All of America now can rest easy: Merrill Lynch chief John Thain won’t get his $10 million bonus after all, having succumbed to browbeating calls for fiscal restraint.

Upside: Maybe we can avoid another round of outrage from Congressmen and other whiners who are shocked—shocked!—that anyone on Wall Street could get paid so handsomely, much less actually deserve it.

Downside: Thain gets screwed out of what rightfully was his, for he did deserve a bonus, for myriad reasons. Same goes, arguably, for Morgan Stanley chief John Mack and the seven senior execs at Goldman Sachs, all of whom will forgo any year-end payout. Worse, this whole kerfuffle may embolden the self-righteous, sanctimonious mob that now decries wealth creation and the profit motive. Where were all these populist prudes when the stock market was rising 63% from 2003 through October 2007? Answer: They were fat and happy and counting their money.

It’s one thing when a greedy fatcat utterly fails his shareholders, guts his company and walks away with an undeserved windfall. Two lamentable examples: the $42 million parachute for Charles Prince, who flopped at integrating the smokestacks of Citigroup and let it plunge head-first into the subprime debacle; and the $160 million sendoff for Stanley O’Neal, accumulated over an entire career at Merrill Lynch before he looked the other way while his traders loaded up on wild-eyed risk.

John Thain, by contrast, was brought in only a year ago to fix the Merrill mess, and he worked 24/7 to do it. Troubled rivals Lehman Brothers and Bear Stearns dilly-dallied—rather than swallow their pride and sell themselves to healthier partners—and they went belly-up, pretty much. Thain, by contrast, handed Merrill over to Bank of America. Since mid-September, just before that deal popped, the stock price of Citigroup is down 43% and Goldman is down 46%—but Merrill shares are up 5%.

That’s a gain of more than $1 billion in market cap for that floundering firm, so a $10 million bonus barely is a rounding error. Ten million bucks, in fact, is equivalent to how much revenue Merrill collects in just 20 minutes, based on a 40-hour work-week.

'Funny Business' with Jane Wells:

Yet now we’re gonna take pleasure in stiffing John Thain? Sounds a little punitive to me.

This CEO backlash, moreover, could spread far beyond Wall Street to infect the entire U.S. economy. Yet, last year, median pay rose only 1.3% and bonuses fell by 5% for the CEOs of more than 230 multibillion-dollar companies, even as their stock prices rose an average of 7.5%, says the research firm Equilar. At financial giants the median pay package fell 20% in 2007, and Wall Street now braces for haircuts of 40% to 70%.