I am persuaded, though, that splitting up the banks by function has much to recommend it. But it is difficult to see how the UK could unilaterally decide to break up its big banks. They have threatened to decamp to some other jurisdiction where they could continue as integrated entities. Not only would this lose tax revenue and employment for the UK but it is far from obvious how this would leave us any safer or more stable. These banks would presumably still deal in UK markets as they do now as integrated global banks. The risks they pose to the UK economy would be just the same. Similarly, for the UK operations of foreign-owned banks which are already headquartered abroad. How can we insulate ourselves from the risks that they pose to us here? If splitting banks by function makes sense, we need to get international agreement. The key to this is, of course, the US.

Meanwhile, it looks as though the investment bankers are back to business as usual - and back to the old arrogance. So many senior bankers still do not get it. They appear to think that because banks are again making large amounts of money this justifies gargantuan pay packets. Indeed, they may think that this is a matter for bank boards and their shareholders alone, without any legitimate public interest.

So many senior bankers still do not get it

It is easy for them to think that public anger over huge pay for bankers is all about envy. It isn't. It is about the feeling that much of what bankers get up to is, in Lord Turner's pithy words, "socially useless" or, still worse, socially harmful. Modern banking is a strange mixture of the absolutely essential, without which the economy cannot function, elaborate ways of transferring wealth from one section of society to another - with a substantial cut taken by those who facilitate the activity - and sophisticated forms of gambling which add nothing to human welfare and may imperil the stability of the whole financial system. And when the rampant risk-taking of the bankers gets them into trouble, who do they turn to for support? Why, the taxpayer. Masters of the universe? I don't think so.

David Fuller's view Clearly any western 'solution' requires international agreement, including at least all European Union members and the USA. This is easier said than done, as countries will inevitably have differing views and some nations or regions are not averse to securing an advantage for themselves via lighter regulation.

I do not know how all this will play out. However I assume that there will be much tighter regulation of derivatives. I would also keep banks out of high-frequency trading, which I maintain serves no useful purpose and is also likely to be destabilising for markets.