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  1. #1
    Senior Membrane spirilis's Avatar
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    Default Credit Suisse to pay executive bonuses with subprime debt

    Bloomberg.com: News
    Credit Suisse Group AG’s investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees’ year-end bonuses.

    The bank will use leveraged loans and commercial mortgage- backed debt, some of the securities blamed for generating the worst financial crisis since the Great Depression, to fund executive compensation packages, people familiar with the matter said. The new policy applies only to managing directors and directors, the two most senior ranks at the Zurich-based company, according to a memo sent to employees today.

    “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 the memo.

    The securities will be placed into a so-called Partner Asset Facility, and affected employees at the bank, Switzerland’s second biggest, will be given stakes in the facility as part of their pay. Bonuses will take the first hit should the securities decline further in value.

    That's awesome. Why don't American capitalists have a sense of humor like that?
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  2. #2

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    Quote Originally Posted by spirilis View Post
    Bloomberg.com: News



    That's awesome. Why don't American capitalists have a sense of humor like that?
    Some do.

    Like the ones that use deep under-water stock options that won't even vest for 10 years as part of compensation.

    Golden Hand-cuffs, they're called.

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  3. #3
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by ygolo View Post
    Some do.

    Like the ones that use deep under-water stock options that won't even vest for 10 years as part of compensation.

    Golden Hand-cuffs, they're called.
    No no, he's right. Americans could never come up with a plan so ingenious.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  4. #4
    pathwise dependent FDG's Avatar
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    Ahaha, great incentive scheme.
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  5. #5
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    The subprime bonuses might not be worth anything now, but it maintains the principle of lavish executive compensation.

    If they still get a bonus even when they make fatal mistakes, think how big their bonus will be when they rise to a level of being merely incompetent.

    Wish I have a job like that.

  6. #6
    Senior Member creativeRhino's Avatar
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    Brilliant, Wicked SOH and appropriate.


    Well it beats the crazy double standard of "privatised profit" and "socialized losses" (ie "don't tax me high or regulate me and my profit machine", but then when things go wrong they cry for "help me. If you don't we'll all be ruined".)

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    As funny as it is, it's actually quite a brilliant move by which the bank can quickly unload its balance sheet.

    And if what those employees did was actually a good thing, those securities which were valued at so little and used as bonus compensation will grow in value, and everyone is justly compensated.

    In fact, I believe that should be the procedure from now on in times of crisis: if you're having solvency issues, just unload all of the garbage securities onto employees as forms of compensation.
    I am an ENTJ. I hate political correctness but love smart people ^_^

  8. #8
    It's always something... PuddleRiver's Avatar
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    AIG's paying their execs 4 millon dollars in "incentive pay".

    I don't think it's funny, I just don't quite know what to do with my anger right now.

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