Will bank bonuses be squished?
When the Treasury said yesterday it was consulting on how to force the disclosure of bumper pay awards by banks with large UK operations, this was hailed as some kind of surprise.
In fact, if there was a surprise, it would be why the launch of the consultation has taken so long - since the Treasury promised to do this back in early February, when it reached its Project Merlin deal with the UK's biggest banks on lending to business.
Back then, it reached an agreement with the UK's banks for them to voluntarily publish the pay details of the five highest paid executives below board level, which they duly did earlier this year.
But the relevant Treasury statement also said:
"The Government will consult with a view to introducing similar disclosures on a mandatory basis for all large banks from 2012 onwards, but go further and consult on the basis that the pay of the eight highest paid 'senior executive officers' - in addition to those Executive Directors' salaries already disclosed - ought to be published annually."
At the time, the Treasury told me this would apply to overseas banks with large UK operations - such as Goldman Sachs, JP Morgan and UBS. And so it has proved.
Given that the Treasury says the plan is to elicit this pay information in respect of the banks' financial performance this year (and every year), the consultation is not going to last terribly long - since the expectation would be that the banks would tell us what their star performers take home in March.
I can tell you that the non-executives of the big banks are filled with trepidation about all this.
Those I talk to recognise that the banks have done themselves terrible reputational damage by failing to impose a moratorium on big payouts since the crash of 2007-8.
And they also fear, as the threat of the UK entering a second recession looms, that their banks' brands could suffer really severe damage if they're seen to be handing out massive remuneration rewards, while most of the UK is experiencing the worst squeeze on living standards since the 1930s.
But up to now, they've found it very difficult to counter the claims of their executives that if they don't hold their noses and pay out top dollar to top bankers, those top bankers will move to greener lusher financial pastures.
You would think, perhaps, that their ability to enforce pay packages that have just six zeroes after the positive number, rather than seven, would be helped by the instruction from the Governor of the Bank of England and by the Chancellor that they should build up their capital buffers - as protection against a possible euro shock - by paying out less in dividends and bonuses.
And to an extent that's right.
But actually this is no constraint on pay for the smart banker. So long as all the bonuses and performance rewards are paid in shares, rather than cash, the capital buffers of a bank are actually augmented by handing out massive rewards to employees.
Here's the thing: when a bank rewards its staff in cash, it is depleting capital reserves available to absorb losses; but when it hands out gazillions in shares, those shares become part of the capital reserves whose purpose it is to ensure the losses don't eat into our deposits and savings.
To be clear, shares aren't free money. When shares are handed to executives in this way, there is a transfer of wealth from shareholders to employees.
But in recent years, the shareholders have been hopeless at protecting their own interests. So why not keep the bankers' party going by fuelling it with share payments, rather than cash payments (actually to an extent this has already been happening)?
But if they did this, would banks protect themselves from the charge that they've never properly paid the price for the pain they've imposed on taxpayers and most households as a result of their role in causing our economic woes? Would lustre be added to the brands of Barclays, RBS, Lloyds and HSBC?
Err, probably not.
But, as it happens, the non-executives and chairs of our banks have been sent an instruction of much greater significance than the semi-ordinance from Mervyn King and George Osborne.
It is a letter from the Association of British Insurers, which even in these days of hedge funds and sovereign wealth funds, still speaks for an important group of the banks' biggest owners.
Here is the only bit of the letter that really matters:
"It is our members' view that it can no longer be business as usual for this remuneration round. They expect to see significantly lower bonus pools and individual rewards given the current market circumstances".
So banks' boards have been told. It will be fascinating to see who has more sway - the executives who run the business, or the shareholders who own it?