That is one idea proposed in a recent NYT article about the lagging performance of banks, specifically in regards to their ROE.
Obviously, the idea of cutting compensation atby 43 percent will not be popular among the people who work at Goldman Sachs. But it still would mean they get paid more for working at Goldman than they could doing anything else without putting their own capital at risk.
Investment bankers by their very nature are the most risk-averse people on the planet. Where else can you work and get paid huge salaries without risking your own capital? My bet is the compensation on Wall Street can be cut in half and most of the people who work there will stay put.
Okay, so compensation wouldn't be cut in half exactly, but 43% is still one hell of a haircut. The author doesn't really go into detail about his proposal, but does anyone think that is the direction banks could/should be headed? Would you want to keep working IB hours after your pay is cut in half?
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