The New Yorker's scintillatingly entitled The Weekly Politics podcast does a good job on banking this week. Highlights:
1. If Obama had focused on banking before healthcare, he could have really done something. The bankers were terrified and begging, and would have accepted real regulation in return for being bailed out. Having been bailed out, they think, because they are just normal people, that the resulting profits are the result of their own cleverness. They are now not really interested in meeting with Obama.
2. But the profits are the result of being able to borrow money at almost no interest, thanks to the government. They can either lend it at higher interest or invest it in bonds. It is, therefore, impossible for them not to make money. To start handing out huge bonuses to 'superstars' is to try to pull the wool over everyone's eyes and try to take credit for a hugely successful (so far) government intervention. It is totally reasonable to put a tax on these bonuses. It is not (just) political grandstanding.
I repeat, I am in favour of strong banks and big wages for good people, but not insane wages, since you can get people just as good with merely big wages. They're just these guys. I'm all about the market, and it isn't working, because bankers make profits from stuff they haven't done. It's like people think they're clever when their house price doubles in ten years: this is money you haven't earned, people. It is because you happened to be rich enough to take a disproportionate benefit from an economic situation which lots of people who can't afford houses were also contributing to. Stamp duty is a way of taxing money people didn't earn.
(I know it is a bit more complicated than this. A bit. If I'm wrong, which seems unlikely, tell me. I will happily retract. I mean, 'unhappily retract'.)