Wall Street isn’t bowing to caps on pay

April 24, 2013, 6:06 PM UTC

FORTUNE — Regulators overseeing America’s banks may be patting themselves on the back for reining in the kind of lavish bonuses critics say almost destroyed our financial system, but little has changed in the amount Wall Street pays.

Seven large U.S. financial-services firms, including Capital One Financial (COF), Discover Financial (DFS), and PNC Financial Services Group (PNC), have reduced maximum bonuses for executives who beat their performance targets, The Wall Street Journal reported this week. The change comes as many of the firms bow to pressures from the Federal Reserve, which since the financial crisis has urged banks to cap bonuses where they may encourage executives to take on too much risk.

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Bonuses certainly aren’t what they used to be before the crisis, but it still pays to be on Wall Street — at least for those who’ve held onto their jobs. In 2012, the average cash bonus in New York rose by about 9% to $121,000, New York State comptroller Thomas P. DiNapoli said in February. This year, cash bonuses are forecast to rise by roughly 8% to $20 billion, although that’s still down from 2010, when bonuses totaled $22.8 billion.

Nonetheless, average pay packages for securities industry employees were $362,900 in 2011, almost unchanged from 2010. Base salaries have risen. And rather than shelling out bonuses like in 2006, banks have been rewarding employees with more stock and other long-term compensation, efforts some say discourage outsize risk-taking and encourage employees to care about the long-term health of their institutions.

In a way, the big pay packages seem justified. Wall Street has been shedding jobs to cut costs as firms face heavier regulations amid a weak economic recovery. Wrestling with tougher times, firms see it as only natural to keep profits up by luring the best and the brightest from other firms. And big pay certainly helps.

But if we compare Wall Street pay with the rest of the private sector, the gap is significant. Compensation in the securities industry grew at an average annual rate of 8.7% between 2009 and 2011 — outpacing the 5.3% growth across the private sector, according to the comptroller.

If regulators really want to protect the financial system, look not just at bankers and traders but also the board of directors at America’s biggest banks. As The New York Times highlighted recently, compensation of directors since the financial crisis has continued to rise even as bonuses at the banks they oversee shrivel. At Goldman Sachs (GS), for instance, the average annual compensation for a director was $488,709 in 2011, up more than 50% from 2008.

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Just as compensation of bank employees far exceeds the private sector, the same holds true when it comes to their respective boards of directors. Overall, the average compensation for a director at one of the six biggest banks was $328,655 in 2011, compared with $232,142 at almost 500 publicly traded companies.

And that’s how little has changed on Wall Street.