As with all examples of human excess, the resulting pendulum swing tends to over compensate.
Years of City led irrational exuberance have been replaced by a type of collective madness (fueled by a dying print media trying to sell papers and a dying Government trying to save itself).
The new culture seems no longer to celebrate success and aspire to it but is instead obsessed with the Salaries and Bonuses of others, primarily City Executives.
Don’t get me wrong, I am appalled at the idiotic behaviour of some of those who managed our money, but lets be honest, we all have to share some responsibility. Our mortgages, credit card debt and cheap finance are what fueled the crisis and rather like a bad hangover we can’t blame it all on the Barman!
If the Banks and Financial Institutions have any sense (questionable) then they will understand the mood of the people (their customers and in many cases their shareholders) and moderate their behaviour and compensation. But its their call to make and that’s the important point.
The decision by the FSA not to regulate to excess has been of course greeted with predictable misplaced uproar most notably by the largest shareholder in some of these institutions (the Government) who is of course reacting to the Media frenzy and making the mistake of not thinking as a company owner.
Nobody could argue that commercially focused Companies must have a free hand to negotiate Executive pay in way which works for the needs of their organisation and allows them to attract and reward the best talent.
If Shareholders are not happy with the remuneration of executives they should veto or vote against the Board that approved it. If the Government is a Shareholder then it should use its vote as a Shareholder and not through legislation.
Customers, including private individuals, Corporations and other Financial Institutions can also put pressure on companies by voting with their feet and if necessary moving their business. Linked to this is perhaps the biggest unanswered question of all. The market inefficiencies which must exist to enable the banks to generate the profits or margins to fund such stratospheric pay levels.
For me that’s the box nobody opened during the recent financial crisis.