NEW YORK (TheStreet) -- I've been waiting patiently for Wall Street to thumb its nose at the Financial Crisis Inquiry Commission and its best-selling report on the causes of the 2008 financial crisis. At last that day has arrived. It took precisely zero time.You see, at the same time that the presses were grinding out copies of the 662-page, unsurprising but comprehensive report, the banks that got us into this mess were clutching firmly to one of their most cherished practices: The habit of paying themselves obscene sums of money. Wall Street compensation hit a record $135 billion last year, a 5.7% increase over 2009. Even though more of that pay came in the form of stock awards than in prior years, and there were "clawback" provisions in the event of future naughtiness, it really doesn't matter. The reason lies in the word "obscene." I know, it's vague. You "know it when you see it," as a Supreme Court justice once put it -- and that's just what we were seeing in the run up to the financial crisis. And nothing has changed. See this Reuters analysis. At Bank of America ( BAC), the new home of Merrill Lynch, 31.5% of revenue went to compensation vs. 26.1% in 2009. At Goldman Sachs ( GS) the compensation-revenue ratio increased to 39.3% from 35.8%. Of the banks surveyed by Reuters, Morgan Stanley ( MS) is paying out the highest percentage of its revenue in compensation -- 50.6% -- but I guess that's OK because in 2009, it was 61.5%. Sure, there's nothing illegal about banks doing any of this. They've paid back the taxpayer money that was used to bail them out, so they're in the clear. The problem is that what we're seeing here is a continuation of an ugly trend. The FCIC report was forthright in describing how Wall Street compensation levels contributed mightily to a fundamental change in the culture of the banks, one that set the stage for the financial crisis. It was a broad and damning indictment, one that received little notice while the media's attention was largely focused elsewhere. Turning to page 62, we see a chart showing how average financial and nonfinancial compensation remained roughly the same from the Roaring '20s through the Great Depression, World War II and afterwards -- right until 1980. Then the two lines began to diverge dramatically to the point that by 2009, average annual pay in the financial sector was topping $102,000, while everyone else was making just under $59,000.
The FCIC pointed to the change in the structure of Wall Street firms. When they were partnerships, as former Lehman Brothers partner Peter J. Solomon testified, "he and the other partners had sat in a single room at headquarters, not to socialize but to 'overhear, interact, and monitor' each other. They were all on the hook together. 'Since they were personally liable as partners, they took risk very seriously,' Solomon said." An exec at Morgan Stanley testified that the big payout came only at retirement. But when the banks went public, all that sound judgment went out the window. Now the bankers were playing with their shareholders' money, the FCIC report points out. "Talented traders and managers once tethered to their firms were now free agents who could play companies against each other for more money. To keep them from leaving, firms began providing aggressive incentives, often tied to the price of their shares and often with accelerated payouts," says the report. Hey, I can understand the argument for unleashing the earning power of the trading desks. In the free market, people have a right to go out in the marketplace and get whatever the market can bear. And if they make mistakes, well they just have to pay the piper and accept responsibility for their blunders. The free market will adjust, and the well-paid bankers of one year will find themselves working the squeegee routes on the Bruckner Boulevard the next. Except that's not how the system works. The FCIC concluded that "compensation systems -- designed in an environment of cheap money, intense competition, and light regulation -- too often rewarded the quick deal, the short-term gain -- without proper consideration of long-term consequences. Often, those systems encouraged the big bet -- where the payoff on the upside could be huge and the downside limited. This was the case up and down the line -- from the corporate boardroom to the mortgage broker on the street." I'm sure the banks would claim that those bad old days are over, and that the days of asymmetrical compensation packages -- rewarding risk but not penalizing failure -- are over. But I wouldn't bet the future of the economy on it. And that's one of the failings of the FCIC report, one of the things that kept this from having the scope and majesty of the Pecora Commission. While identifying the problem, it failed to provide a concrete solution, such as, God forbid, taxing the hell out of the banks. So we're left with our fate in the hands of the same overpaid CEOs who got us into this mess. That's right. All that stands between us and the next crash is the goodwill of captains of industry like Brian T. Moynihan, who was just paid a $9 million bonus for his great job running Bank of America in 2010, a year in which the bank's shares fell 11%. I guess if the shares fell 20% he'd have only gotten $5 million. Meanwhile, the bank was slapped with a lawsuit the other day claiming that it covered up the mortgage defects that have plagued the company. Sounds as if it's business as usual on Wall Street, in the courtrooms, the executive suites and, of course, the paychecks.