Former Federal Reserve Vice Chairman Alan Blinder says Wall Street's flawed compensation system hasn't changed.

And, he writes in a Wall Street Journal opinion piece that the onus is on bank directors to bring pay back down to earth.

Wall Street traders and executives are encouraged to take huge risks, because if the risks turn out well, they receive humongous compensation. And if not, they are still paid handsomely.

"Amazingly, despite the devastating losses, these perverse pay incentives remain the rule on Wall Street today, though exceptions are growing," Blinder explains.

"For now, excessive risk-taking is being held in check by rampant fear. But when fear once again gives way to greed, most traders and CEOs will have the bad, old incentives they had before — unless we reform the system."

And how to do that?

"It is tempting to conclude that the U.S. (and other) governments should regulate compensation practices to eliminate, or at least greatly reduce, go-for-broke incentives," Blinder writes.

"But the prospects for success in this domain are slim."

Instead, "fixing compensation should be the responsibility of corporate boards of directors and, in particular, of their compensation committees," Blinder maintains.

"The unhappy (but common) combination of coziness and drowsiness in corporate boardrooms must end."

Many experts agree with Blinder. The limit on bonuses has merely pushed salaries higher, they say.

"The flip side (of that) is then it is more of an entitlement," compensation consultant

David Leach of Strategic Apex Group tells Reuters.