extreme sports daredevils know that the Baywatch crew will spare no expense to come to their rescue.

John Bill

Dear friend,

Realy it is very useful post , Accept my sincere thanks and appreciation

John Bill


Jobs , companies , real estate , engineers , petroleum company

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