Major Wall Street firms are expected to slash annual bonuses for executives an average 50 percent or more, according to senior executives.
The move comes as the big broker-banks begin laying off as much as 15 percent of their workforce due to the economic slowdown.
The expected cuts in bonuses not only reflect sharply lower profits at the financial giants. Congress and New York Attorney General Andrew Cuomo are targeting compensation at big Wall Street firms that have received injections of government capital due to the global credit crisis.
Morgan Stanley is just starting to discuss bonuses, so no firm number is set. But sources there say bonuses will be sharply lower.
Goldman Sachs is planning the biggest cuts in bonuses, primarily because executives there made the most last year. Senior executives are expected to take a 75 percent cut in bonuses, while less senior executives could see a 50 percent cut.
Goldman CEO Llyod Blankfein—who pocketed a bonus of close to $70 million last year—might not take any bonus this year, sources told CNBC.
At JP Morgan Chase , the most successful of the big financial firms, bonuses will be cut 30 to 40 percent.
Goldman, meanwhile, notified roughly 3,200 employees this week that they have been laid off, part of previously reported plans to slash 10 percent of the firm's global work force.
At Merrill Lynch, 10,000 employees could be jettisoned as a result of the merger with Bank of America.
Barclay's purchase of Lehman Brothers' investment banking unit also will mean layoffs.
Morgan Stanley may lay off 15 percent of its workforce due to the lack of merger and acquisitions and initial public offerings.
JPMorgan Chase is also likely to lay off 10 to 15 percent of its workforce.