And when Republicans stammer that some sort of compensation caps for those that get taxpayer monies will drive away good talent from the financial industry I want to scream. Where are these people going to go? Have these brilliant politicians not noticed that the financial industry has contracted severely. And by the way, has the question ever occured to them that some of this "talent" was not that talented in the first place, or at the very least their talents were misdirected. These bankers make the Bush administration prosecution of the Iraq war and response to Katrina look almost adequate by comparison.
What is the value proposition that these bankers have that can enable them to command such bonuses? Clearly it is not there ability to manage risk. Have they threatened society collectively "let us get fat and happy in the financial sector or else we will start to run your health care and prosecute your wars"?
I have been always squeamish about the meddling with executive compensation but I think it is nigh time to have that conversation. The levels of compensation are so great that the incentive or temptation to engage in corporate looting have pushed society to a fragile state. I think there has to be something that aligns the compensation with the long term health of the company. Brad DeLong has suggested bonuses that are redeemable if the company meets certain thresholds ten years out as opposed to one quarter out. I would also like to see clawback provisions for salaries once they get into the F-U money range- maybe 8 digits.