Senior executives at Goldman Sachs Group (GS) have decided to forego their 2008 bonuses, according to various media reports Monday morning, in an effort to to what many industry observers have said was needed in the face of a historic crisis -- preserve capital. The Wall Street Journal reported on the decision, which was verified by a company spokesman without further comment; the executives asked the board's compensation committee to grant them no bonuses, and the request was approved on Sunday, the Journal said. HousingWire has been hearing of the so-called "Goldman effect" in chatter for the past few weeks -- meaning that if execs at Goldman nixed bonus payouts for themselves, pretty much every other investment and large commercial banking operation would need to do the same. The reason: Goldman has been, well, golden. The former investment bank, now a commercial bank, had avoided much of the mortgage-led pitfalls that have eaten away or destroyed their primary competitors. And if CEO Lloyd Blankfein ain't getting paid, how can anyone in the leadership seats at Citigroup Inc. (C), Merrill Lynch & Co. (MER), and others look shareholders in the eye and take a bonus check? The answer, sources tell HW, is that they won't have to. "Morgan Stanley, JP Morgan, all of them are going to have to nix bonuses," said one source, an investment banker that asked not to be identified in this story. "Given all that's happened, and Goldman's move, they don't have any other choice." Don't cry too hard to Blankfein and his colleagues; the man still has his $600,000 salary, and he made a record $68.5 million in cash and stock during 2007. And his decision may not have been made of altruistic means, given the pressure put on banking executives in recent weeks. Goldman is among the initial nine financial companies that received a combined $125 billion in government capital, setting off an uproar over executive compensation. “I am deeply disappointed that a number of financial institutions are distorting the legislation that Congress passed at the President’s request to respond to the credit crisis by making funds available for increased lending,” House Financial Services Committee chairman Barney Frank (D-MA) said at the end of October (see coverage). “Any use of the funds for any purpose other than lending — for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. — is a violation of the terms of the Act.” Henry Waxman (D-CA), chairman of the House Committee on Oversight and Government Reform, also expressed concern over executive compensation last month, requesting full compensation details from each of the banks, including all employees paid more than $500,000 in total compensation during each of the past two years. “Some experts have suggested that a significant percentage of this compensation could come in year-end bonuses and that the size of the bonuses will be significantly enhanced as a result of the infusion of taxpayer funds,” he wrote in a letter to the nine firms receiving the first round of taxpayer funds. It seems clear that Goldman's top execs are intent on dampening criticism, but their bonus pool is only one part of the issue; there are still employee bonuses to be paid, as well, and most traders earn more from their bonuses than they do from their salaries. Although, here too, many outside of Wall Street are having trouble finding sympathy for a trader that takes home an average salary of $250,000, according to statistics reported by the Journal. Write to Paul Jackson at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.