You Can Pay Credit Suisse Not to Work There
Also Luckin, oil ETFs and floor traders.
Some of the world’s best financial engineers work in human resources at Credit Suisse Group AG. In 2008, when the banking system was awash in toxic mortgage assets, Credit Suisse paid its employees with toxic mortgage assets. This was called the “Partner Asset Facility” and it was great for the bank: In a frozen illiquid market where mortgage exposures were viewed with suspicion, it was able to move this stuff off its books. It was great for the employees: “Toxic” assets are fine at the right price, and the employees got them at the lows; they regained a lot of value and the employees made a killing. It was great for aligning incentives: Credit Suisse’s employees had to eat what they killed; knowing that they could end up owning Credit Suisse’s worst stuff, they would make sure that stuff was good.
In 2011, as financial regulatory reform forced banks to focus more on systemic and counterparty risk, Credit Suisse paid senior employees in credit exposure to its derivatives counterparties. Credit Suisse had a bunch of derivatives, and if its counterparties didn’t pay up on those derivatives that would be bad for Credit Suisse, so it handed that risk to its employees, as their bonus. Enjoy!