The New York Stock Exchange, Wall Street, New York.

The New York Times reported on Sunday that the bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.

Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years. The haul, in cash and stock, will run into many billions of dollars. The Times said Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.

Goldman Sachs, JPMorgan and other big Wall Street banks are awarding multi-million dollar bonuses to the same financiers who pushed the nation to the brink of financial ruin. President Obama voices outrage but fails to stem the abuse. Wall Street leaders argue those bonuses were earned, much like jewel thieves refer to a big heist snatched from an impenetrable safe.

Wall Street has kept its mischief legal by salting the pockets of politicians running for Congress and President, and by making certain that key policymakers at Treasury and Federal Reserve are faithful Goldman Sachs alumni.

Those bonuses were made possible by billions in taxpayer financed TARP (Troubled Assets Relief Program for financial industry bailouts) funds and nearly two trillion in loans from the Federal Reserve and through the FDIC.

Those funds helped Wall Street financial institutions, deemed too big to fail, survive their own misdeeds. Bankers used this cash, much obtained at near zero interest rates, not to make loans for homes and businesses but to trade derivatives, currency futures and other exotic contracts.

The fallout is a dramatic drop in the interest paid by banks for private capital too. Retirees suddenly found CDs that once paid four or five percent interest, now pay two or three percent.

Essentially, Treasury and chiefs Timothy Geithner and Ben Bernanke are taxing grandma to subsidize Goldman Sachs and finance huge big paydays for bankers who hatched the greatest financial calamity in 80 years.

Meanwhile Goldman Sachs, JPMorgan and others continued their pay cartel salaries to everyone from top executives to the mailroom clerk.

It is not surprising that their CEOs, who get the biggest paydays, claim huge bonuses are essential for rewarding talent. When my students grade themselves, they reach self-serving conclusions too.

Sadly, Obama, Geithner and Bernanke could halt this madness but don’t.

These banks serve as primary dealers in U.S. Treasury securities—a very profitable business—and depend on Fed lines of credit to sustain business. Status as primary securities dealers and access to Fed financing could be withdrawn from banks that refuse to establish sane compensation practices going forward.

Cynically, Wall Street has contributed mightily to the campaigns of Senate and House committee members who make the rules and President Obama’s election campaign.

Goldman Sachs and others paid Obama’s senior economic advisor Lawrence Summers millions in speaking and consulting fees the year between being fired as President of Harvard and joining the Obama Administration.

Americans should expect better but won’t get it as long as Barack Obama has the audacity to hope voters will look the other way.

Dr. Christina Romer, Chair of the White House Council of Economic Advisers said on ABC Sunday: “We've provided extraordinary aid, and the -- and the idea that, as the financial system heals, they just go back to business as usual is -- is simply outrageous.”

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