Commercial bankers "commonly seem" not to acknowledge the basic trade-off between risk and return, says Anjan Thakor, a professor at the Olin Business School at Washington University.

The fact that returns on equity (ROE) fall when capital increases "is very important for CEO compensation", he notes. Most chief executives of banks, Thajor says, "have their bonus indexed to ROE, which is not so common in other industries".

Thajor argues that this then has an impact on banking regulation.