It is no surprise that Wall Street is hiring. As long as we have an enormous amount of debt of all sorts outstanding in the economy, there will be an enormous amount of work for Wall Street to do. Even if there are no IPOs or takeovers, there is plenty of opportunity for managing portfolios, capturing spreads and all the rest.
Or, another way to look at it is that the maximum income potentially available to Wall Street is the total interest flow on the outstanding debt. Any time Wall Street finds a way to intermediate between borrowers and lenders, it can capture a piece of that income. Unless the income flow diminishes, Wall Street will not shrink.
What the taxpayer should, however, be upset about is how much of the profits from these operations are being sucked up by Wall Street pay and dividends, since much of the current profitability is driven by the steep yield curve engineered by the Federal Reserve. We’d all be a lot better off if more of that money went to reducing the amount of outstanding debt or at least refinancing it to a lower interest rate.