Everyone thinks they are special...who knows if they are?

I know very little about Frank Sorrentino of the North Jersey Community Bank. In this interview on CNBC he makes a typical argument of many investment professionals. To paraphrase: Regulators want to apply a one size fits all capital requirement on banks. That's no good. Regulators need to go bank by bank, loan by loan, to determine capital requirements.

I'm not saying he's wrong. Proving he is right is next to impossible. This is a sampling question. He's claiming his book of business is materially better than average. He's also implying this is skill, not luck. He only has $490 million of assets. In the world of banks, this is nothing. It's very reasonable to believe he has biases in his portfolio, both good and bad. He's regionally over-exposed. Was this an active decision he made, or luck of his geography? Are his loss ratios indicative of skill, once accounting for his regional biases? Are the ratios better "enough" that we can conclude statistically different? These questions can go on forever.

If I were a regulator, I too would presume nothing special out of management. If nothing else, as the regulator, I'm responsible for everything, not just the better than average banks! And I certainly cannot choose to not regulate those I deem better than average.