Goldman Sachs, Morgan Stanley and JPMorgan Chase's investment bank, survivors of the worst financial crisis since the Great Depression, are set to pay record bonuses this year.

The firms – the three biggest banks to exit the Troubled Asset Relief Programme (Tarp) in the US – will hand out $29.7bn in bonuses, according to analysts' estimates. That's up 60% from last year and more than the previous high of $26.8bn in 2007. The money, split among 119,000 employees, equals $250,400 each, almost five times the $50,303 median household income in the US last year, data compiled by Bloomberg show.

The three will award more in stock and defer more cash payments under pressure from regulators to tie pay to long-term results, compensation experts said. They may still face public wrath over the size of bonuses after the US government injected capital into all the major financial institutions following Lehman Brothers' collapse in September 2008.

"Wall Street is beginning to resemble Rhett Butler in Gone With the Wind: 'Frankly, my dear, I don't give a damn'," said Paul Hodgson, a senior research associate on compensation at the Maine-based Corporate Library. "It doesn't seem as if even political threat, disastrous PR, envy, rising unemployment and home repossessions are enough to get any of these people to refuse the bonuses they have 'earned'."

Bonuses for employees in fixed income will likely jump the most, 40% to 45%, while employees in asset management may see no growth in their year-end bonuses, according to a report from Options Group, an executive search and compensation consultant firm.

Average bonuses for employees at financial firms worldwide will rise 35% to 40% this year, according to the annual report. They will still remain below 2007 levels after dropping an average of 40% to 45% last year, the report said.

Managing directors in high-yield credit sales are expected to see some of the largest average increases in bonuses, a 50% jump to a range of $1.3m to $1.7m. The bonuses of directors in commodity sales units may also climb 50% to a range of $650,000 to $850,000, the report said. Managing directors in commodities trading will receive the largest bonuses, an average of $4m to $6m each.

Morgan Stanley is offering a larger portion of bonuses in stock and instituting so-called clawback clauses to tie incentive pay to risk, the report said. JPMorgan and UBS are also raising base salaries for some employees to reduce the share of bonuses in total pay.

"Wall Street is all about creating wealth, and when banks start making money again, they have to pay their people," said Michael Karp, co-founder of Options Group. "But because there's so much public scrutiny, people will be very sensitive in terms of putting caps on some of these cash figures, and you'll see a lot more in stock."

Securities firms typically use slightly less than half of their revenue to pay salaries, benefits and bonuses, a percentage that is adjusted throughout the year. In the first nine months, Goldman Sachs, Morgan Stanley, and JPMorgan's investment bank told their shareholders that they set aside $36.4bn for compensation, up 27% from the same period a year earlier.

The three New York-based firms will likely set aside $49.5bn for compensation for the full year, according to estimates from David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller in New York. That's up from $30.9bn last year and $44.7bn in 2007.

The rise in compensation is led by Goldman Sachs, which had record profit in the second quarter. Its compensation expense is expected to more than double from last year to $21.9bn, or about $691,000 per employee, according to Trone's estimates. The expense at JPMorgan's investment bank is expected to jump 55% to $12bn, about $482,400 for each employee, while Morgan Stanley's compensation cost will rise 27% to $15.6bn, or $252,000.

More than a third of Wall Street finance professionals expect their bonuses to increase for 2009, according to a survey by eFinancialCareers.com, a job-search website specialising in the financial industry. Of the 1,074 people who responded to an email poll in September, 36% said they're anticipating a bigger annual payout and 11% said it will jump by at least half.

Wall Street is behaving like, "We made it through the storm, and now it's back to doing things we know how to do in our comfortable environment", said Mark Borges, compensation consultant at Compensia. "It runs counter to the things you're hearing out of the administration about how things have to change."

The US Federal Reserve said last month it will review the 28 largest banks to ensure that compensation doesn't create incentives for the kinds of risky investments that brought the global financial system to the edge of collapse. It also offered guidelines on tying pay to risk management.

Lloyd Blankfein, Jamie Dimon and John Mack, the chief executives of Goldman Sachs, JPMorgan and Morgan Stanley, were summoned to the Federal Reserve Bank of New York this month by its president, William Dudley, and told they had to follow the new rules. Blankfein set a Wall Street pay record in 2007 when he was awarded a $67.9m bonus on top of his $600,000 salary. He went without a bonus last year after the firm reported its first quarterly loss and accepted financial support from the government. Other bank CEOs, including Citigroup's Vikram Pandit and Morgan Stanley's Mack, also didn't take bonuses in 2008.

Kenneth Feinberg, the Obama administration's special master on pay, ordered pay cuts last month averaging 50% for top executives at seven taxpayer-rescued companies and will rule on the pay structures of the 26th to 100th highest-paid employees at those firms by the end of the year. Feinberg's rulings are "making their way into the hallways of non-financial companies", even if they aren't likely to influence pay practices at private equity firms or hedge funds, she said.

"The big firms are going to need to be very creative now, because of the populist sentiment," Peter Weinberg, a founder of Perella Weinberg Partners, said last week. "It is very, very intense; it is bitter, and I understand it." (Bloomberg)