What those who are trying to regulate banking don't fully grasp, is the kind of person who tends to reach the top of finance, often has a particular attitude to money, liable to land it in trouble. This character appears endemic in certain parts of banking, which means that to fully understand why the sector appears to lurch from crisis and scandal, you really need to get inside the mind of a banker.

We believe the basic character type of Narcissism, which is frequently found in parts of banking, as in other spheres where great wealth, power or fame is at stake, could be the key character dysfunction which lies at the heart of the problem. Often those with merely very high self-esteem 'cross the line' into sub-clinical narcissism, as a result of multiple successes.

Managers and regulators need to take more account of the psychological, perhaps corrupting, impact on a psyche, of enormous rewards.

Narcissism is a grandiose sense of self-importance and entitlement. Narcissists exaggerate talents, expecting to be recognised as superior, without proportionate achievements. They're preoccupied with dreams of unlimited triumph, supremacy, genius and gorgeousness.

Convinced they are incomparable and exceptional, it follows they can only be appreciated by others similarly exalted. Not only do they require excessive respect, but they're also exploitative, taking advantage to achieve their own ends. Lacking empathy, they don't appreciate other's feelings. Instead they're dominated by envy, convinced everyone else are ever jealous of them.

Narcissism seems to develop partly from over-indulgent and over-protective parenting, developing when we're told everything we do is breathtaking, and therefore failure is inconceivable.

You may well recognise several of the above features of narcissism in many you encounter in your daily life, and this will happen increasingly, as there is evidence that narcissism is increasing which each modern generation.

Narcissism isn't confined to banking, but maybe narcissism interacts particularly badly with the temptations offered in this field, creating 'toxic' employees at a rate now not found anywhere else.

The central task at work of those that report to a narcissist is most importantly to recognise their ability, talent and specialness. But all this culture of preening and mutual admiring means decision making goes astray, as colleagues take their eye off the ball, so normal internal regulation becomes contaminated.

Research on narcissists finds they spotlight rewards and disregard risks when gambling and investing. Their tunnel vision focus on reward drives narcissists to excessive risk-taking. Being strongly motivated by reward, and weakly restrained to avoid punishment, means regulation is always going to be problematic in parts of finance. Regulators need to take more account of the particular psychology of these personality types. Psychologists would argue this is emerging as one of the key reasons for regulatory failure in the past.

Recent studies conclude that narcissists get into trouble not because they lack awareness of potential dangers associated with their high risk schemes, but rather because they find the lure of rewards irresistible. The insatiable ego of the narcissist requires constant feeding; colleagues and regulators may be caught out by this.

Narcissists become addicted to wealth because it fills their need for attention and power plus it's a vehicle for social comparison. Narcissists are in thrall with the symbolic power of money, explaining why they brag about how much they make, or do so indirectly, by flaunting expensive acquisitions.

Playing with other people's capital and no longer having a personal stake in the decision may therefore be particularly corrupting for narcissists. In the old days Wall Street partnerships had their own money tied up in their trades too, before these firms went public, and, interestingly behaviour certainly seemed different back then.

Narcissism is generally associated with career success, and the problem with trying to be vigilant for narcissism, in order to weed it out, or guard against it, is, narcissists are also charming, demonstrate leadership, assertiveness, and impression management skills, all of which help them climb the greasy pole to the top of corporations. It used to be called arrogance, and many organisations were on their guard against appointing or promoting arrogant leaders, but the goal posts may have changed and corporations are struggling to catch up with the new 'dark side' or successful personalities.

Given the rest of us face the consequences when banks collapse, it's in all our interests to pressure financial institutions into giving more thought to the personality types given such power. The previous focus has been on external regulation, so perhaps we need to now include more 'internal' regulation - where old fashioned things like a 'conscience' or 'character' regulate the self. We need to better understand the corrosive dangers on temperament of the increasing commercialisation of life.

One recent study found narcissism is significantly lower in women compared to men. But women score much higher than men in a particular area of personality difficulty - 'dependency'. Greater 'dependency' refers to difficulty making everyday decisions without excessive advice and reassurance, combined with problems expressing disagreement, out of fear of loss of support, or approval.

So one simple solution is to hire more women, by being more forgiving of feminine personality quirks, particularly given how deadly the male ones are.

But women in financial services already complain that promotion is snidely regarded as being based on gender rather than ability, so the atmosphere in banking has also to become much more female friendly.

Because male Narcissists will be brilliant at appearing to be doing a wonderful job, but in the end, they will break the bank, and your heart.