Andy is of course free to disagree, but it seems to me that the final Basel III compromise goes some way towards heeding his call for simple models and simpler regulatory rules and practices. It is by no means simple in itself, of course; but it does contain comparatively simple backstops to avoid some of the pitfalls of complexity.
Andy himself might just say: ‘you do not fight complexity with complexity’. 14 At a minimum, you cannot delude yourself that regulatory complexity is a cure-all. As I mentioned, regulators are faced with a trade-off. Simple rules are transparent, robust to model risk and more difficult to ‘game’; but they may fail to penalise risk-taking adequately.