Bankers Getting Toxic Assets For Bonuses

from the two-birds,-one-stone dept

The various banks on Wall Street have a bunch of problems that they’re dealing with right now, including getting rid of toxic assets on their balance sheet, properly compensating staff who are expecting big bonuses even in such a down year and figuring out ways to motivate staff to invest in good assets, even in such tough times. It appears that Credit Suisse Group may have come up with a creative solution to all of those things. Instead of cash bonuses this year, it’s going to give employees some of those toxic assets it holds. This is incredibly creative for a variety of reasons. It starts to get some of those assets off the balance sheet. It gives them to employees who want bonuses, and it gives those employees quite the incentive to make sure those assets are actually worth something. Of course, since many of those employees recognize that the assets aren’t worth much at all, many of them are pissed off, but it’s pretty difficult to come up with any reason at all that they deserve any sort of bonus, so they’re probably a lot better off accepting what they’re given and seeing if they can actually make it worth something.

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Companies: credit suisse

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Comments on “Bankers Getting Toxic Assets For Bonuses”

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TMan says:

Makes some sense for the financial types, but for all employees? Not for the folks down in the computer room or the facilities peeps.

Also, what is Joe Blow going to do with these? If ‘he’ owns the security, then he doesn’t have much facility to help somebody refinance their crappy loan – he doesn’t have access to hundreds of thousands (minimum) in capital, so if the thing is going bad, what can he do about it?

Markian says:

Re: Re:

That’s the wonderful thing about this. It forces Joe Blow to hold onto the assets until they either gain value through hard work by all employees, or go to zero. In either case, it was strictly a bonus, and was not part of a salary package, much like company matched 401K contributions. You did not earn that money, it was given to you, based on earnings of your company.

Markian says:

Fantastic Idea

It’s about time that someone came up with an idea that makes sense, and builds on the greed of Wall St. I wonder what the tax ramifications of this move would be, as it would be considered “compensation”. Who determines the value of these assets and do they follow current market value, or an estimated value such as stock options.

Shane C says:

Not for the folks down in the computer room or the facilities peeps

>Not for the folks down in the computer room or the facilities peeps

When do you think the last time people in the IT, or facilities were actually able to “demand” bonuses? I’ve worked “in the computer room” for many years. The only times that we saw bonuses was when management wanted to bait the hook in some way. Almost never were bonuses back-to-back years, and never did they reflect what management saw.

One year that there “wasn’t enough margin for bonuses” I actually dug up the company propaganda that showed six months earlier the upper management all cheering because they had just closed the “best year ever,” and were all looking to receive huge bonuses. Kinda puts things in perspective.

Generally speaking, people that work in “revenue spending departments” will never be able to “demand bonuses.” The people that do “demand bonuses” actually have a lot more control over, and flexibility to use, and make profitable toxic assets. Thus reiterated by the article that mentions only “managing directors and directors” will be receiving the “toxic bonuses” (and probably the only ones receiving bonuses in general).

Anonymous Coward says:

Re: Not for the folks down in the computer room or the facilities peeps

Somewhat Troll-ish here, but I read your post and I see why John Stewart refers to the quotation gesture in spoken word as “dick-fingers”. Just a comment on composition style, but you can have the intended effect without “gratuitous quote usage”.

Yes, I’m a troll, but I’m an anonymous troll.

Anonymous Coward (user link) says:

Re: Re: Not for the folks down in the computer room or the facilities peeps

Just a comment on composition style, but you can have the intended effect without “gratuitous quote usage”.

Poor Anon Cow, they are being a hipster.
But you wouldn’t understand if you:
1. Teach Sunday School.
2. Are a big fan of the suburbs and vinyl siding.
3. Have a special “spill shirt” that you wear when you eat dinner at night.
4. Read novels with raised lettering on their covers.
5. Eat at Popeye’s on a regular basis.
6. You work in an office building that has a man-made pond or fountain in its front lot.

Anonymous Coward says:

Terrible Idea

As nice as would be to think that would make the problem better, my fear is the opposite would be true. What do we think they are going to do with these Toxic Assets? “Seeing if they can actually make it worth something” Bankers don’t have any way to add real value to them. The only “value” they can add is to repackage, re-sell (no value added, basically con someone else into buying them). The problem with giving the unscrupulous garbage is that they will turn around and re-sell. Granted that is a bit harder with the current economy, but still…

Lee says:

Re: Terrible Idea

Actually, no.

Say they get given a property in a decent neighborhood. It doesn’t cost them anything to acquire it.

They can then undervalue the property and sell it to someone who can’t currently afford a home based on current home values.

They get cash,someone gets a home mortgage free.

I don’t see this as a bad thing.

'bout time says:

The financial types created the mess with credit default swaps, loans that people were not capable of paying back, and the “editing” of paper work to ensure the loan went through. The executives singed off on it, and underwriting went along with it. Now they should all bear the burden of the mess the created, and instead of crying about bonuses be happy they have jobs. Additionally it was there lack of ethics, poor judgment, and greed that caused this. They should bear penalties too.

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