This $11.1 billion supported $395 billion in assets, which means a leverage ratio of 35.5 to 1.
However, this advice was not heeded by these institutions, which had used the boom times to increase their leverage ratio instead.
Northern Rock's leverage ratio, before it exploded, was more than £50 for every pound of common equity.
It adds up to a leverage ratio of some 60 times.
With liabilities still over $100 billion, this translated to an effective leverage ratio of more than 250-to-1.
It also claimed a leverage ratio of 15 to 1.
If the manager has a leverage ratio of (say) 5 then his return is not but .
Banks had a leverage ratio of 40 to 1 and it now 20 to 1.
And it has to be pointed out to them that a leverage ratio of 20 to 1, let alone 40 to 1, is too high.
Such leverage ratios were typical of the larger investment banks during 2007.