Banks with bigger capital cushions are likely to be rewarded by the stock market and find it easier to get permission to enter new businesses.

"Loans are classified according to risk, and the bank's capital cushion judged accordingly," she said.

If the biggest banks get even larger, then they may be forced to raise their capital cushions to 10.5%.

After a pause, both men said the bank's greater capital cushion would allow them to take on larger risk.

But his comments have not lessened the drive at many banks to improve their capital cushions.

Although the Seamen's Bank has assets of $4.7 billion, its capital cushion is thin.

A lower Moody's rating came even as management has moved for more than a year to increase its capital cushion.

For many banks, the capital cushion is now thin.

Based on its capital cushion, the tiny insurer was hit harder than any other.

So what are the banks going to do to boost their capital cushions?