Longtime reader checks in:

There are all sorts of accounting reasons that firms hand out much of their compensation in the form of bonuses, but those incentives, like the bonuses themselves, stem from historic practice. Most Wall Street firms began as partnerships, not as publicly-owned corporations. Partnerships apportion their profits at the end of their fiscal year; that practice has remained the norm, even though shareholders (or, in the case of AIG, taxpayers) now own these corporations.

And that's really the nub of the problem. Most Wall Street firms have gone public; at the same time, many public banks have entered the Wall Street game. But corporate governance, compensation, and accountability haven't kept pace. In essence, these firms offloaded most of their risk to shareholders, but continued to be run in an insular fashion, and to divert the great bulk of their surplus revenues to their workers and executives. In the bubble years, enough cash rolled in that the complaints were muted - executives and traders took it home in wheelbarrows, and the share prices still went up.

But those working on Wall Street have come to regard their bonuses - their traditional share of the profits - as guaranteed compensation. They want the rewards of ownership with the security of employment. And that's just unsustainable.

When it comes time to sort through the wreckage, and to erect a more sustainable model, I hope we pay a little more attention to corporate governance. That those who own the corporation - shareholders - have long had little say in its operation is a scandal. It's been driven home this week by the realization that simply substituting 'taxpayer' for 'shareholder' does nothing to change the locus of corporate power - in either case, it rests less with the owners than with the board and executive suite. And, all too often, those groups pursue interests divergent from those of the ownership. Levying a tax on undeserved compensation is a bromide - it makes us feel better, but neither solves the problem nor prevents its recurrence. The real solution lies in ensuring that corporations are run in the long-term interests of their owners, not to line the pockets of their executives.