Implicit in the global movement to rein in bankers' pay is the idea that runaway compensation helped spawn the financial crisis. While the idea has appealed to some reformists at the G-20 and elsewhere, the New York Times suggests that there's a lack hard evidence that compensation was a critical factor. Not that the evidence doesn't exist.

Some have noted academically that executives tend to have more to gain in boom times than they tend to lose in busts. They are thus incented to take huge risks. But other studies have not found a hard correlation between pay and risk-taking. Indeed, one study actually found that banks whose CEOs had the strongest incentives for excessive risk-taking--that is, higher pay potential--fared better on average than others. Not that this will matter, in the current environment, pay reform seems to have taken on a life of its own.  

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