In the years running up to the crisis, an army of bankers and lawyers put together new sorts of instruments that were supposed to be as cheap for banks as debt (interest payments in many countries are tax-deductible whereas dividends are not), yet still looked sufficiently equity-like to satisfy regulators.
While Zuckerberg's deputies received new shares last year, Facebook's compensation committee decided not to award more to the chief executive because "his existing equity ownership position sufficiently aligns his interests with those of our stockholders".
"Banks are already worried about whether they can show that they are generating returns on equity that are sufficiently interesting for shareholders at the levels of reserved capital regulators are requiring of them.
Institutional investors reasoned at that time that the dividends on a diversified pool of equities would grow sufficiently to offset the loss in immediate income.
The equity rally is now sufficiently established that investors have overcome their memories of the dark days of 2008.
"If the equity in the house is sufficiently negative, there may be an incentive for the household to engage in a short sale," says Sanders. "But the more negative the equity, the less likely the lender or servicer will be willing to agree, since it increases the loss".
"If the equity capital is there in sufficient amounts and is sufficiently patient and it brings the right incentives then the management talent will follow".
Restricting equity payouts until financial institutions are sufficiently well-capitalized is the easiest, least costly way to transition to healthier and safer system.
Many investors are sufficiently confident in the long-term potential of equities that they believe permanent exposure to the asset class would be beneficial even if one has to sit through periodic downturns, as was the case just recently.
None of these is impossible, but I think the odds are sufficiently low that they do not justify an exit from equity investments.
Mr Terry says: "The overall share of profits that has gone to compensation has gone down for UK banks but not sufficiently to make up for the decline in the return on equity - the cost of capital.
