While the top management of Wall Street banks are being pressured to forego bonuses in light of the companies’ acceptance of billions of dollars in TARP money, traders are being told they will still be getting millions in bonuses – albeit less than they got last year.

“At a partner meeting last Wednesday, I breathed a sigh of relief we were told we would be getting bonuses,” said one Goldman Sachs partner, who has been a trader for the firm for more than 20 years and has helped the firm score record profits and recruit blue-chip pension fund clients, like Calpers.

Despite being in line for a bonus, the trader, like hundreds of others on Wall Street, will be getting a lot less because of the overall poor performance of the firm compared to previous years. Plus, like most traders on the Street, the frustration over the smaller bonuses is compounded because the stock-heavy, mega-bonuses of 2006 and 2007 are now a fraction of what they were.

That’s because the stock of every Wall Street bank have tanked this year – sending the size of the bonuses down with them.

For example, this Goldman partner, who spoke on the condition of anonymity, took home roughly $40 million in bonuses in over the past two years – because he brought in record profits to the firm and shareholders – but has seen that well-earned payday shrink to less than $10 million.

He said he regrets not retiring last year.

Like many Wall Street bulge bank executives, Goldman’s stock-paid bonuses vest over three years – meaning last year’s multi-million dollar bonuses cannot be collected until 2010.

As an employee of the firm they can’t hedge the stock through buying options on it while they wait for it to arrive. So if it takes a dive like it did this last year failing from $234 to $53.39 on Friday, they have no chance to sell it or protect it’s value by buying puts.

This year, the trader had a chance to leave and head a large asset management firm – thus giving him the chance to hedge his Goldman stock and lock in his bonus value. But now even asset management firms are having their own problems so it would have meant the same pay level with even more stress trying to turn their bad investments into good ones. So he’s staying.

Many top-notch traders up and down Wall Street are in the same boat – not happy about seeing the earning power fade but unable to do anything about it except send pleading letters to their congressmen explaining why bonuses are really a form of regular compensation – and that they drive performance.