Three top Wall Street financial firms, Morgan Stanley, JP Morgan Chase and Goldman Sachs, plan to cut the bonuses offered to their top executives, as part of an effort to show that they’re willing to cut back on what the White House recently called “obscene” compensation. For 2009, the three banks will award themselves just $39.9 billion, down from $44.7 billion in 2007.

According to Bloomberg, “even with lower amounts allocated in the fourth quarter, the compensation costs are enough to pay each employee at the three firms $336,843, more than six times the U.S. median household income of $50,303 in 2008.”

Some top execs, including outgoing Morgan Stanley CEO John Mack, aren’t getting any bonuses. Mack’s replacement, James Gorman, will receive deferred stock grants worth $8.6 million. Bankers have defended using stock grants as bonuses, saying it keeps their interests aligned with those of shareholders. However, such arguments have tended to fall flat in Washington.

According to Bloomberg:

“There’s no question that Wall Street got the message from Washington,” said Michael W. Robinson, a senior vice president of Levick Strategic Communications and former head of public affairs at the Securities and Exchange Commission. “But positioning the big banks with big bonuses as the bad guys has played well for politicians, and they are likely going to keep coming back to it. To some extent, banks are just going to have to be prepared for that.”

President Barack Obama called bank bonuses “obscene” for the second time in a week on Jan. 21. The next day, Democratic Representative Andre Carson called the industry’s practices “reckless” during a House Financial Services Committee hearing on compensation. Banks are disclosing stock awards handed out to top executives in the next few weeks.

The CFO of Goldman Sachs said the company tried to “balance the needs of the public versus being fair to our people” and that he doesn’t expect many employees to quit in protest over the reduced bonuses. That’s a relief. There are enough unemployed people out there without having to add a group of angry bankers who are down to their last $336,843.

Wall Street Firms Cut Compensation, `Buckling’ to Pressure From Washington [Bloomberg]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.