From the “Maybe I should’ve settled for a firm handshake” department, Credit Suisse announces all bonuses will be paid in illiquid assets:

Dec. 18 (Bloomberg) — 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.

The incentive to use an approach like this is overwhelming, and you wonder why nobody thought of it before. First, your employees don’t have to walk away absolutely empty-handed; second, it transfers some of the risk, even though the garbage stays on Credit Suisse’s books, and third, it’s more memorable than handing out homemade fruitcake:

“It’s monstrously clever,” said Dirk Hoffman-Becking, an analyst at Sanford C. Bernstein Ltd. in London who has a “market perform” rating on Credit Suisse stock. “From a shareholders’ perspective it’s great because you’ve got rid of some of the assets and regulators will be pleased because you’ve organized a risk transfer.”

BUT WAIT! THERE’S MORE!

CS provides leverage to the facility (because we’ve proven again and again that leveraging toxic assets is a brilliant move). Oh, and YOU… yes, YOU… may even be able to get in on this action.

Outside investors may also be permitted to invest in the facility, according to the people familiar with the matter, who declined to be identified because the plan hasn’t been made public. The bank will boost the potential for returns by providing leverage to the facility, and will be paid back first, according to the people.

Operators are standing by… call now! Once the value of these assets drops to zero, this offer can no longer be extended!

[h/t to Carsten Maybach for the link to this epic strat.]