Should Obama regulate Wall Street pay?

Yes, he can and yes, he should. There is no doubt in my mind that people go to Wall Street for the money. They learn the rules of the game and they play hard to get the most money in the shortest time. As Wall Street pay has grown -- the average Wall Street bonus climbed 19-fold from about $10,000 in 1985 to almost $190,000 in 2007 -- more and more of the most talented people in the world have flocked there, and away from other parts of the work world.

But the opportunity cost of taking talent from building more energy efficient vehicles or finding a cure for cancer and putting it in a hedge fund is not the biggest problem with Wall Street pay. It's that Wall Street's pay plan leads bankers to make the biggest bets in the shortest period of time so they can win the lion's share of the bonus pool. When those big deals went bad, Wall Street's bankers got to keep their money and stick the cost on taxpayers.