Now they will have to behave - or else

While they huff and puff, the market has voted. The Chancellor may like to think he is a big bad wolf but he's not blowing anyone's house down.

His proposal would have come anyway - all he's done is head-off the Vickers report for political ends (pre-empting Vince Cable and making a show at tonight's Mansion House dinner).

The banks can moan all they like, but what's being suggested is not as extreme as the complete break-up mooted by the governor of the Bank of England.

If Mervyn King had his way, they would be looking at separate ownership of the High Street counters and City trading desks.

The fact of the matter is that they are pretty much operationally divided already.

When I go into my bank, I don't encounter bond dealers and corporate financiers. Their staffing and systems are different.

Having to establish new headquarters will be a niggle but that is all; again, they've got existing retail administrative centres that can easily become head offices.

Holding more capital in reserve is a more serious expense, but going from 7% to 10% is hardly earth-shattering.

No, on the face of it, the banks have got away lightly.

So why the concerted lobbying and moaning? Because the ring-fencing is symbolic of something else. It may make the retail section safer. But by the same token it makes the investment banking division less secure. It may be easier in future for the authorities to allow the latter to go under.

That's what this is really about. The banks are going to have to behave, or else.

And that's what they don't like.