Vince Cable, the UK’s business secretary, has coined a phrase. He described the continuing efforts of the Bank of England to make banks in the country hold more capital as being one of the biggest brakes on economic recovery.
But on this occasion, his comments garnered an unsurprisingly receptive welcome from bankers in London and beyond.
The bewildering mix of messages from global regulators is becoming almost impossible for banks to deal with.
One investment bank chief rolls his eyes, leans back in his chair, sighs and says: "Its beyond the point of ridiculous. We still have to report in Basle I terms. Weve just about left behind Basle II... we hope. Were used to reporting in Basle III fully loaded terms, but now were having to go back to the old Basle III reporting because of the proposed leverage ratio."
He is just warming to his theme. "Then youve got the regulators themselves. Within this building today we have the PRA and the Bank of England running around. In the US we have the SEC and the CFTC. In Europe, were getting ready to find out which national regulators have been plucked out of their central banks to be part of the ECB supervisor. I cant tell you the level of supervision has got any better since the crisis."
You feel some sympathy for his plight, and that of many of his peers. You also listen and understand when he echoes Cables viewpoint that these myriad regulations will limit banks ability to lend. The leverage ratio is a particular bugbear: banks have spent years getting up to speed with applying different risk-weightings to different types of asset. The leverage ratio runs contrary to that in effect, all assets are the same. It is, undoubtedly, a mess of massive proportions.
But then you remember that, just a couple of days before the meeting, his bank was one of many to report multi-billion dollar profits for the second quarter of this year. And for all that return-on-equity numbers remain constrained, its the absolute profit levels in the industry that regulators, politicians and the public will focus on.
And thats the reason that the capital Taleban will win the battle. To people outside the industry, the point that banks are producing these returns on far higher levels of equity is a moot one.
But the biggest threat to banks is perhaps not legislation, but litigation. The indictment of SAC Capital on criminal charges of insider trading shows how law enforcers continue to dredge the darker days of the financial crisis for wrongdoing. The trial of Goldman Sachs trader Fabrice Tourre reinforces the jittery mood. News that US authorities are pressing all banks with a big stateside presence for the mis-selling of mortgage-backed securities, which in July cost UBS a hefty $885 million, sounds yet another alarm bell.
Banks are doing better; they are nowhere near out of the woods just yet.