The regulators, who foolishly gave in to bank-children’s equity pleas, must as responsible parents now help them out.

Sir, Tom Braithwaite and Martin Arnold write: “Together with regulatory and investor pressure for higher returns, universal banks have lost their luster around the world”, “Regulators test the universal banking model”, January 16.

Of course the minimum minimorum equity banks were required to hold against some assets, 1.6 percent of the AAArisktocracy, and even zero in the case of “infallible” sovereigns, served as a potent growth hormone for the too big to fail banks. No doubt about it.

But, the problem is not that imposing, for instance an 8 percent equity requirement against all assets, would fatally wound big banks, or in this case the universal banking model. The real problem is that the journey from here to there would be extremely difficult. But since it really was the regulator, the supposedly responsible parent, who so foolishly gave in to what the children, the banks screamingly wanted, it really should be the regulator who now must assume his responsibilities to help the banks, the children, to adapt to the new much firmer rules of the house.

If only enough of the QE’s had been invested in bank equity, to make up completely for the equity shortfall caused by new requirements, central banks would probably now be reselling those shares to an avid market. That because, for a bank’s shareholders, it is also the journey from here to there that most frightens them. To have less risky bank shares producing lower returns is no problem whatsoever for any normal shareholder.

To sell such bank equity assistance scheme, could indeed be politically nightmarish… but if we want to put some decent order back in the system, in order to avoid our kids and grandchildren becoming a lost generation,  someone has to do it.

FT, what about at least daring to talk about it?