08/07/09 Baltimore, Maryland
Here’s a good idea: Credit Suisse has been paying its hotshot bankers with mortgage-backed securities. Since the end of 2008, the Swiss bank has been paying out most of its bonuses with stock — not shares or options of CS, but shares of a fund the bank created that’s composed of its own distressed mortgages and toxic assets.
As the WSJ put it, “This means the performance of bets these bankers were originally involved in structuring will help determine whether their 2008 compensation turns into big money or big losses.” It’s actually a double win for Credit Suisse: Not only does the move insentivise accountablity among its ranks, but the bank is able to jettison these bad assets off its balance sheet and into a separate bonus pool.
And surprise, surprise… when you’re forced to “eat your own cooking,” the food ends up tasting just fine. The fund is up 17% this year, well ahead of the Dow and S&P 500.
Ian Mathias
Ian Mathias is the managing editor of Agora Financial’s Income Franchise, where he writes and researches about retirement, dividend and fixed income investing. Much of his work is featured in The Daily Reckoning and Lifetime Income Report – Agora Financial’s flagship income investing advisory.
Previously, Ian managed The 5 Min. Forecast, a fun, fast-paced daily look into the future of global markets and macroeconomics. He’s also worked in public relations, where media outlets like Forbes, AP, Yahoo! and MSN Money have syndicated his writing. If he’s not at work, you’ll probably find Ian on a bicycle, racing up and down the “mountains” of Baltimore County. Ian has a BA from Loyola University in Maryland.
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insentivise ~ incentivize
Hey Ian! Baltimore MD, huh? Me too! Can you do an article on when Sheila Dixon is going to be locked up already? or about all the money she’s embezzled from the city? or how she’s connected with the major shifts in the drug markets throughout the city? and about how she profits from that?