Here's a story that will put you in the Christmas mood.

One of the largeest European banks, Credit Suisse, will pay its employees bonuses not in cash but in "illiquid" loans and bonds - including mortgage backed securities that have been blamed for the financial crisis:

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.

“While the solution we have come up with may not be ideal for everyone, we believe it strikes the appropriate balance among the interests of our employees, shareholders and regulators and helps position us well for 2009,” Chief Executive Officer Brady Dougan and Paul Calello, CEO of the investment bank, said in the memo.

The securities will be placed into a so-called Partner Asset Facility, and affected employees at the bank, Switzerland’s second biggest, will be given stakes in the facility as part of their pay. Bonuses will take the first hit should the securities decline further in value.

“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.”

Maybe instead of coal, Santa could leave some of our reckless financial managers a pile of these mortgage securities under the tree.

They could use them to help set that Yule Log afire if not give them something they so desperately need - a little Christmas humility.

Hat Tip: Ed Lasky and James Taranto