What is the connection?

The FT has a long article on the demands bankers are making of regulators.

Let us see the demands in one place:

(1) “One executive said banks were pushing for an extension of the implementation of Basel IV — which is due to come into full effect by 2027 — to prevent banks having to build up capital levels by 2021.  

(2) “Lenders in the UK have written to the Bank of England to demand that the transition to the new accounting rules — which are due to come into full effect by 2023 — is extended, said several people who have seen the letter. ” 

(3) “Several executives said the industry was also asking supervisors to take a “best efforts” approach to money laundering and market abuse, whereby banks would avoid punishment as long as they had tried to do the right thing — even if they had technically breached rules.” 

(4) “Executives have also asked that the transition from the discredited Libor rate to new interest benchmarks be delayed from its current hard deadline of 2022 to free up employees to work on more pressing matters.” 

(5) In the UK, banks are also pushing for the BoE to delay climate change stress tests. “Steps on the whole green debate have put an additional onus on banks,” said the executive. “We’ve got to be pragmatic.” 

FT can hold a contest among its readers to guess the most egregious demand of the five listed above. Personally, my vote is for no. (3).

Regulations that are to come into effect at least two years from now are being asked to be suspended for banks to lend now!

What is their record on lending for productive purposes, to small and medium businesses and to low income households?

How much of their earnings they derive from these relative to the monies they make from lending to capital market participants and from proprietary trading?

Articles galore on how much humans are going to change for the better on account of the crisis – sustainable living, respect for climate change, respect for the environment, cooperation over conflicts, etc. 

Most of us know, from past evidence, that such behaviour tend to be fleeting. They occurred during the previous WW II (see this: https://www.collaborativefund.com/blog/common-enemies/). That is why they are called fleeting social utopia. But, at least, they instil some hope and make for good reading.

Stories such as these bring us down to earth and keep us grounded in a way. We must be grateful to the bankers for reminding us of the inherently self-destructive nature of Sapiens.

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