by Frank James
Political controversies often leave human wreckage along the wayside and so it is with the AIG bonuses firestorm.
Jake DeSantis, who just resigned as am official in AIG's financial-products unit which is blamed for effectively making the company insolvent, has a remarkable op-ed in the New York Times. It's his resignation letter.
In it, he explains how he and other AIG workers feel they were stabbed in the back. And not just by a federal government they thought they were helping by trying to salvage the remaining value in the unit so that taxpayers could be repaid their bailout money but by Edward Liddy, the company's new chief executive who failed to stand up for them when they were being scape-goated by lawmakers and others.
An excerpt:
After 12 months of hard work dismantling the company -- during which A.I.G. reassured us many times we would be rewarded in March 2009 -- we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
You and I have never met or spoken to each other, so I'd like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute's generous financial aid enabled me to attend. I had fulfilled my American dream.I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.'s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable -- in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.'s effort to repay the American taxpayer.
The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity -- directly as well as indirectly with the rest of the taxpayers.
From the letter it's clear that DeSantis feels particularly aggrieved by the actions of Liddy, AIG's caretaker CEO. For all intents and purposes, Liddy sold him and his fellow AIG employees down the river.
I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country's call and you are taking a tremendous beating for it.
But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn't defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.
You can almost feel the anguish come through the computer screen. Et tu, Liddy?
What's really interesting about this is that when he testified before Congress last week, Liddy warned that the outrage of lawmakers and the public was counterproductive since it would likely chase off AIG employees needed to help sell AIG assets and unwind financial contracts. It's only by taking such business actions that AIG has any hope of returning the more than $180 billion it has received from taxpayers to stay afloat.
But in trying to appease Congress and the public by saying that he himself found the retention bonus payments distasteful, Liddy obviously lost a lot of the respect and trust from the very employees he had worried aloud about losing.
While many people will be unmoved by DeSantis's letter, it could resonate with others better able to discern victims from villains.
As DeSantis notes, he's not among the executives who made fortunes loading AIG's balance sheet with the financial time bombs known as credit default swaps. Those executives, like Joe Cassano who once ran the financial products unit and has the dubious honor of essentially bankrupting AIG, have already left the company to enjoy the lifestyles of the rich and shameless.
Nevertheless, DeSantis and his colleagues are catching hell and for some of them, enough is enough.
Here's hoping DeSantis's letter has the intended effect of calming down the Washington lynch mob.
Comments
Aww, Poor baby. I weep so for him. Let's all take up a collection.
Posted by: Unemployed Auto Worker | March 25, 2009 10:23 AM
The end of year bonuses are usually defined by management through a pool. The size of the pool is based on the firms complete earnings and profitability. If one side of the firm fails the ENTIRE firm suffers. That is what a team is about. Maybe if everyone at AIG were under the assumption of "all for one and one for all" then the CDS team would have been better watched. Sorry Mr. DeSantis, but your COMPANY screwed up and maybe you should help fix it for the rest of America and not just yourself. BTW I've been on Wall Street for 24 years and when the traders screwed up the support staff took the reductions in bonus, but we kept working for the team. So I've been taking the business losses for years in my bonuses while you guys got rewarded for screwing up. Grow Up!
Posted by: muffler | March 25, 2009 10:51 AM
While not disputing Mr. DeSantis' integrity as a businessman, in essence what he's going through is what all of us are going through (certainly, to a much grander scale, I freely admit).
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In the current economic situation, very few are NOT being asked to work longer hours, with less and less remuneration, spending less time at home with their families and more time trying to "put out fires" with others breathing down their necks to do it all quicker, cheaper and better, with fewer resources. It's the way of the world right now, unfortunately. And the option, which DeSantis chose to take, is to walk away from your job if all that gets to be too much for you. (The unlucky ones have had, or will have, that choice made for them when their job walks away from THEM.)
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DeSantis' advantage, which disinclines me to shed tears for him, is that he's got a history of being very well-rewarded indeed by his company, so that he's had a better opportunity to build a cushion he can fall back on and that allows him to realistically choose to quit before the stress gets to him. Many aren't so lucky.
Posted by: Op109 | March 25, 2009 11:24 AM
Someone needs to tell Barack that he can’t put his class enemies on the rack and wring all their money out of them- regardless of what his Marxist professors told him.
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Obama is used to dealing with stupid supporters who will vote for him in Illinois even when he lies to them and gives their tax money to his political supporters like Rezko - so he can build unihabitable slums for them… but these guys are way, way smarter than Barrack.
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The executives he targets know how the world works, unlike Barack as he employs his long ago disproven zero-sum class warfare strategies to an economy who’s only real advantage in the world has been freedom and low taxes. Without a healthy, free market… America is doomed.
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All he is doing is scaring away talent with repressive measures that will not work. When I got sick of quotas in the corporate world promoting unqualified types ahead of me, I quit and went into commissioned sales… where no one could tell me who I am or what I can do. The only loser here will be the compainies, and of course the USA- Obama can’t control these people in defiance of market forces… they’ll just do something else.
-http://reaganiterepublicanresistance.blogspot.com/
Posted by: Reaganite Republican | March 25, 2009 11:46 AM
Interesting letter. There is no doubt that Congress with their goofy tax idea is governing out of anger. Not just anger, but the worst kind; mock anger, as many of them knew this was coming down the pike and only acted upset when the public caught wind. I think the Administration realizes this and is working behind closed doors to get AIG executives to return the money (which has been somewhat successful) and to kill any reactionary "punishment" tax.
Payments involving taxpayer money to anyone at AIG is distasteful to me, but unless these contracts were illegal, the company is bound to honor them and can face damage claims in Conn for breaching, not to mention attorney's fees. Using the tax code as a punishment to single out a few tax payers is an even dumber idea than asking AIG to breach. First, it is likely unconstitutional. Second, it is irritating because it shows how inept Congress is. They should have attached explicit strings barring taxpayer funds from going to bonuses, and especially to those in the credit default swap unit. They should have also not included that provision in the stimulus package exempting these payments. I don't know who is ultimately responsible for that, because the answer changes with the wind when it comes from either Dodd or Treasury.
Posted by: Herbie H. | March 25, 2009 11:54 AM
Cheer up Mr DeSantis. There are some shovel ready jobs that are going to appear one of these days and they pay more than $1.00 a year. Of course you will require some training to learn how to properly lean on said shovel but most people seem to catch on rather quickly. I point to all of those government road crews that you've presumably seen in your travels as examples. After you've leaned for spell you can then take a break or a nap in the truck.
Posted by: Rob | March 25, 2009 12:18 PM
"When I got sick of quotas in the corporate world promoting unqualified types ahead of me, I quit and went into commissioned sales…"
Translation: My company promoted someone who wasn't a white male instead of me, and we all know that people who aren't white males couldn't possibly be better qualified than a white male, so I quit in a bigotted snit. I hate having to treat minorities like equals.
Posted by: Translator | March 25, 2009 12:44 PM
What a prima donna we have here!
It's nice to see he's returning the money, but he still has no sense of the part his company or his individual actions have in the company's collapse! (By the way, I guess it's still the Exxon Valdez instead of whatever the name change was about. More wasted money.) He still made more than the best doctors in the best hospital closest to his rather costly residence by several times over.
If he sold shares of his sense of entitlement, that alone would rescue the economy.
I can't see how the company will miss him.
Posted by: kravitz | March 25, 2009 2:58 PM
If I could I would quit my job, I would, in so far as I am the t**t upon which the american "taxpayer" suckles upon. Buck up all, in so far as the suicide rate is highest among us white males over forty, so we evil ones will be gone. I guess then the big O can tax welfare - LOL.
Posted by: Guy Luca | March 25, 2009 11:53 PM
I JUST WROTE AIG AN OP-ED LETTER
(the Letter, Joe Cocker)
WilliamBanzai7
Sing along: http://www.youtube.com/watch?v=HoW81x4j7ow
Gimme a minute to write a $750,000 complaint
Its just a matter of time before I'll find a new game
Fast and easy days are gone, I'm a-goin' home
Hey baby, I just wrote AIG an OP-ED letter
I don't care how much money I get to keep in the end
Got to go back to my savings once again
Fast and easy days are gone, I'm a-goin' home
Hey baby, I just-a wrote AIG an OP-ED letter
Well, I wrote them a letter
Said I couldn't live without my bonus no more
Listen mister, can't you see I can't just give it back
To charity maybe, don't cha wanna hear more?
Anyway, yeah!
Gimme a minute to write a $750,000 complaint
Its just a matter of time before I'll find a new game
Fast and easy days are gone, I'm a-goin' home
Hey baby, I just wrote AIG an OP-ED letter
Well, I wrote them a letter
Said they would have to live without me, ohhhh no!
Listen mister, can't you see I can't just give it back
To charity maybe, don't cha wanna hear more?
Anyway, yeah!
Gimme a minute to write a self servng complaint
Its just a matter of time before I'll find a new game
Fast and easy days are gone, I'm a-goin' home
Hey baby, I just wrote AIG an OP-ED letter
Posted by: williambanzai7 | March 26, 2009 2:11 AM
I can empathize with your sense of betrayal -- Chairman ObaMao and his leftist lackies are betraying every one of us and the Constitution to boot -- but you should have known better than to take a handout from Big Brother. Can you genuinely say you're surprised by Fedzilla's actions last week?
Posted by: Vast Right Wing Conspirator | March 26, 2009 1:27 PM