From the Economist: Wall Street's new shape, Rearranging the towers of gold

Wall Street has staged a surprisingly strong recovery from its meltdown a year ago. But it will not return to business as usual
The most dramatic is likely to be a toughening of capital-adequacy standards, endorsed recently by G20 finance ministers and a group of central bankers and supervisors that oversees the Basel capital rules (see article). The new rules could be ready for adoption by the end of next year. The Basel Committee has already proposed higher capital charges for complex trading and exotic securitisations.

Capital will also be the method of choice to rein in firms big enough to rock the system. American officials are reluctant to go nuclear and break them up, not least because the task of splitting them into pieces small enough to pose no danger would be horribly messy. Instead banks will probably face a sliding scale, with minimum capital ratios rising as they get bigger or embrace more risk. They will also be expected to prepare “living wills”, setting out how they could be liquidated in the event of failure.

“There’s a real risk we end up so laden with capital that we can’t waddle and fart at the same time,” says a Wall Street grandee. Scrutiny from supervisors, increased after Lehman, will remain heavy. Goldman Sachs has no fewer than 40 Fed staffers breathing down the necks of its traders and risk-modellers.