Wednesday, March 25, 2009

Dear A.I.G., I Quit!

The following excerpts are from a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G. It appears in today's NY Times.

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. 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.

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. 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.

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.

35 Comments:

At 3/25/2009 8:50 AM, Anonymous Brad S said...

Now that Mr. DeSantis has decided to make a public figure of himself (and for those who think he's not, please see the DC Circuit's decision in Lohrenz v Donnelly (2003) for enlightenment), it's time to start asking questions of Mr. DeSantis. Namely, did he foresee that the issues involving credit-default swaps would put his company in the position that it is in?

Sometimes, writing a letter to the New York Times does not help your cause.

 
At 3/25/2009 9:07 AM, Anonymous Anonymous said...

The more telling aspect of the letter is that it is evident that Mr DeSantis and his colleagues thought that their bonus were at risk, and were repeatedly reassured that they were not (keeping the team on board).

His departure is refers to a breach of trust, the behavior of the AG and the "pitch fork" mentality of Congress.

If I was willing to work for $1.00 a year, maybe even forgo large cash bonus (if asked), but there is no way that I would agree to this if I was to be vilified by the whole country.

It is more than likely that Mr. DeSantis will be easily replaced, he will work 10-14 hours a day, he will do it for a salary of less then $700k, that's not the issue of his resignation letter.

And by the way Brad S, do you know what the guy two cubicles down from you is doing? and if so, maybe you just don't have enough on your plate!

 
At 3/25/2009 9:15 AM, Anonymous Anonymous said...

Now we get to the part wherein the Unification Board rules that you have to do your job. We're doomed.

 
At 3/25/2009 9:34 AM, Blogger Mia said...

What upsets me about this whole mess is when I see people like Barney Frank - who, it can be argued, helped create the financial mess, and who has benefitted from campaign donations from AIG - that HE, or anyone else in Congress, would sit in judgement of people and say that bonuses reward incompetence is the height of hypocrisy. Congress just gave themselves a raise...for what? Congress and incompetence are interchangeable words these days.

 
At 3/25/2009 9:45 AM, Blogger David said...

1)It seems likely that someone in Congress or the administration will soon propose a law that would make it *illegal* for people like DeSantis to quit their jobs. The trend of statist governments is always toward increasing compulsion. How would this be done?...perhaps by a tax law provision that would retroactively tax all income over the past 5 years at 100% for any designated "key executive" who quits his job at a time of "national emergency."

2)In the letter of resignation, DeSantis says "You and I have never met or spoken to each other, so I’d like to tell you about myself." This is the executive VP of financial products writing to the chairman & CEO of the overall company. I don't think it speaks well for Liddy's management style if he has not made time to meet all the members of this executive tier.

 
At 3/25/2009 9:53 AM, Anonymous Anonymous said...

Guilt by association, my friend.

Yes, I am sure Mr. DeSantis was just riding in the car. He had no idea about the 10 kilos of crack in the trunk.

 
At 3/25/2009 9:58 AM, Blogger John said...

You stay classy, Jake DeSantis.

Good luck finding a new job: Most employers pass on someone who whines and blames others.

How this poor of a leader ever made it to the executive level is beyond me.

 
At 3/25/2009 10:25 AM, Anonymous Kevin said...

Barney Frank is a big fat idiot. Now, his grandstanding is causing good people to leave AIG which will harm the taxpayers investment. Well done Barney

 
At 3/25/2009 10:25 AM, Anonymous Anonymous said...

Who is John Galt?

 
At 3/25/2009 10:29 AM, Blogger Size said...

es, I am sure Mr. DeSantis was just riding in the car. He had no idea about the 10 kilos of crack in the trunk.

No, he wouldn't. When my husband worked as an interest rate derivatives trader (at a bank that is not bankrupt and didn't need TARP, so put down the pitchfork), the groups were not aware of each other's positions. Unless he were in the CDS group, he wouldn't have been privy to the details of that business.

Besides, even the CDS insurance group wouldn't have had an idea that the business is under capitalized. Those decisions are made at the upper management level and dictated to the different groups. You either do what they want or get fired.

Basically, what you're saying is that if a two doctors are partners in a practice and one of the doctors commits malpractice, the other doctor is guilty by association. By that logic, if your kid gets a DUI, you should too. If your wife shoplifts, you should be charged.

 
At 3/25/2009 10:34 AM, Blogger Size said...

Good luck finding a new job: Most employers pass on someone who whines and blames others.

I don't know exactly what an "executive VP" does because every institution has their own definitions. But, it sounds like he's in trading. If he's smart, he'll get a job no problem.

I will hire any trader I think can make money for me. So, the top guys always have a bid. If you don't pay them at AIG, the best will leave and you will be stuck subsidizing the dregs with yearly TARP injections.

 
At 3/25/2009 10:56 AM, Anonymous Anonymous said...

"Basically, what you're saying is that if a two doctors are partners in a practice and one of the doctors commits malpractice, the other doctor is guilty by association. By that logic, if your kid gets a DUI, you should too. If your wife shoplifts, you should be charged."

That is not at all what I am saying. In his position he had to have known what was going on and deserved to be punished for it. Whether that be monitarily or jail time, it matters not to me. If he failed to recognize something faulty was going on while in his lofty position then he should have never been in that position in the first place and thusly shouldn't have been making that lofty salary. Punishment fits the crime.

 
At 3/25/2009 11:12 AM, Anonymous Anonymous said...

Size: Please dont confuse the leftists with facts and logic. It hurts their heads.

 
At 3/25/2009 11:16 AM, Anonymous Anonymous said...

"In his position he had to have known what was going on and deserved to be punished for it."

This guy should have known what no one else knew about: The US Congress, the alphabet soup of US regulators, AIG counterparties, AIG shareholders. All of these groups did not know what was going on, but this guy, he should have known!!!

 
At 3/25/2009 11:25 AM, Anonymous Anonymous said...

"Namely, did he foresee that the issues involving credit-default swaps would put his company in the position that it is in?"

Just ask yourself theis: if he did know, wouldn't he be a billionaire short selling the company instead of a guy who just lost most of his retirement savings? Duh.

 
At 3/25/2009 11:29 AM, Blogger Size said...

Anonymous 10:56,

I do realize that Anon 11:12 is right, but are you really too thick to understand that "In his position he had to have known what was going on and deserved to be punished for it." is exactly analogous to my two partner medical practice example? Yes, you are.

You clearly have no clue how trading operations are run and you wish to make yourself feel better by lynching people for things about which you are so profoundly ignorant. Idiots like you is what the constitution is supposed to protect us from.

 
At 3/25/2009 11:30 AM, Blogger Size said...

Just ask yourself theis: if he did know, wouldn't he be a billionaire short selling the company instead of a guy who just lost most of his retirement savings? Duh

Indeed. he would have quit, removed the vested portion of his previous bonuses and shorted the hell out of the company stock.

 
At 3/25/2009 1:10 PM, Anonymous Anonymous said...

My sincere condolences “righties” you lost. Spin yourselves into the ground all you like. We cried ourselves to sleep for 8 years while your choice burned the house down. Now we have to reconstruct it. As always.

 
At 3/25/2009 1:27 PM, Blogger NoWhining said...

"We cried ourselves to sleep for 8 years while your choice burned the house down. Now we have to reconstruct it. As always."

Yep...just like the Carter Administration saved us from all of that price stability and low unemployment. Thank God you folks are back in office...we can all breathe more easily now.

 
At 3/25/2009 3:16 PM, Blogger ExtremeHobo said...

Its people that consider themselves "Right" or "Left" that are ruining this country. Because you are "Right" on tax code does this mean you cant be "Left" on abortion?

Pigeonholing your beliefs to the right or left is a slap in the face to critical thinking

 
At 3/25/2009 4:38 PM, Anonymous Ralph Short said...

Another irony and outrage here is the elected lawyers who demonize AIG for their bankruptcy and bonuses are the same ones who are about to bankrupt the country with their own "investments" which are simply excessive borrowing and lying to the taxpayers who are the investors. They would not even be in office if the people who vote actually were the ones who paid taxes.

The government is dysfunctional in the extreme and major upheavals are in store for us as a result.

 
At 3/25/2009 7:07 PM, Anonymous t jefferson said...

Efin crybaby. Why is he giving the money to charity? The money should be returned to the taxpayer.

 
At 3/25/2009 7:30 PM, Blogger save_the_rustbelt said...

Jake was probably getting huge compensation for years while his company, yes HIS company was reporting profits while sinking into insolvency.

Oh wait, AIG belonged to the shareholders who were being defrauded.

Now I think we, the new owners, should force AIG into a pre-pack Chapter 11 and clean up the mess once and for all.

And clawback the bonuses.

 
At 3/25/2009 7:48 PM, Blogger Rick said...

Does anyone else find it ironic that "SaveTheRustBelt" is talking about putting AIG into bankruptcy. I wonder how he feels about GM.

Anyway, probably the best way to look at these bonuses is not as bonuses, but as commissions. If a sales rep makes his sales quota, are we now trying to say he shouldn't get his commission if any part of the company is losing money? Good luck with that.

 
At 3/25/2009 8:10 PM, Anonymous toronto realtor said...

To John:
"Good luck finding a new job: Most employers pass on someone who whines and blames others." Are you sure Mr DeSantis would be in better position for a new job if he didn't speak up? The AIG has its name screwed anyway; this way is Mr DeSantis at least somewhat recognized, don't you think?

Take care,
Julie

 
At 3/25/2009 8:49 PM, Blogger marketdoc said...

I wonder if Barney Frank, Nancy Pelosi and Company in Washington will give back any of their salary after they realize that they have bankrupted our country by passing a trillion dollar "stimulus" package?

 
At 3/26/2009 12:03 AM, Blogger bobble said...

if AIG had gone bankrupt would he have received the bonus? yes, they had a contract, but the contract could have been voided in BK.

the government (with g.w.b admin treasury secretary paulson's approval, btw) decided to save the company from BK. this does not mean the employees are still entitled to bonuses, even if they are not at fault.

i find it interesting that many on this blog, who dismiss low level employees who complain about low pay and lay offs as whiners, jump to this guy's defense.

every day, thousands of employees are laid off or have their salaries cut, for no other reason other than the company isn't doing well. this is no different.

 
At 3/26/2009 1:12 AM, Anonymous Anonymous said...

"the government (with g.w.b admin treasury secretary paulson's approval, btw) decided to save the company from BK. this does not mean the employees are still entitled to bonuses, even if they are not at fault."

Yes, they are still owed the retention payments. As you note, if the government didn't want to pay they could have put the company in bankruptcy court or they could have not offered the rentention payments in the first place. The retention payments were offered to keep people who could maximize the value of the business units (they are winding down positions and selling business units). The idea here is that this maximizes the value received by the taxpayers as AIG is dismantled.

This guy was a commodities trader - he wouldn't have been aware of the positions of the cds unit. If he had been aware he would have quit his job, saved his wealth, and shorted AIG.

 
At 3/26/2009 8:09 AM, Blogger ExtremeHobo said...

Its all a witch hunt. AIG even had to remove its name from its building to avoid nut-jobs.

 
At 3/26/2009 4:02 PM, Blogger misterjosh said...

I'm chagrined at the stupidity of my fellow Americans. WE own AIG now. We need to maximize our investment aka minimize our loss. The BEST way to do that is to retain the people who are good at that crap.

If, as anon 9:07 says, Mr. DeSantis is "easily replaced" then I am wrong. However, if this weird financial voodoo is actually kinda difficult to "unwind", then we are so screwed. AIG as owned by us is a terrible employer - reneging on contracts, poor job security, looks bad on a resume, and only the most incompetent idiots would want to work there.

 
At 3/28/2009 1:18 PM, Anonymous Anonymous said...

http://www.somethingawful.com/d/feature-articles/death-wall-street.php?page=2

 
At 3/30/2009 12:05 AM, Blogger bobble said...

"I'm chagrined at the stupidity of my fellow Americans. WE own AIG now. We need to maximize our investment aka minimize our loss. The BEST way to do that is to retain the people who are good at that crap."

are they good at this crap? how did they get AIG in troupble in the first place?

is this an example of minimizing our losses?

>>During Jan/Feb AIG would call up and just ask for complete unwind prices from the credit desk in the relevant jurisdiction. . . . The size of these unwinds were enormous, the quotes I have heard were "we [the banks unwinding AIG CDS] have never done as big or as profitable trades - ever".<<

it sounds to me like the AIG FP employees are giving away the store

 
At 3/30/2009 5:26 PM, Blogger misterjosh said...

Bobble,
From the same article: "3) executed with Tim Geithner's (and thus the administration's) full knowledge and intent"

I'm beyond chagrined at the incompetence of our leadership, but I stand by my assessment that if they are going sail the good ship AIG on the Crapper Sea, they need the best sailors they can get.

I still don't understand why they couldn't let AIG go bankrupt and then throw the trillions of dollars they throwing now at the banks that didn't go bankrupt. They're out there.

If I had my tinfoil hat on, I'd say it was just a ploy by the corporate titans to stay in control in these times of trouble. They don't like creative destruction, and will do whatever it takes to stay in power. Why do we have corporate welfare? Because we are dumb.

 
At 3/30/2009 6:10 PM, Blogger John said...

@Size: Please let me know where "the best" go. I see devaluation coming to public companies that hire them. Does/did your husband work for one of these companies?
http://www.cnbc.com/id/26787630/site/14081545/

@Toronto Realtor/Julie: Concur, "any press is good press" but step back and look at this letter. Would publishing an editorial proclaiming yourself a chainsaw-wielding lunatic help land a job anywhere but... a lumber mill? Followup note: personally surprised to see a realtor following economics.

 
At 4/01/2009 5:14 AM, Anonymous Realtor from Toronto said...

To John: Well, I guess you're right. Mr DeSantis would have very hard time looking for a managerial job having published the letter or not. At least bloggers had something to write about for weeks :) As for your follow up note, even realtors have many bad habits..

Take care,
Julie

 

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