Wednesday, March 25, 2009

AIG - Ain't It Great?

Yesterday's New York Times printed an Op-Ed article by now former AIG executive Jake DeSantis titled Dear A.I.G., I Quit!

In summary, Mr. DeSantis is resigning from AIG, returning his $742,006.40 bonus after taxes and is outraged at the treatment that has befallen him. Defending his "legacy," he states:

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.

But, you see, there is a big difference between how the taxpayers have suffered and how Mr. DeSantis has suffered. Mr. DeSantis decided by his own accord to risk his own capital by investing it in AIG. The American taxpayers had their capital stolen from them without their consent. One is capitalism and the other is theft.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses.

Not true. The employees of the financial products unit shared the same employer as those individuals that lost hundreds of billions of dollars. If the company fails, everyone working there fails as well. I am sure there were many honest, hard working employees at Enron and Lehman but when those companies went bust everyone lost their jobs.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised.

This is exactly why you let failing institutions go bankrupt. When you bail them out, you have employees walking around acting like they deserve something. What exactly would Mr. DeSantis feel he "deserved" if AIG went bankrupt back in the fall? That answer would be decided in a bankruptcy court, where he would have had to stand in line with the company's debtors, customers and other stakeholders.

None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Compelling analogy. As a hypothetical, if the electrician and the plumber both worked for the same company, would you feel the same way? Not such a strong argument anymore, now is it?

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

That sucks but that is life. Go talk to former Lehman employees or retired coal miners who had their pensions renegotiated by bankruptcy courts.

I think I will stop here as I will only start to get more nasty. Mr. DeSantis is surely mistaken if he thinks that anyone should feel sorry for him. The absolute last type of person I want to hear from is a whining banker.


Anonymous said...

I blame the gov more than anyone for this. This guy probably isnt worth bothering over but yeah a sniveling crybaby.