Banks also hold more capital than their regulatory minimums, to achieve a credit rating to do business. The ratings agencies are fallible however, given they operate with as much ‘art’ as ‘science’. Bank failures also happen more often and be more devastating than bank owners – and credit ratings agencies – tend to remember. The costs are spread across the public and through time.
I believe that these should continue to underpin the thought processes around policy and institutional reforms as well as economic transformation; as recently announced by His Excellency, The President, “the Reset Agenda” or “Reinventing Government” as one American President once put it.