On Friday, much was made of the fall in compensation as a share of revenue in JPMorgan’s latest quarterly results. With other large American banks reporting results this week, might we see a similar pattern? Are bankers so chastened that they are accepting lower pay?

Yes and no. Michael Mayo, a financial services analyst who testified at the Financial Crisis Inquiry Commission last week, explained how a lower share of pay in relation to revenues may not tell the whole story. Compensation at banks has risen moderately as a share of revenue in recent decades. But when loan-loss provisions are taken into account, recent pay packages appear a lot more generous. According to FDIC data, compensation as a share of revenue at commercial banks is the highest it’s been in nearly 60 years, after accounting for provisions.

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