The former bosses of Citigroup and Merrill Lynch have more reason than most to shrink at the mention of collateralised debt obligations. It was their banks’ ballooning exposure to such debt securities, and the associated writedowns, that effectively cost both men their jobs.

Now the two banks have to convince investors that they have a firmer grip on risk management. They could start by providing more disclosure. Right now, investors have very little to go on. How is it possible that the banks’ systems allowed executives to OK such concentrated – and ultimately such poorly understood – exposures? Merrill, for instance, had some $32bn in CDO-related exposure for the second quarter. Banks are understandably reluctant to divulge how they keep their traders in check. But investors are owed a better explanation of their banks’ overall risk appetite and the proportion of earnings that managements will stake on apparently attractive strategies.