Finally: a regulator who has the good sense to see that there is a direct correlation between the intrusiveness of the regulation and the extent of the impact of the current market situation.
Don Brash is a former Governor of the Reserve Bank of New Zealand, who, along with Australia is one of the systems to have had few problems recently.
In many ways, this intensive supervision by official agencies made matters worse by leading bank customers to assume that banks were effectively “guaranteed” by Government, thereby enabling banks to operate with levels of capital well below those regarded as prudent in earlier decades. Perhaps even more serious, intensive supervision led some bank directors to suspend their own judgment, and believe that they were behaving prudently provided they were observing all the rules.(my emphasis)
Hat tip – Jason Soon