In the past, investment banks were always known for their often too rapid response to changes in market conditions. And that response usually played out in changes to their headcount and empty bonus envelopes. I’ll never lose a junior banker memory of my Wall Street employer cutting back shortly before Christmas when the firm had decided it was certain to take a loss.

In 1989, cuts came quickly. And in 1998, immediately following the Asian crisis, banks cut their headcount fast and aggressively. However, the process tempered after the dot.com collapse – it still happened, and was pretty vicious in some firms, but it was slower this time. It seemed that banks had begun to fear the potentially missed opportunities (or the pain of rehiring) more than the bloated expenses.

Nevertheless, many banks were again understaffed in 2004 when the action started again. This meant that banks were even slower off the mark after the ugly fund failures of mid-2007 – remember the record bonuses of early 2008 with defunct firms worried that their employees would flee without the dosh? How that happened, in that atmosphere, is still unexplainable to me.

After 2008, the cuts did come. However, there was a time lag which again seemed to reflect the fear of missed opportunities. And, again, this proved to be somewhat rational as the money rolled in during 2009, fuelled by subsidy money and central banks’ desperation.

Now, things aren’t looking as rosy again. Yet we still see the big banks hiring in fairly big numbers. I cannot help but feel that it will come to an unpleasant end.

As we get closer to bonus season, I also wonder if banks are ready to batten down the hatches or to keep partying in terms of pay. The reality is that paying big bonuses is incompatible with paying healthy dividends, or with building capital.

Despite all this, I’m still advising my students that they can make their fortunes in the highly regulated banking industry. At some point, regulation will restrict the risk-taking that’s necessary to make big bucks. We haven’t got to that point yet.

Peter Hahn is a lecturer in finance at Cass Business School. He was formerly Citigroup’s Senior Corporate Finance Officer for the UK.