BANKS should be given breathing space from the onslaught of new regulation in return for drastically increasing their levels of core capital, a key Bank of England policymaker said last night.
Speaking in a personal capacity, Robert Jenkins floated the idea of a freeze on new banking regulations and a reassessment of the existing rulebook – if banks can raise their tangible equity capital to 20 per cent.
“The best solution is to set the minimum for loss absorbing capital at a level which discourages recklessness and protects the public purse when it happens,” he said.
Jenkins also claimed regulators were foolish to put their faith in banks during the financial crisis – particularly in bankers’ ability to judge and manage the risks that they were taking.
“How could we have been so dumb as to believe that bankers were so smart? Both groups belong to the human race and the human race is hubris hungry and error prone.”
Jenkins, now a member of the Bank’s new Financial Policy Committee, worked at both Citibank and Credit Suisse in his former life as a fund manager.