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Anat Admati, a professor at Stanford Universitys graduate school of business, and German economist Martin Hellwig think the exact same lesson ought to be applied to banks.

Monday marks the sixth anniversary of the Lehman Brothers bankruptcy, the trigger event (if not necessarily the cause) of the worst of the global financial crisis. As part of an occasional series, Ive been looking at different proposals to prevent the next panic. One obvious step is to regulate how banks lend out money. to crack down on predatory loans. Admati and Hellwig come at the problem from another direction one thats particularly apropos on the Lehman anniversary by proposing tougher rules on how banks get their money in the first place.

They argue that banks should borrow less, relative to their assets. After all, what turned a bubble in real estate prices into a full-on financial panic was not just the toxic loans banks gambled on, but the fact that they too were playing with borrowed money.

In a nutshell, Admati and Hellwig say that 20% to 30% of the money a bank puts to work should be funded from shareholders pockets, instead of from debt. Currently, that number for big banks their equity or capital, in bankers jargon is more in the neighborhood of 5% to 6%. In other words, about 95% of banks assets (which includes the mortgages, business loans and other investments they hold) are matched on the other side of the balance sheet by money banks owe (to everyone from depositors to bondholders.) And that means, roughly, that if the value of a banks assets falls by more than 6%, it now owes more than it is worth.

Admatis and Hellwigs idea is getting attention. Admati has been the subject of a long profile by Binyamin Applebaum in the New York Times. Top Federal Reserve officials are citing her. and Applebaum says shes lunched with Barack Obama at the White House. But the proposal has admirers on both sides of the ideological divide. Economist John Cochrane, no fan of Democratic banking reforms like Dodd-Frank, has praised Admati. And Republican Sen. David Vitter is co-sponsoring legislation requiring 15% capital with Democratic Sen. Sherrod Brown.

My Money colleague Kim Clark interviewed Admati at length back in 2013 about her book with Hellwig, The Bankers New Clothes. You can read the interview here .

I said in the headline that this plan is simple and thats true in the sense that its elegant. Instead of getting into the weeds of defining tricky concepts like Too Big to Fail, it puts a big, bright number on how much capital a bank has to hold to be considered safe. (Defining capital can in fact be contentious and complicated, but demanding a lot of it makes it harder to game.)

The tricky part is that its not so simple for people who dont know banking to get why capital or equity is so important, or even what it is. As Admati frequently points out, banks have benefited from the misconception that higher capital requirements means banks would have to keep 20% or 30% of their money locked up in a vault, instead of lending it out to businesses or homeowners.

In fact, making banks hold more capital actually means they have to borrow less. In their book, Admati and Hellwig show that this is almost exactly like a homeowner making sure to build up equity in her house. This graphic published with Kim Clarks Money interview with Admati shows how it works:

To raise more capital, banks wouldnt hold back lending. Rather, theyd tap their shareholders, either by issuing new stock or just by cutting the dividends they pay out of earnings, letting profits build up on the balance sheet. (They can still lend that money out if they choose the point is, it wasnt borrowed from someone else and wont have to be paid back in a crisis.) This would be unwelcome news to many investors in banks, who often invest in large part to get those dividends.

Recently, I spoke with Brian Rogers. a fund manager at T. Rowe Price who invests a lot in banks, and he was satisfied that banks had already done enough to clean up their balance sheets and raise capital. Admati and Hellwig would doubtless say that investors confidence in banks now has a lot to do with the fact that the government bails the industry out when it gets in trouble.

Making banks less attractive to some stockholders, and limiting their ability to take advantage of debt when its attractive, could make them less eager to lend, raising interest rates.

In their book, Admati and Hellwig argue this isnt necessarily the case some investors might prefer to hold stock in less-risky banks. But even if there is a cost to safety, by now we have a pretty good idea of how expensive for everyone the alternative can be.