As far as the payment of bonuses to bankers is concerned, I am a lot less bothered by the thought of someone being able to afford themselves a private ski lodge in Aspen, Colorado than I am by the principle of rewarding failure. The thought that the money I have recently paid in taxes might contribute to paying an ill-deserved bonus to someone whose only noteworthy qualities are in the self-esteem department is a real annoyance. However, the really pernicious thing about city bonuses is that they have incentivised destructive behaviour - behaviour that under a more rational assessment would be considered perverse and ill-judged.
For the heart of the financial system to have been compromised to the extent that is has been over the past two decades almost beggars belief. To argue that to continue to reward failure is somehow justifiable on the grounds that it is necessary to retain and motivate the best people would be laughable if it weren't simultaneously reckless.
There's nothing inherently wrong with paying large rewards - but banks should be absolutely clear as to exactly what it is they are rewarding.