This is why I am not a investment banker – or the boss of an investment bank.
Most of the time I just read the commentaries on CNN and don’t bother blogging about them. It is a matter that some are interesting and I have blogged about it already and most I just don’t agree with – but this one is very different.
That’s because one of the world’s largest financial institutions, Credit Suisse, just announced that it would pay its bankers up to 80 percent of their 2008 year-end bonuses in the form of what The Wall Street Journal called “an illiquid group of junk bonds, mortgage-backed securities and corporate loans” instead of cash or stock, as had been the norm throughout the industry.
What a brilliant idea! Pay the schmucks with the very toxic assets they sold – even the CEO – now that is poetic justice, even if it is thought up by the very people who advocated the selling of these assets in the first place.
Is it PR? Well obviously it is – but it is a way of getting rid of these assets rather than just trying to sell them off to some other idiot.
CS effectively told its bankers that this year, instead of getting paid money, they would get paid in kind — the same kind of over-leveraged, securitized paper that caused much of the crisis in the first place.
This is a fabulous idea. Not only does it help the bank’s balance sheet by moving these toxic assets off their books and onto those of its employees, but it serves as an unambiguous reminder to those whose job it is to create and sell financial products in the markets that this isn’t a game of smoke and mirrors.
Will it make those who think up these things think any differently in the future – well, how would you like to be paid something of zero value for a bonus come Christmas time?
All I can say is well done to them – this could lead to a trend of making people think before coming up with an obviously stupid and corrupt idea.
I wonder if their partners will make them sleep on the couch when they see the bonus pay packet?