Follow the Money -- If You Can

In Jurassic Park, before things even begin to go wrong, Jeff Goldblum’s Dr. Ian Malcolm warns that the park is inherently dangerous, that the dinosaurs will get out of control, because “life finds a way.”

True dat. So does money:

Chinese regulators have tried for months to rein in lending by the country’s banks, most recently by instigating a cash squeeze that left some scrambling for funds. But the banks have stayed one step ahead, keeping the lending spigots open largely through increasingly complicated transactions.

The banks’ latest effort in their cat-and-mouse game with regulators involves making corporate loans appear on their balance sheets as less risky loans to banks. This allows banks to skirt limits on lending to customers but hides risks that they will be hit by big losses.

“What worries me is the way banks are getting around regulations is becoming more and more convoluted,” Fitch China banking analyst Charlene Chu said. “If these exposures encounter a problem, it will be really hard to sort out.”

Transparency is never engendered by government attempts at control.