One reason that banks aren't lending to many whom they used to lend to, regulations

Previously regulation forced banks to make loans that they didn't want to make, now they probably can't make may loans that they would want to make.

Tighter regulatory requirements are compelling giant investment banks in the U.S. and Europe to tone down their risk-taking and shift to more staid strategies. Now hot on Wall Street: trading securities for clients, processing trades, exchanging currency, managing assets and advising clients on deals and financing.

The latest example of this new pressure came Monday, when a Swiss bank panel recommended that the country's banks be forced to raise their capital cushion against risky assets by a higher margin than standards issued last month by a global bank-reform group. Analysts say U.S. regulators could take similar steps as they implement the Basel III Accord.

Adding to the urgency to adopt plain-vanilla strategies: a recent slowdown in the volume of U.S. stock trading, traditionally a big source of revenue. If this shift continues, analysts say, it will pinch profits but also lead to less risk for the financial system.

Investor presentations by top bank executives in London last week, combined with increasingly dour projections for the third quarter that ended Thursday, are crystallizing the challenges banks face.

"The business models on the Street are going through dramatic changes," says Clayton Rose, professor of management practice at Harvard Business School, based on the most drastic shifts in the "political, regulatory, and economic environment since the 1930s in the financial industry." . . .

Isn't it ironic to see this story about the UK also today in the WSJ?

Osborne also directed his comments to the financial world, saying that if banks don't lend, the government wouldn't allow them to allocate "unimpeded bonuses." . . .