"For starters, this may simply be an idle threat. There are a lot of questions about how many bankers will really be affected by these pay limitations. And even if they do want to leave, the bankers may not be able to make good on their threat. Anti-banker anger is on the rise just about everywhere and pay caps are being imposed in many of the world's financial centers including London and Paris, and are likely to be instituted elsewhere as well...
So what? The answer is: this may be a blessing in not that much of a disguise. Most economists agree that our financial industry is now too large...
But what about the argument that the pay caps will make us loose the "best brains," as this restructuring takes place? Well, who are the highest paid bankers, the ones who should (but might not) chafe most under the new restrictions? The highest paid bankers are the "deal makers," the "rain makers," the ones who figured out how to create the toxic securities, the structured investment vehicles, the credit default swaps and sell them around the globe. We do not want these kind of deals to be made anymore and so we do not need these top brains - or any brains - to make them. In fact, our real problem has not been a brain drain, but the reverse: a brain rush into banking...
We faced a banking black hole-sucking in many of the good young minds of several generations - never to be seen again in the classrooms of schools, hospital wards, engineering firms, or solar cell manufacturing firms. Never, at least, until now...
So let's say to the government: tighten those pay restrictions, if necessary to make them bite.
And let's say this to the bankers who are threatening to leave: we call your bluff. Make our day."
