If banks are forced to de-lever by raising equity, I believe it...

If banks are forced to de-lever by raising equity, I believe it will be forced upon them by the debt markets. Bondholders will say "You want us to fund your exposure to housing ? No problem, go and raise some equity to absorb any losses then we will decide what it costs you"

The regulatory regime has had years and years to limit their riskiness and has chosen to do nothing.

I know so many people who consider the banks to be safe and stable investments because of the franked dividend stream and the fact that they enjoy government protection but I honestly think they are missing the point.