Last week’s startling bounce in global bank shares prompts a couple of intriguing questions. The move may, of course, prove no more than a normal bear market spasm. But in the near term, might the banks be close to turning the corner? And further out, might the threat of regulation turn out to be empty?

Part of the answer to the first question lies with asset-backed securities. Most of those went on to the banks’ books at more than they were worth, so at least some of the writedowns will prove permanent.