I think they are being delusional. For the next twenty years, minimum, bankers in general and investment bankers in particular should come to expect that if anybody's making lots of money, they're going to get scrutinized. Not just by the government and not just by the people, but by the banks themselves. The banks have seen what happens when you pay too much money to those people, and while the upper echelon shall always be handsomely paid, I think the rank and file are going to see a severe and long-term pay cut.

At this point, you tell an investment bank that if they don't pay a lot they aren't going to get the smartest possible people and the reaction is likely to be "Thank god! At least when they make mistakes they won't make really smart mistakes! Those are the worst." Why should they pay someone five million to destroy the company when they can find people for $200,000 who will do quite adequately? (Recall that "beating the market" is very hard and that an index fund is generally an astonishingly good investment, all things considered.)

It will come back, though. It will come back when those who remember how we got here are flushed out of the system and the people of 2040 or 2050 make the same damn mistake and fall into the credit bubble trap again, as the balance of the workforce tilts away from those who are at least 20 today. But that's probably not soon enough for the students of today.