Amid high drama in bank boardrooms, the chief executives of Citigroup, Merrill Lynch and UBS have gone in short order. And with good reason, in the light of the huge losses these men presided over in asset-backed securities.

Yet it is important to recognise, when considering any response to this continuing debacle, that the extreme nature of this financial cycle is partly the product of the very regulatory systems that govern the operations of large financial institutions. Likewise, executives’ behaviour has been a direct response to flawed incentive structures in individual banks.