The need for traditional investment banking services—intermediating capital flows and financial transactions for all comers—is not going to go away any time soon. It is simply impractical to imagine a world without investment bankers, no matter how eagerly the torch and pitchfork crowd would love to do so. But it seems to be a somewhat paradoxical business, one best suited to entities which combine extremely aggressive pursuit of revenues with a highly developed aversion to risk.
The Epicurean Dealmaker is by far my favourite finance blog. This quote is from Part IV of his series of posts on investment banking compensation. Part I, Part II, Part III.
Anyone who has even the slightest interest in understanding the role of compensation in the recent financial crisis should read all four posts.
