The Bradford & Bingley rights issue fiasco has been portrayed as evidence of the final nail in the coffin of gentlemanly capitalism. Certainly the old stock exchange motto dictum meum pactum (my word is my bond) seems a quaint curiosity in a world where underwriters, rather than being held to their promises, are allowed to tear them up and then return to the table with inferior terms for bigger fees.

Underwriters today seem more concerned with inserting weasel words into the Material Adverse Change clauses in underwriting agreements or finding other loopholes than in providing an insurance policy capable of being claimed upon. But in one way at least, the Bradford & Bingley affair does hark back to an earlier era. The Financial Services Authority last week succeeded in pressuring the biggest five banks each to shoulder a chunk of the underwriting. At the behest of the FSA, HSBC at one point even committed to provide a substantial chunk of rescue finance in the event of the private equity group TPG Capital walking away.

This seems to come from a time when financial institutions would jump through hoops if the Governor of the Bank of England so much as waggled an eyebrow. Nowadays the eyebrow is jointly waggled with the FSA, which has responsibility for bank supervision, but the effect seems to have been the same. Perhaps, as the credit crunch continues to bite and nerves in bank boardrooms become more frayed, banks will be more prepared to heed the informal hints and nudges of regulators. And regulators, having seen one bank sinking beneath the waves, will more often resort to moral suasion, as it used to be called, as an instrument of policy.

In the tug-of-war between regulators and their charges, the former have the whip hand.

For example, Mervyn King is right to push his preference for the new depositor protection scheme to be funded while the banks are weakened and while they still need his £50 billion liquidity fund.

The banks respond that the money will have to come from somewhere, and given the size of the scheme required that somewhere will have to be the customer.

The pre-funded US compensation scheme, cited as a shining example of consumer protection, currently has around $49 billion - just about enough to cover Northern Rock's depositors.

But it seems to be asking for trouble to leave the scheme unfunded until it is needed, which could be just the time when other banks are short of money too.

The manner in which preemption rights were brushed aside by Bradford & Bingley also has the feel of something agreed by a group of gentlemen in a marble hall.

Institutional investors have for years presented the philosophy that existing shareholders have first dibs in any capital-raising as the Holy Grail of joint-stock capitalism.

Yet in Bradford & Bingley’s case, bankers, regulators and advisers seemed able to dump that principle as easily as discarding an old sweet wrapper. The gentlemen decided what was best for the company and the country and B&B’s private shareholders were not at the table.

HBOS, whose shares sank another 15p to 292p yesterday, just 6 per cent above the 275p rights issue price, could soon become the next institution to test the system. Short sellers are making hay in the absence of up-to-date information from the bank. The sooner it comes up with its prospectus and trading statement, the better.

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