The issue of executive pay at investment banks is not easy to tackle. So good luck to Timothy Geithner, who says he plans to come up with "a very substantial change" to Wall Street compensation in coming weeks.
The US Treasury secretary has already said that he is against capping executive pay. Is that the right thing to do, however? For sure, imposing limits on how much Wall Street executives are paid has already had consequences. Senior personnel have been leaving banks in droves to head to boutiques or start up on their own. UBS is reportedly boosting salaries for its senior bankers by 50% in order to retain staff.
But talent leaving Wall Street to go to boutiques means that a new level of investment banking is emerging. Mid-tier investment banks such as Evercore, Rothschild, Blackstone and now Citadel will bring...
