Lost in the hubbub over Goldman Sachs' (GS) blowout third-quarter earnings and ever rising bonus pool was the fact that the firm actually reduced the percentage of earnings it devoted to pay. Goldman typically devotes about half its net earnings to pay and benefits, but the past quarter saw that ratio fall to 43 percent. Super strong earnings will allow banks to do that. 

The move indicates, to a degree, the bank is very sensitive to the idea of soaring bonuses; bonuses could have been even higher. The bank can't wait for Main Street to get its groove back and get on its feet. 

Despite the lower percentage set aside, the bank has set aside $16.7 billion for pay and benefits and will likely top the record $20 billion set in 2007.  

Reuters says the big winners will be executives such as those in FICC, such as David Heller, Harvey Schwartz, Edward Eisler and Pablo Salame, who all oversee sales and trading units. But all this is politically sensitive and many assume Goldman Sachs will get creative with the PR around the payouts. The Goldman Sachs Foundation, its not-for-profit charity, may be in for a big contribution. 

We'll see how they handle this tricky issue. 

In the meantime, we can turn to Bloomberg columnist David Pauley for a fun look at some options Goldman Sachs CEO Lloyd Blankfein has: 

1. Pay the $20 plus billion in salaries and junk the evil bonus system.

2. Send the cash to the IRS, stipulating that all 308 million Americans get a one-time $65 payout. A nice thank you for extending that $10 billion TARP payment, the AIG payout and so on.

3. Declaring a massive one-time dividend to shareholders. Which haven't poorly at all.

4. Buy a commercial bank. So it would be such a bank in reality, and not just according to its new charter.

5. All of the above.

"None of the above will happen, of course. Blankfein will justify the huge bonuses by citing huge profits and Goldman's long-standing bonus system." But the PR is bound to change! - Jim