You heard that right. There's no recession for Goldman Sachs (NYSE:GS).

Goldman -- fresh off of repaying taxpayers $10 billion in TARP funds -- might pay its employees the biggest bonus payouts in history this year, according to Guardian.

Yep -- bigger than 2007, the peak of the leveraged wealth boom, and far bigger than anything during the dot-com bubble, when bankers were regarded as deities in suits.

It's good to be Goldman
Over the past few years, here's how much the average Goldmanite earned:


Average Compensation Per Employee











Source: Company filings, author's calculations.

Paying record bonuses might seem thoroughly ridiculous after Wall Street nearly exploded a few months ago. But, here's the thing: Wall Street used to be a crowded place, with five major stand-alone investment banks (Bear Stearns, Lehman Brothers, Morgan Stanley (NYSE:MS), Merrill Lynch, and Goldman). Today, there are really only two left: Morgan Stanley, and Goldman Sachs.

The result has been a drastic reduction in competition, which has sent survivors' profits through the roof. Last quarter, for example, Goldman beat earnings expectations by 100% after revenue from its fixed income, currency, and commodities division surged 109%. Sure enough, Guardian reports Goldman's record bonuses correspond with record profits. This is the kind of stuff Darwin would drool over: The weak die, while the adapters get even stronger.

Of course, other banks are in for a bonanza after a good chunk of Wall Street died off last year. JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C) all have segments that are doing quite well thanks to less competition. But gains at commercial banks have been offset by outsized credit losses on loans -- a problem Goldman is relatively immune to.

Deja vu all over again
Legitimacy aside, I'm sure many think of the possibility of record bonuses with a sense of, "I'd like it if we could move away from an economy where financiers are paid Croesus-like sums for pushing around pieces of paper. After all, this is the same type of behavior that got us here in the first place."

So what's the answer, Fools? Should Goldman be praised for thriving in this environment? Regulated into the ground to prevent another meltdown? Left alone to pay its bankers whatever it wants? I'll leave the answer up to you. Feel free to share you thoughts in the comment section below.

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Fool contributor Morgan Housel doesn't own shares of any of the companies mentioned in this article. The Fool has a disclosure policy.