The banks rather repurchase their stocks that reduces the Retained Earnings account and Additional Paid-In Capital account when they are retired, otherwise they reduce the regulatory capital through the Treasury Stock line item that reduces both the common stock par value (CET1) and Equity (a contra-Equity account)
With Retained Earnings (Common Equity: both CET1 and Core Capital), not only we make sure that the banks reinvest in their business instead, with the cash attached to the increase in the Retained Earnings that quarter (double -entry accounting cash-Retained Earnings), but also this cash is leveraged (more debt) thanks to the capital ratio.
I would propose to remove the banking license to those banks buying back stocks. Pay an extra dividend instead or acquire other company. Evidence that they are clueless about the banking business or it's too risky, and they rather trade with stocks on the market.
Also, I would remove the Capital Buffers since there are bank CEOs that still think they are capital requirements, like the Bank of America CEO. The managements would have the Capital Buffers they want. Just so you know, if the Adequately Capitalized threshold is broken, the Prompt Corrective Actions kick off: dividend suspended across the board, as set forth in the banks FDI Act for undercapitalized banks (HERA mirrors the FDI Act) The FnF JPS holders know the drill.
(Summary - For Profit companies do not always take a long view and their efforts at maximizing short term profit and taking risks will win out. If there is no regulator watching for the overall LONG TERM health of the industry - we will repeat 2008 ----- (regulators can worry about the 1 in 40 or whatever - CEOS do not)