'Basel III' lets banks off the hook but keeps the rest of us on it

The Basel III regulations have been framed to give banks almost a decade to recover. The problem for the rest of us is that, over that time, we're the ones still on the hook says James Ferguson.

It was always a stretch to expect the Bank for International Settlements' (BIS) Basel Committee on Banking Supervision to come up with draconian new bank regulations. Even so, what we got was a big disappointment. Not to the markets, which rallied enthusiastically on the confirmation that the regulator is asleep at the wheel again and highly geared risk-taking is back on the table. The disappointment was to anyone who wants to see bankers' incentives realigned with the rest of the economy.

Recent events surely convinced everyone that when banks are allowed to gear up excessively, they (perhaps unknowingly) take big risks, pay themselves big bonuses and leave us, as taxpayers, to shoulder the burden when things inevitably blow up.

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James Ferguson qualified with an MA (Hons) in economics from Edinburgh University in 1985. For the last 21 years he has had a high-powered career in institutional stock broking, specialising in equities, working for Nomura, Robert Fleming, SBC Warburg, Dresdner Kleinwort Wasserstein and Mitsubishi Securities.