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Bank will pay executive bonuses in illiquid assets

This is the best idea I’ve heard of in some time. Credit Suisse Group AG is going to pay its executives bonuses out of a pool of toxic mortgage-backed assets that it cannot currently sell. I love this because it is both just and clever. The executives at the bank now have every incentive to figure out a way to make these rotten assets turn into something less rotten, and if they don’t, they’re in the same boat as the investors who purchased them.

2 Comments

  1. “Cannot” meaning nobody wants them, or “Cannot” meaning legally prevented from doing so. If it’s the first one, what’s to prevent the usual executive “pump-and-dump” strategy?

  2. Cannot meaning there is no market for them currently. The article says they make take outside investments in the same pool of securities that are going to fund the bonuses.

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