So, Lloyd Blankfein has decided that Goldman Sachs’ top management will forgo their yearly bonuses this year, bringing the “will they or won’t they” argument to a close. Now the others are expected to follow suit.

Smooth move, Lloyd: Please Washington by taking a hit at the top; let the “little people” take home their bonuses; and Wall Street and Main Street are finally reconciled.

Goldman’s “goodwill” move has prompted executives at UK-based, Barclays, PLC, Germany’s Deutschbank AG and Switzerland’s UBS AG to abandon bonuses for senior managers. But executives at Morgan Stanley, Citigroup and AIG aren’t lining up to fall on their swords. In fact, John Mack and Brady Dougan are conspicuously silent on the matter while Vikram Pandit has decided to eliminate the bonus question altogether by slashing jobs.

Everybody should take home a bonus this year, even if I’m not. It’s kind of crazy for Americans in general to expect that, just because they’re hurting, everyone else should hurt too. Congress can mask their little witch hunt as an effort to curtail corporate excess but, seriously, no one went after hedge funds at the peak of their profitability. Nobody targeted Exxon when they announced that they made over $14 billion in the third quarter of this year. So, now, making money is a problem?

Absurd.

Yes, exposure to toxic mortgage-backed securities ruined the global economy. And Wall Street should take the blame. But what is the Street supposed to do: repay investors out of the money that would have gone to bonuses? That’s not free-market capitalism. Moreover, nobody on either side of the Atlantic has mentioned that as an option.

Every economy in the world will have to limp through this recession. And — I’ll admit — some people need to go down for this. But making everyone poor won’t do anyone any good. Besides, if Blankfein — who made more than $50 million in 2007 — is an appropriate model for the typical Wall Street manager, taking a haircut in a bad year won’t hurt those at the top anyway.

Her research division had nothing to do with the high leverage that Morgan took on or its investments in mortgage-backed securities. Her division has continued to make solid, consistent profits for Morgan Stanley.

So if Rep. Barney Frank and Sen. Bernie Sanders are talking about cutting the bonuses of EVERY employee at every financial institution that has received part of the the bailout money I couldn’t be more opposed to the idea. Is it fair to penalize thousands of people for actions they had nothing to do with? And it is more than likely that these employees will be penalized in some way (either by losing their job or receiving less compensation) by their employer without the hand of government getting involved (I get into this later).

Check out this interview Bernie Sanders (I-VT) recently did with CNBC. At the 1:56 mark a host chimes in:

“Senator your proposal looks rather punitive and mean spirited…It’s one thing to say to take bonuses away, when you’re getting federal money, from the big brass, that got us into this mess, but you want bonuses deprived of every Wall Street employee…You want the secretary at Goldman Sachs not to get a $30,000 bonus that she could put back into the economy. And she did nothing wrong.”

The comments made by Barney Frank (D-Mass) have been kind of vague as to whether they would go after executive pay or the pay of every Wall Street employee. The one below calls incentive structure on Wall Street “perverse.”

“The incentive structure of the finance industry should be looked at closely,” says Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. He plans to hold hearings on Nov. 12 and Nov. 18 and says he will raise the subject of bonuses. “It’s a perverse structure if it’s heads I win and tails I break even.”

WTF? What is he talking about? I’ll admit that I’m not a big fan of Frank. It’s kind of scary to me that he’s the chairman of such a powerful House committee. But he’s also a total hypocrite. In the past election cycle, he received more political contributions from the securities industry ($192,000) than any other industry. He is doing the typical play we see in Washington all the time – denounce something in public, but support it behind the scenes.

But in the end, I think all of this is a moot point because these firms are already going through major cost cutting by laying off thousands of workers (Morgan Stanley announced job cuts today) and bonus payouts will likely follow. When Morgan had a couple of terrible years a few years ago, they erased bonuses for thousands of employees.

I agree with Greg that the negative economic impact on New York would be huge if bonuses were frozen for all Wall Street employees. But I think the companies will be cutting, or reducing, bonuses on their own. And all this talk by Frank, Sanders and other Democrats is nothing but populist bloviating.

If it were my decision, I wouldn’t give a dime to Wall Street to pay for CEO bonuses. But, as we all know, it’s not up to me.

I saw a segment on “The Early Show” this morning that posed this very controversial question to the experts, which made me decide that I really don’t care if these CEOs get their bonuses or how much the bonuses are–the thing I mostly care about is: Where is the money coming from?

Goldman Sachs and Morgan Stanley each have $6.8 billion and $6.4 billion, respectively, set aside for bonuses. However, U.S. taxpayers are saying that these bonuses should be eliminated.

“I may not understand everything, but I do understand common sense, and when you lend money to someone, you don’t want to see them at a new-car dealer the next day,” said Ken Karlson, a 61-year-old Vietnam veteran and freelance marketer in Wheaton, Illinois. “The bailout money shouldn’t have been given to them in the first place.”

On the other hand, Massachusetts Sen. Barney Frank says that none of the money from the bailout will be given to bonuses and that “all of the money is to go into new loans.”

While I don’t feel too strongly about either side on this issue, I think it’s a moot point. Losing a bonus is a much nicer gift than losing your house or losing your job.

Here’s the CBS piece I talked about earlier.

My favorite line in this piece is: “If firms don’t pay out the big bonuses, they’re afraid they might lose the top talent.”

Which leads me to ask: Would it be so bad to lose the people that got us into this mess in the first place?

The Comfort Diner

The reason wasn’t some unresolved resentment toward the colonies, nor do I think it can be attributed entirely to a lack of familiarity with local custom (Yes, tips are much more modest in your country, I wanted to scream, but you’ve got a guidebook – read it!).

It came down to this: Brits knew that they were expected to tip more, but they often didn’t realize why. In Britain, you see, waitstaff are paid a living wage, so tips are just an added perk for great service. In the States, of course, tips are anticipated and factored into wages, allowing restaurants to pay their staff less than minimum wage (to my recollection, it was around $2.50 an hour). So Brits visiting my diner thought a 15 to 20 percent tip was an example of profligate and unnecessary American spending; when in fact their refusal to add gratuity was a direct knock to my salary.

A wholesale elimination of bonuses is kind of like stripping servers of their tips – by doing it, you’re messing with the structure by which they get paid, and as Greg argues, that’s not really fair. Just like tips in the service industry, for many, Wall Street Bonuses are something of a hedge against cyclical instability in the industry and a lack of job security. Taking them away on principle fails to account for how entwined with the salary structure they are.

That said, I think that points to a problem with the structure. Wall Streeters, be they C.E.Os or entry level, choose to take risks (the risk that their job will fall victim to market fluctuations) in the hopes of great reward (the $.5 million – or more – bonus). It turns out, as we all know too well, that they were also gambling with risky financial instruments, to their (and our) great misfortune. Maybe the pay structure on Wall Street shouldn’t be so inherently risky, nor the bonuses so immoderate. And of course, we can’t forget about those at the top who got us into this mess, and to whom bonus should really not be given. Just like when a waitress spills a bottle of wine in your lap or a waiter unapologetically forgets your order — in some cases, a tip should simply be withheld.