Wall Street is in quite a quandary. On the one hand, all signs point to record revenues, which in normal times would point to a massive bonus pool. On the other hand, the communiqué of the recent Group of 20 meetings in Pittsburgh left no doubt where the member countries pin the blame for the financial crisis: “Excessive compensation in the financial sector has both reflected and encouraged excessive risk-taking.”

Since the G20 has called for explicit limits on bonuses as a percentage of total net revenues, it will be a clash of titans – Wall Street versus central banks – later this year when compensation figures are released. While many observers believe the US will try to diffuse the situation, even the Federal Reserve has put forth a surprisingly invasive plan to put executive compensation right. The Fed basically wants to supervise all compensation at financial institutions with the ability to make and enforce changes if it does not like what it sees.