Bankers, of course, hate the idea of holding higher capital. “Talking capital ratios with banks is like waving a red flag in front of a bull,” says George Kaufman, a professor of finance and economics at Loyola University in Chicago. “They aren’t rational about it. They think that by leveraging more they can increase their earnings per share, and that’s not totally true.”

Bankers are also complaining that they can’t lend more, as many governments are urging them to do, at a time when they are forced to set aside more capital. “If you demand of them more capital than they need to ensure their security, then you are going to put a break on economic growth because the capital base defines the volume of financing available to the economy,” Michel Pébereau, chairman of France’s PNB Paribas, told the FT.

One new proposal being considered by the G-20 leaders is a plan to adopt a prudential system known as countercyclical capital requirements. This means essentially that when times are good, banks put away more capital, which can then be used in lean times. Also known as dynamic provisioning, it has been used successfully by Spanish banks, which have weathered the crisis far better than their European competitors. But the question is: Who would determine that an upturn has begun?

“The problem with dynamic provisioning is that it is very hard to distinguish whether you have a bubble or that prices have merely been increasing because economic growth is increasing,” says Benink. “It’s very good to talk about countercyclical capital requirements, but it will be very difficult to implement in an adequate way.”

All of this won’t be decided in Pittsburgh. Geithner says he would like an international agreement on bank capital to be reached by the end of 2010 and that it should be implemented by the end of 2012.

For some, that’s too late. “I’m strongly in favor of a capital increase; it should have been done long ago,” says Kaufman. “Most U.S. banks have capital well above the minimum, but it turned out that was still not enough and banks failed.”

Since the U.S. also wants the G-20 leaders to agree on international limits on bankers’ pay and efforts to reduce global imbalances such as the U.S. trade deficit, it could be hard for Obama to win an agreement on such a difficult issue as bank regulation. But it would be a pity if leaders take a pass because the topic is just too complicated.