Getting Creative with Wall Street Bonuses

Hey, bankers! Got a bunch illiquid, crappy assets weighing your balance sheet down?

Here's a novel idea: Give them to your employees as a bonus. It's better than nothing, right?

That's Credit Suisse's idea, anyway, and kudos to them for solving two seemingly insurmountable problems with one swift move. Bloomberg reports that Credit Suisse will use $5 billion in illiquid debt to pay its top employee's bonuses this year.

"While the solution we have come up with may not be ideal for everyone, we believe it strikes the appropriate balance among the interests of our employees, shareholders and regulators and helps position us well for 2009," Chief Executive Officer Brady Dougan and Paul Calello, CEO of the investment bank, said in a memo to employees.

Actually, it is ideal for everyone. For employees who might otherwise get zilch, they now at least have the potential for earning money down the road on the leveraged loans and mortgage-backed securities. Remember, it was just a couple of months ago that Hank Paulson and Ben Bernanke managed to convince skeptical lawmakers that buying up this debt was such a great idea they should authorize $700 billion for it!

No matter that the bailout ended up going to bank equity instead (or that Credit Suisse, as a Swiss firm, wouldn't have been eligible anyway). Frustrated Credit Suisse shareholders can now breathe a sigh of relief that its executives found an alternative way to get rid of it.

What's not to like? Bravo to the compensation consultant or whomever it was that came up with this idea. You deserve a bonus!

by Megan Barnett