Right or wrong, there's no denying the fact that many Americans think that people who work on Wall Street are paid too much. While this view was certainly present before the bailouts, it has bubbled up to the forefront of popular opinion since then. Those of the view that bonuses should be capped or restricted argue that even banks who have paid back the government benefited from the government's actions.

This is certainly true, but a lot of companies outside of the financial sector also took government assistance or regularly benefit from government programs. In these cases, there is little outrage towards pay. Professional athletes make salaries on par or greater than the top bankers, and they play in stadiums that are largely financed by higher sales taxes or through the issuance of tax-free municipal bonds. And just last week, NBC paid Conan O'Brien over $30 million to walk away and take the Summer off, even though NBC's parent company took advantage of the government's TLGP (Temporary Liquidity Guarantee Program) and issued over $60 billion in government guaranteed commercial paper.

Since the subprime crisis began, many people have offered ideas on the best way to reform the financial system. Since the crisis has many different causes various proposals have been raised, to try and prevent this crisis from occurring in the future. Some of these ideas have included a consumer protection agency, strict loan standards, and the regulation of credit default swaps.

To be honest I have stopped following the various proposals for some time now. Like the health care bill currently being debated in Washington the details are being changed constantly to try to secure enough votes for passage. However, I remember hearing a proposal several months ago that I thought would be an excellent idea. The proposal is titled the Credit Risk Retention Act of 2009. I will quote from the proposal.

By Michael Wong

Article originally published on 12/7/09

Many investment banks reported robust earnings during the last couple of quarters. Earnings outperformance was based on a tripod of contributors: a broad-based rally in asset prices, a partial recovery in investment banking revenues, and strong fixed-income trading revenues. Although these earnings weren't the result of accounting gimmicks, they are of questionable quality for other reasons and may prove transitory. We believe that the worst has already passed for investment banks in this cycle, but we also believe that most investment banks will likely stumble on their earnings before a sustainable earnings uptrend establishes itself.