The five largest investment firms in the United States paid a record US$39 billion (S$56 billion) in bonuses last year, a year when three of the companies suffered the worst quarterly losses in their history and shareholders lost more than US$80 billion because of bad bets in sub-prime mortgages.

The big five - Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns - together awarded US$65.6 billion in compensation and benefits last year to their 186,000 employees.

That meant year-end bonuses, at 60 per cent of the total, exceeded the US$36 billion distributed in 2006, when the industry reported all-time high profits.

Goldman Sachs and Lehman Brothers were the only two of the five powerhouses that did not post a loss during the most recent quarter.

'Merrill Lynch's appalling failure to manage risk destroyed 43 per cent of the firm's value in one year and contributed to a broader crisis of confidence now afflicting the financial markets,' said Mr William Patterson, an executive director of the CtW Investment Group. 'This is a bad year to be paying big bonuses.'

Year-end bonuses paid to Wall Street's 185,687 employees averaged US$211,849, roughly four times the average household income in the US.

'To many people, it will be shocking and questionable,' said Ms Jeanne Branthover, the managing director of Boyden Global Executive Search.

'People in New York, in the world of investment banking, will understand it. It's critical that pay is still there or you're going to lose really good people.'

BLOOMBERG NEWS, LOS ANGELES TIMES

'To many people, it will be shocking. People in the world of investment banking will understand it. It's critical that pay is still there or you're going to lose good people.'

MS BRANTHOVER of Boyden Global, justifying the huge payouts