By Rana Foroohar
April 22, 2016

Investors and the public alike have long been calling for new banker pay rules that would hopefully prevent financiers from taking on too much risk in the quest for profit. On Thursday, we got them. But the headlines are in some ways bigger than the news. The truth is that many of the “new” rules are already in place. There’s much bigger work still to be done to make our financial system safer.

The rules released by regulators will force many financial institutions to hold back bonuses for at least four years, to make sure that bankers’ deals are actually creating profit without undue risk. They will also claw back bonuses from those who are taking on too much leverage and risk, the sort of things that led to the crisis of 2008. But the truth is that many of the largest banks have been slowly instituting these rules over the last few years. And their profit margins show it. Big banks like Goldman Sachs, which released its latest quarterly earnings this week, are showing single digit returns rather than the high double digits that characterized the post-crisis era.

Part of this is about the market environment itself. Almost everything is up in the air right now. Historic risk models are less and less relevant. (Old correlations and patterns are changing, and new ones have yet to emerge clearly.) The entire nature of economic recovery in a late-stage capitalist society like the U.S. is being rethought. How much growth is really normal? Why isn’t productivity showing up in the figures? And how much of it might actually just accrue to business owners rather than trickling down into the broader economy? What will China’s slowdown mean politically and economically? These are the questions that big banks and all investors are struggling with right now. Their returns (and their bonuses, which are also somewhat down from peaks) show it.

But there is a bigger issue here. It’s one that rarely gets discussed in political debates over Too Big To Fail (TBTF) banks, which are only part of the risk equation in financial markets. Sure, they sit at the center of the financial system. But there are two other key factors that are making financial markets risky right now, and they won’t be addressed by the new rules.

First, shadow banking – the less regulated sector of the financial markets that includes hedge funds and mutual funds – has taken on much of the risk, and the profit, that used to be held in the TBTF institutions. In a global economy where 30% of sovereign bond yields are negative, they still have every incentive to lever up and take on lots of risks to try and show investors some kind of return. And while those funds aren’t as big as a major Wall Street bank, size isn’t everything – as Lehman Brothers, or Long Term Capital Management, showed.

Second, and perhaps more important in terms of the broader economy, is that non-financial companies still have plenty of reasons to take on risk. They are holding trillions on their balance sheets. At least some of it has gone into risky high-yield debt. What’s more, the Dodd-Frank rules don’t require CEO bonuses to be held back over four years so that shareholders and the public can gauge whether corporate leaders are actually making decisions that pay off over the long haul. Until we reform the current system of corporate compensation (which has led to over half of C-suite pay being dolled out in tax-deductible stock options), we will have a system in which earnings look better on paper than they should. (Add in all that tax-deductible compensation and they go down pretty quickly.) CEOs have incentives to bolster their own pay, rather than growing their firms over the long haul. That’s not the same as creating a financial crisis, but it’s very much a part of the slow growth, fragile recovery story. In fact, you could argue it’s a bigger part right now.

Bottom line: It’s great that those Dodd-Frank comp rules are finally kicking in. But it’s hardly news. And there is still plenty of deeper work to be done to make the financial system safer, and our economy more robust.

Contact us at editors@time.com.

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