Chestnuts, Jack Frost and Wall Street's Spring Bonuses

A man walks down Wall Street outside the New York Stock Exchange in this Feb. 23, 2009 file photo in New York. (Mario Tama/Getty Images)

As we ring out what has been a pretty lousy year for most of us, Wall Streeters are all aglow—thoughts turning to sugar-plum fairies dancing in their brains, bearing bundles of spring bonuses—while stepping around agitated demonstrators who Occupy but a tiny part of their head space.

While Wall Street bonuses may be down somewhat this year, the billion-dollar payday for America's 1% is seen as an insult to most Americans who still feel the sting of their tax dollars lining the pockets of the very people who created, or at least mightily contributed to, the 2008 meltdown.

Perhaps in this season's spirit of giving, in an effort to change the dynamic, we might create a new paradigm which puts the welfare of Main Street in the middle of the bonus equation rather than keeping it as little more than a Park Avenue holiday party punchline.

For example, since the bailout, while Fannie Mae and Freddie Mac combined lost over $121 billion, and received about $94 billion MORE in taxpayer "bailout" funding, their top six executives received $35 million in compensation, most of it in the form of bonuses. Fannie's CEO alone received more than $9 million over the past two years.

[Related article: I'm a One Percenter Who's Pre-Occupied with Wall Street]

Mario Tama/Getty Images

A man walks down Wall Street outside the New... View Full Size

Mario Tama/Getty Images

A man walks down Wall Street outside the New York Stock Exchange in this Feb. 23, 2009 file photo in New York.

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The House Financial Services Committee recently approved a bill by a 52 to 4 vote that would limit executive pay at Fannie and Freddie. It's about damn time. But wait, there's more.

Gigantic bonuses that quickly follow taxpayer bailouts are not only bad PR, they are emblematic of the mentality that gave rise to Occupy Wall Street. We would be well advised not underestimate the backlash, which picked up steam this week in federal court as well as in Zuccotti park a few blocks away. A Federal District Court judge in New York vacated a proposed settlement between the Securities and Exchange Commission and Citigroup that involved a mortgage securitization in 2007. The Court said that the settlement, which of course permitted Citigroup to neither admit nor deny any wrongdoing, was "neither fair, nor adequate, nor in the public interest."

Irrespective of the legal niceties involved, in his ruling the judge managed to aptly summarize the feeling of so many Americans that while Wall Street has not really paid for the havoc it contributed to, it's still getting paid very well—that's why it's not fair. Big bonuses are the insult added to the injury.

The answer isn't as simple as ending the bonus system or shutting down Wall Street. Unfortunately, as economic disparity increases and the only responses from Wall Street are more whistling in the dark and business as usual, scrapping the whole system will continue to be the knee-jerk response from Main Street.

The answer, however, may lie in simple customer—and consumer—advocacy. The tradition of large bonuses on Wall Street isn't the problem. People get bonuses when they have a good year—and they should. The issue is the definition of a "good year."

For the most part, these bonuses are entirely dependent on how much money the firm makes and how much money the individual in question contributed to the firm's bottom line. The MBA who comes up with the riskiest credit default swap generates huge fees that benefit the firm, but might well destroy its customers. In fact, it may harm many individual consumers who would otherwise seem to be unconnected to high finance, as we saw with mortgage-backed securities that contributed to the current housing and foreclosure crises.