No one would be surprised if executives at big financial firms have forgotten what commercial airlines look like. After decades of corporate jets and other toys, austerity is to bankers what oil is to water. But this week at the World Economic Forum (WEF) in Davos, Switzerland, this persecuted tribe—having endured 16 months in the wilderness of a populist backlash since Lehman—will be rediscovering the virtues of austerity. In appearance, at least.

Last year, bankers just disappeared from Davos—a conference whose tenor, which in yesteryear included extolling cross-border capital flows and financial deregulation, has anyway flattened post-crisis. Wall Street is now making a comeback, with some precautions.

Illustration: Jayachandran / Mint

Perhaps bankers noticed a WEF poll released last week that showed that, out of 130,000 respondents from across the world, two-thirds thought the crisis to be one of values. Only one-fourth thought multinationals “apply a values-driven approach" to their business. So if everyone hates you as you seem too greedy, then the simplest solution is to stop seeming too greedy. Who needs risk managers and regulators when you have good public relations managers?

Little surprise, then, that inquiries—such as one the US Congress started this month—are beginning to be more about apology and remorse than about finding out what went wrong. It’s not just that bankers are concentrating on an austere appearance while they reap record profits. Politicians, too, are only looking to score populist points.

But when naked populism dominates the financial agenda, as it did in 2009, nothing gets done. Politicians spewed vitriol against banks (targeting bonuses), but banks just responded by modifying their appearance (increasing base salaries instead of bonuses).

Politicians and regulators have an earnest opportunity to start off 2010 by focusing on real regulation. Following a proposal to tax bank liabilities, US President Barack Obama on Thursday proposed prohibiting deposit-taking banks from trading with their own money. We can quibble over details, but this gets at the heart of moral hazard: Banks can’t both take on too much risk and expect to get bailed out.It also gets at the heart of solving economics problems where we’re tempted to offer black-and-white answers—such as “greed is bad". More than finding out what is ethical, we need to find out how incentives can be retooled.

Are ethics and values at the heart of the financial crisis? Tell us at