Regulators Don't Want Bankers to Be Paid for Taking Risk

Bankers are taking risks with other peoples money and in such situations the incentive structure is critical to manage behavioral risks. Another way to reduce risk is to increase loss reserves. If reserves are to be increased either capital needs to be added or more profits need to be retained. A large share of bank profit goes to upper level employees and not bank shareholders or are retained as reserves.

Don't try to shortcut this editorial by just reading the headline!

tldr: "The reg is closing the barn door a bit, at a time when there have been no recent mass horse escapes. That's probably a good idea though it doesn't solve all the problems out there and is arguably kind of unhip."