In a perfect world yes, agreed. However, in a perfect world the current phuck-up would not have happened, so, ... welcome to the real world. In the real world, it will not simply be all the "inefficient bodies" (as you put it) that get fired. It will be many of the junior workers and many of the ones not super chummy with their boss, etc, etc. Far from an optimal solution. All short term gain - long term pain.
Banking/investment industry does not produce anything in general. It is ideally meant to be a luxury service within commerce, not the cornerstone of it. Once it gets beyond 10% of the nation's overall economy, there is a serious problem. In the US, Banking/Investment/Financial Services is over 30% of the economy.
Just curious, what purpose did those 50,000 employees served in 07 that now they are not needed in 08. The smart thing would have been never to have hired the 50K employees to begin with.