Bankers Get Own Medicine as a Bonus

Rod Serling had a particularly bleak view of the world. His Twilight Zone TV show in the early 1960s always had the ultimate "gotcha" in plot lines. Like the crooked gambler who dies and thinks he is in heaven as he wins every role of the dice, only to discover it's really hell and he is condemned to win all the time. But even Serling -- who wrote the screenplays for the original Planet of the Apes and Seven Days in May movies -- would have appreciated the twilight zone the bankers at Credit Suisse (CS - commentary - Cramer's Take) entered yesterday.

The company announced that senior bankers would receive their bonuses via shares of an illiquid portfolio of junk bonds, mortgage-backed securities and corporate loans. The Wall Street Journal said they were left "reeling" at the news, since they won't receive a return for eight years. I mean, really! This stuff was good for customers, but not for them!

Goldman Sachs (GS - commentary - Cramer's Take) also changed its bonus structure -- down by 80% in many cases -- to include company stock and options on the stock with large portions deferred so that it can be "clawed back" if today's creations turn into tomorrow's losses.

Sounds good to me, and it could be a lot worse. Vladimir Putin is backing a bill (which means it will be passed) that would let authorities label anyone criticizing the Russian regime as a traitor. Alexsandr Solzhenitsyn got his smuggled horror story The Gulag Archipelago published in the West in 1973. It was written in the prior years as he suffered in a Soviet prison camp. I'll take some junk that will probably be paid off handsomely, if as I suspect, it has been over-marked due to mark-to-market accounting rules. At least the banker guys can complain and not be shipped off someplace cold and damp. Not that investment-banking houses aren't pretty cold and damp today.

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Vincent Farrell Jr. is chief investment officer for Soleil Securities Group and a regular guest on CNBC and other national print and broadcast media.

Prior to joining Soleil in August 2008, Farrell was a principal of Scotsman Capital Management. Before that, he was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships.

Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.

Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.