I tend to take the "there was too much banking going on" as more a statement "there was a lot of banking going on because of cheap credit etc, that would not survive a downturn". In the same way that a housing boom would likely to increase the number of real estate agents trying to sell homes, the availability of cheap credit meant a rapid expansion in market activity, which in turn required more staff. When things cool down however, all those real estate agents/bankers start to experience job cuts. Of course, that is just the way I interpreted the statement, which admittedly does seem to be rather sweeping.
Along the same lines, I guess I think that the justification for TARP varies according to what you define as banking. There is not as much cheap credit being extended, but then, the last few years have been an anomaly, and I think people have to realise that they should be treated as such... all the commentary I've been reading so far seems to suggest that somehow all these bailout plans can whip us back to the golden times of 2005, when regular joe people will easily and painlessly average a 20% return on their investments year after year... when, to my mind, that is patently, nonsense.
Finally, I have no doubt that IT and other industries will experience a downward trend in their rates for the immediate future, as more people compete for less jobs. The point I think that the (opinion) piece was making, is that those industries that were the MOST overinflated will experience the most decline, similar to how the most overcooked housing markets are likely to witness the greatest slumps.
To me, the interesting element was the attempt to decide just HOW overcooked the finance salaries have been, in comparison to their relative historical proportions.