How big a punch will US banks take from financial reform? Assume the toughest legislation mooted becomes law. Also assume the troubled asset relief programme tax is agreed upon, representing an additional 3 per cent hit to aggregate 2012 earnings, according to Morgan Stanley.

Indeed, the latter levy may be the most painful of all the attacks on Wall Street. Still, taken together the moves add up. The next biggest is potentially from derivatives legislation. Derivatives account for anywhere up to half of trading revenues. Increasing the transparency of transactions both pre- and post-trade will reduce volumes and drive margins down. For the top banks in this business, analysts estimate a 2 to 10 per cent drop in total earnings from this change alone. Any measures to curtail credit default swap trading could have a bigger impact, however.

The so-called Volcker rule would be slightly less feared. Prop trading is not as profitable over the long run as many realise, but if banks are also forced to stop investing in hedge funds and private equity, normalised earnings could fall by about 2 per cent, according to Goldman Sachs. Next in line, a hit of about 1 per cent might be expected from higher deposit insurance costs and the raft of consumer protection measures, for example on interchange and credit card fees. Also, if markets genuinely believe big banks will be allowed to go under, possible rating downgrades would increase funding costs.