Should M&A bankers suffer for fixed income's failings?

Some banks seem to be splashing out more cash than they can afford.

Morgan Stanley's compensation ratio rose to 59% last year after it struggled to keep up with the 'Goldman-Sachses' and to compensate for its lack of generosity in 2006. Now Jefferies also appears to be feeling the pain.

The Wall Street Journal reports that the mid-sized US brokerage house is on track for a fourth-quarter loss after allocating handsome bonuses to its investment bankers despite losing money on prop trades and a hedge fund.

Jefferies' woes stem from an unwillingness to cut payouts to its M&A bankers, who did well in 2007, for fear that they might be poached by rivals.

But, as the Financial Times' Peter Thal Larson pointed out yesterday, those same M&A bankers who are being paid well despite this year's losses benefited from the success of fixed income departments during the good times and should therefore be made to suffer now things aren't so good.

Do you agree? Should M&A types be made to feel the pain? Or do they deserve some pleasure after all that hard work?