Will regulated compensation drive talent to non-TARP boutique firms? That's the hot topic on trading desks this morning.
Don't get me wrong: a lot of the average, working Joe types on trading desks—and even average types working in the lower rungs of investment banking—are in favor of lower compensation for the highest paid executives, and even claw backs. They think management screwed up, too.
- Obama Unveils New Rules To Curb Executive Pay
- What's In The New Rules
But now that it is clear that the government is going to likely over-regulate the entire industry, the talk is that anyone who makes significant money (and significant profits) is looking for a way to get out of firms that take TARP money and go to boutique firms, from currently existing ones (Greenhill, Lazard and Jeffries are mentioned), to new ones that will be created in the near future, to foreign firms that would not be part of the government restrictions.
The shift of revenues and talent to smaller firms could create a new two-tier system on the Street: the old staid regulated firms and the more dynamic smaller firms. Assuming they are not regulated out of existence as well.
What do you think?
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