In case you need additional proof that more regulators is the last thing we need, please consider Banks 'should take more risk' argues BoE executive director
Banks should be allowed to take more risk to underpin the recovery in spite of the lasting damage caused by the financial crisis, a leading regulator has suggested.Foolish Thinking and Revisionist History
Andrew Haldane, executive director of financial stability at the Bank of England, argued that banks have over-reacted and are now suffering from "acute risk aversion".
This aversion has pushed up the cost of credit and "may be retarding the recovery".
Departing from current thinking, Mr Haldane suggested regulators now allow banks to operate with weaker finances to encourage lending.
Specifically, he indicated that banks could reduce the amount of loss-bearing capital they hold from around 10pc to 7.5pc.
"Setting regulation to boost risk-taking may feel like a radical departure," he said. But, drawing parallels with the Great Depression, he pointed out that President Franklin Roosevelt relaxed bank regulation in 1933.
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