Many of those that failed did so because they had purchased AAA-rated mortgage-backed securities thought to be both sound and liquid investments.

FORBES: Will The Banker Bashing Never End?

That also represents a significant cut for banks in the cost for them of doing business, because the safest liquid investments - such as government bonds - pay the lowest income.

BBC: Have regulators deepened the recession?

And the FSA is also allowing banks to hold a much wider and more diverse and riskier collection of supposedly liquid investments, as a proxy for cash, which is their rainy-day money in case too many of their depositors want their cash back at the same time (it is the insurance against bank runs).

BBC: Have regulators deepened the recession?