Excessive remunerations and bonuses should be controlled

The control of bonuses in the financial sector by regulatory or legal means would be in the best interest of the economy in general, and of most banks and their shareholders as well. Many banks do not even make real profits in the medium to long term on their financial markets activities and investments, particularly after the bonuses have been paid; they should much rather concentrate on delivering competitive services to their clients, something which most of those market activities do not help. A very small number of banks make profits on them after bonuses in the long term, but it could hardly be said that those profits amount to value creation for the economy ( and thus correspond to the kind of deserved profit which is the economic and moral foundation of the capitalist system). Many profits made in financial markets stem from insider dealing, price opacity, market manipulation and volatility enhancing, and the sale of dubious instruments to investors. Government supported and subsidised capacity to take excessive risks also accounts for a good deal of these profits. The very fact that " top talent" is massively attracted to financial activities is a cost to the rest of the economy ( shouldn't they be helping to produce better cars and to launch new planes on time if the Atlantic economy is to remain competitive?) The social cost of modern finance is probably (much) higher than its social benefits; bonuses have also in many instances encouraged unethical and fraudulent behavior. But we should not count on management or market mecanisms to curb them; most banks would not admit ( or do not know) the real, and feeble, profits from those activities. Shareholder pressure will not work any more than in the case of excessive CEO pay because shareholders meetings are mostly dominated by conflicted shareholder's representatives : banks voting with their client's shares, fund managers dependent on businesses for a large part of their income (pension fund management), or not motivated (indexed investors ),... .

As long as these bonuses have not become more reasonable, it might be recommended to force the financial sector to apply its logic to much needed internal and external control of financial activities; rules should make sure that controllers (internal and external) and regulators number at least a certain proportion of traders (one for any three, or five traders, for example) who should be paid at least as much as the best paid traders, and even get bonuses, for all the reasons invoqued by the financial lobby, that this is the "only way to attract top talent". The crisis demonstrated at least that we need top talent in control and regulation, did it not?