I won't pretend to claim expertise in the debate about whether the feds should regulate bankers' compensation. But the devil, it seems, is in the details. I could easily imagine rules that are excessive intrusions -- but I could just as easily imagine acceptable ones too.
Regardless, though, the underlying theory of imposing new rules makes perfect sense.
Markets don't handle externalities all that well. For instance, factories that spit out mercury into lakes don't bear those costs in a truly "free" market -- we the drinking public do. Regulations and dread tort law are the ways to force factories to internalize those costs. Without regulations, it would be completely rational for factories to dump mercury if it makes production more efficient.
That's essentially how Wall Street compensation structures should be thought of -- as pollutants spilling out, poisoning the general public. The incentives for short-term gains with no regard for the long term hurt a lot of people. And so it's completely justifiable to push those costs back on Wall Street.
No one's really even considering limiting compensation amounts. (And frankly, I think that concentrations of wealth aren't much better than mercury in the water). The proposals, as I understand them, are about channeling incentives in a more constructive direction.
The ultimate rules may go too far, but this basic idea is a sound one.