Dave Maher, my business partner sent me this article early this morning. It is worth your time to read what is really happening with AIG and some very talented folks there.
If you can remember to comment here on this blog about what this AIG employee has to say, we would appreciate it. I think it will get some good dialog going as to what is really happening to our country.
Maybe it's time to stand up and tell Congress we are "mad as H*LL and not going to take it anymore".
Here's the link
OPINION | March 25, 2009
Op-Ed Contributor: Dear A.I.G., I Quit!
Jake DeSantis, an executive vice president of the American International Group's financial products unit, sent this letter on Tuesday to Edward M. Liddy, the chief executive of A.I.G.
34 thoughts on “This could be a major story on tonight's news.”
What a depressing state of affairs. I guess the majority are merely foot soldiers that make up the base of the corporate and social pyramid. But I also think that where someone ends up has a lot to do with opportunity and how well they can use it to their advantage, so with the right investments and priorities anyone can bounce back from unfavourable circumstances.
The Recessionarry Pressures can be over in 30 days in case the Ine Trillion Dollar is invested in Emerging Economies by OBAMA's policiles followed by 50% Reduction in Taxes and opening doors for easy partnerships arrangements with Indians and Chinese Entreprenuers. The family cultures should be strentghened with "Love and Affection".This will arrest the negative factors and start an era of confidence.
boo hoo hoo!!!
AIG, Citi, JPM and others should've been dropped into bankruptcy and sell off the worthwhile assets (if there were any).
" of those responsible have left the company and have conspicuously escaped the public outrage."
hmmmmmm, how'd that happen.?
And they should take our bankrupt Congress with them. 3 or more decades of doing nothing for America.
Only lining their pockets and free health care and other benies.
Term limits for all elected and appointed officials in Federal & State positions, including the Soupreme Court.
Mandatory retirement at 65, like everyone else. Go and teach if you want to remain active.
did I say, boo hoo hoo!!!!!!! ?
I've run several small businesses. Many employees think they are worth more or contribute more than anyone else. After a while I learned to accept changing faces with an expectation of better things to come.
That's what usually happened.
Jakes had been very fortunate. There are many who work much harder than he for min. wage. He's been eating too much of the pie and thinks he deserves it.
From the comments made above, I have concluded a few important facts: 1) if the literacy level of the commentators is representative of the state of educational achievement in this country, then we are all in trouble, and 2) the triumvirate of media, government and education as it is presently constituted in this country has quite successfully completed the planned coup d'etat to take over the minds and souls of the American populace.
My observation of the AIG debacle leads me to the conclusion that if we were to rely on the business and intellectual prowess of such behemoths as Barney Frank, Chris Dodd, Harry Reed and Nancy Pelosi to rescue this great nation from itself, then we might as well all just drink the Kool-aid right now and get it over with. Quite frankly, I trust the likes of Mr. DeSantis and Mr. Liddy over the current political ruling class that is destroying this country from the inside. Heaven help us all!
In a resignation letter published in the New York Times today, AIG executive Jake DeSantis complains that he and other employees who weren't directly involved in structuring credit derivatives have been unjustly caught up in the recent controversy over the company's bonus payments. After all, their activities weren't at the heart of the housing mania that has been unraveling in disastrous fashion since mid-September.
What's not mentioned in the letter is that Mr. DeSantis, as head of business development for commodities, was indeed involved in a separate bubble that also held serious consequences for the broader economy and that also burst last year. That "other" bubble, which entailed gains in an array of raw materials over several years, ended shortly before the housing bubble, which has since easily overshadowed it.
Oil prices rose more than five-fold between the start of the Iraq war in spring 2003 and their peak last summer around $150 a barrel. That in turn helped the Dow Jones-AIG Commodity Index which is jointly owned by the publisher of the Wall Street Journal to more than double over approximately the same timeframe. Now the index has plunged more than 50% from its records hit in July 2008.
In retrospect, most traders and analysts now agree that commodities' run-up constituted a speculative bubble fueled in large part by buying from hedge funds and other players who had no industrial need for raw materials. Among the main vehicles used by these investors to place bets on paper on the sector were various index products, including instruments that paid returns based on the DJ-AIG.
In the meantime, sharp gains on commodity-trading floors translated into increased prices for people around the world at the pump, at the supermarket, and elsewhere a phenomenon that helped to wreck consumer confidence well before last fall's eruption of financial crisis. (In a recent interview with the Wall Street Journal, British Prime Minister Gordon Brown who served as his country's chancellor of the exchequer through most of the commodity bubble said that excess oil speculation is a problem that regulators around the world are going to have to revisit once they're done dealing with the credit crisis.)
Now that AIG itself has melted down, it is selling its commodity-index business to UBS. A spokeswoman for Dow Jones Co., said that deal will have no effect on this company's stake in the index. AIG's press office said Mr. DeSantis is declining interviews, preferring to let his published resignation speak for itself.
I believe the outcry resulted not from the fact that some hard working individuals received a bonus for hard work, I believe it was the sheer extremely ridiculus amount individuals received. Many of us have worked for tens of years for 60 -70 hours per week for others, and then received salary or bonus in these extreme amounts. You need to get back to the real world. If you had received a reasonable bonus there would not have been hugh outcry.
Should the government not be going after all of the employees who worked for Bernie Manoff? If it is true that secretaries were being paid $500,000 a year salaries, would it not also be reasonable to believe these individuals should have assummed that something was not right? These individuals need to return all unreasonable salary they earned while employed to carry out Bernies scheme.
Spare me. OK he's a very bright MIT grad.Lets get to the core. Not a buck shud have went into AIG and his stk wud have been worthless and he wud have been on the unemployment line no retention contract. So as he says he lost substantial so his buy in was to protect that stk price until he cud unload it.
How does he think his commodities group ran up such great profits. It was all part of the same bubble/scam. This last 80 bil shud not have been given either. Then contract or not he wud have worked a year and AIG still wud have been tapped out. I know lots of folks where the door was locked and they never collected for their last pay period. His hard work - barf. Like in America today who isnt working hard to keep yur gig, to keep the company afloat and to accept the cutbacks. Hey whoever gave such a big retention contract to stay was giving away gov money from the beginning. Who was that. So 3/4 mil was his after tax. Not a bad retention contract whatever bracket he is in. Hey when my company went belly up (I worked 12 hours every day) all my stk options went up in smoke. Unless he has shoes shaped like Steve Jobs, I doubt they wud have had such a difficult time contract out Goldman or some Lehman unemployed to do whatever he has done or the past year. Nobody is that important... As many major personalities say, the entire renumeration scale is out of wack on The Street.
No sympathy for AIG here. They are a bunch of pigs, and it extends to other units in the company, not just the FP unit. I work in the commercial insurance industry and have to compete against their Property & Casualty (P&C) insurance operations.
The buzz you've been hearing from Atty General Cuomo of New York, some members of Congress, and Ted Kelly (president and CEO of Liberty Mutual) is true. AIG is underpricing their P&C products in a desperate attempt to maintain marketshare, and it is damaging the pricing integrity of the commercial insurance mechanism in the US. Normally an insurance company who does this will eventually fail because paid losses and expenses will consistently exceed premiums collected. However in the case of AIG, they are using taxpayer's bailout money to run amok because the government won't let them fail.
People need to realize that a contract is only as good as the company that stands behind it, AIG failed and unfortunately the employees that performed can not be paid. They might be due the money from AIG contractually but not from us tax payers.
Management chose greed by investing in risky credit instruments, it is unfortunate that some employess performed but they now work for a broken company, thank the top management, they chose greed and were burned. You chose to work for AIG and must accept your fate, the American way, life's rewards are sometimes unfair but in this case AIG's failure stems from the byproduct of greed.
I'm sorry, but you don't get paid for polishing the brass of a sinking ship, no matter what promises were made when the ship was afloat. Each and every one of the 2 million people who have lost their jobs, has a similar story that it was not their fault, and that getting severed from the company was unfair.
Us taxpayers are bearing a huge cost to keep AIG afloat, and if Mr. DeSantis holds a critical job at the company, he should put the country first and work without pay, especially since he can afford it.
I don't condone the Congress, but the issues at hand are enormous, and each of us needs to selflessly do his/her part for the sake of our country.
Mr. DeSantis do you know that any other employee get
over 700000$ "bonus" after company get bancrupt? Are U kidding?
Do U understand what "Bonus" word means? Don't blame taxpeyers for your predicament. No sympaty for U from me.
First of all, none and I mean none of them should be benefiting by collecting any bonuses that is basically tax payers money, I do not care who it is, all bonuses should be frozen, second, i really don't give two rats behind if this dude feels he is not responsible, there are plenty of extremely intelligent unemployed folks out on the street right now that are more than willing to work for AIG and fix this company. This is the first year none of those idiots will be collecting any bonuses, all the years prior they were ALL collecting bonuses while the company was being run into the ground. If my money is going to bail out any company, I do not want my money being used to pay bonuses to any of them whether they feel they deserve it or not.
A deal is a deal and there must be a element of trust in life if we are to continue in business. Congress has agreed to keep AIG afloat so the employees of the company should be aloud to keep there pay bonuses and try to move forward.
AIG has lost because people have walk away from there commitments to pay and now are being asked to do the same with there empolyees and managers, like as if it was there fault. If Congress felt AIG was worth saving they should allow the contracts to be paid or they just paid a high price for the building and what good is a building with out people.
I no longer care to be distracted by AIG. I doubt if anyone who has worked for a Corporation or had experience with politicians and governments is witnessing anything new here!
As a Canadian , well acquainted with government run medicine for over thirty years, I can assure you that as far the AIG follies go, they are nothing compared to the turmoil organized medicine can cause in a society.
I hope my American friends will not be distracted by all the rot represented by AIG and Wall Street then be disposed to look favourbly at government run medicine - especially when it seems so fair, equitable and honourable in comparison. Clue: Pandora's Box
Remember Politics&Government 101- DISTRACT,DISTRACT,DISTRACT.
This may be the start of the breakup. There is no sypathy as inoscent americans are being affected and there are many qualified people ready to step up and fill the positions of the weak and guilty. Chances are they will fill these positions for more resposible wages about as quick as the adds come off the press.None of these executives are indispencable only they make them selves out to be, remember thier insurance people and they can and will sell you anything. WAKE UP AMERICA,they only want you to believe they can't be replaced, THEY MOST CERTAINLY CAN BE.
I think that you all need to look at the comments posted in the NYTimes. The vast majority do not have sympathy for poor Mr. DeSantis. Come on. The guy has been overpaid for years! He wants sympathy when many people are working 2 jobs just to feed their families? Is he kidding? This is just another example of Wall Street rationalization of their greed and sense of entitlement. Get a grip Mr. De Santis, that money that you are so generously donating to charity is taxpayers money. I don't care what division you worked for in AIG. I company that has lost billions does NOT give bonuses. Again we face no conscience when spending someone elses money. How very typical of you and your kind. It's what brought us here to begin with.
I believe that government intervention is /was wrong. The gov. didn't bail out Bear Stearns (maybe because a Goldman Sachs competitor) nor did they bail out Lehman (maybe because a Goldman Sachs competitor). AIG was to big to fail (or did they owe to much to a certain few like Goldman Sachs). Then the gov. hands out Billions and Trillions, not to save your job nor your house, but to bail out a few banks and companies that have a broken business models. The bailouts did nothing but delay the inevitable, the business model is broke.
Small business owners have nor parachute, not even unemployment insurance, but the Gov. can without prejudice give their tax money to bail out these large corporations without even having one employee held accountable.
I believe that this current attempt to redistribute wealth is far stretching the original purpose of regulating trade between the states and for the protection of our sovereign nation.
How much bonus would these AIG execs receive if the company was allowed to fail. The bonus they should get, the same that faces many of us, Unemployment insurance.
Did Mr. DeSantis, leave because of lack of support? Or is what is between the lines, AIG is crumbling beneath it's own weight and he wants to be clear of the rubble.
AIG employees have been tarred and feathered, and have no upside in this deal. The government made a huge mis-calculation in their efforts to hype their own agenda. DeSantis is a casualty. He is probably very good at what he does and deserves to be rewarded for his efforts, as do many other AIG employees. They didn't cause this mess, but we need them to help us get out. For all of those folks that think that these folks can't get other jobs, they are just kidding themselves.
Mr. DeSantis completely misses the fact that his millions in bonuses over the last years and this one, too, derive from the excessive profitability of the short term actions of AIG, and although he himself may not have been responsible for the bad decisions of others in the company, he did profit from it, and apparently did nothing in any intra-company upper level management discussions to help avoid his company going bankrupt. Having gone bankrupt, EVERYONE at a company loses everything, bonuses, salaries, and jobs, as so many Americans have experienced. Now Mr. DeSantis believes he should be entitled to keep his million dollars because we taxpayers were extorted by AIG's "too big to fail" monopoly into giving them enough to not actually go through the bankruptcy process? Please...
Couldn't agree more. It doesn't matter how hard you work if the company you work for doesn't make any money. No money, no bonus.
What's not to understand?
I work very hard too but I still don't get a million dollar + bonus, even though the company I work for DOES make money and is not a drag on the economy.
As for the "contract" what would have become of that "legal right" if the company had gone bankrupt, which it would have if the taxpayer had not bailed it out? Obviously again, no money, no bonus.
Jim Starr is so right in pointing out that DeSantis completely misses the point - that his millions in prior bonuses derive almost entirely from AIG's reckless financial gambling which proved to be mythical brought the company to bankruptcy!
Talk about having your mythical cake and eating it!
I think this issue has been blown way over proportion, and it's a distraction to the bigger issue here. C'mon $160m is just chicken change compared with the $700 billion, and I think everyone deserves what they worked for, issue closed. Let this administration focus on concrete things rather than some employee getting a bonus or not, and let the country move on to solving the current problems it faces rather than a class warfare. I think this administration's focus should be telling the American people how and where exactly these bailout funds are going.
There is nothing new here , at least for some of us .I am a physician/surgeon who along with ALL Doctors have been treated this way for the last 20 years with progressive intensity in the same attitudes depicted in this letter . As a result I have retired at 58 unable and unwilling to putting up with government ,hospital and insurance companies dictating how we doctors should practice medicine to inhance profits for hosptals and at the same time controlling cost for the government and insuranc co . Not least in this is the malpractice situation which is to say the least is "out of control" . I say this in relation to this letter as physicians have been telling anyone for years who would listen what was going on . That physicians have the total responsibilty of patient care but not the right to do what we were trained for ,and that over time the country thru government was going to do the same to all professioals and eventually every worker .I hate to say but "WE TOLD YOU THIS WAS COMING " .We are in an irreversible slide of class warfare thru government control until or unless all people wake up and feel that if someoneworks 14-16 hours a day that they deserve what they make and that the government and populace doesn't have the right to take these earnings simply because its a lot more than others . It fosters the attitude that "whats the use " of working hard just to pay the congress to get re-elected .I am not very hopefull of any change and expect things to only get worse , that is "spread the wealth ".
Several weeks ago when this matter of the AIG bonuses was coming out, my somewhat liberal wife was angry that the executives were taking these bonuses. I explained to her basically that AIG has a lot of divisions that are very profitable and the people in those divisions need to be paid according to contract if they reached their levels of performance. After all, they are basically being paid out of the profits they earned the company. If they did not get paid, then many very productive people will leave, and because of their connections will take a lot of that business with them in the future, leaving AIG even weaker. Congress knew about these arrangements and like all the dishonest Democrats, they love a dog and pony show to distract from their own incompetence.
Obama is nothing more than another crooked politician from Chicago. He and the likes of Commo will look to capitalized on any situation or tragedy to make themselves look good at the expense of truth and reason.
The last thing commo was involved in was suing Gun manufactures for the actions of criminals use of guns in crimes. Always makes a lot of political sense to these guys to find a scape goat for the sole purpose of gaining attention for themselves without solving any problem or attempting to address the any real issue.
Sure AIG used bad judgement. Remember the Goverment now holds a 80% equity stake in AIG. Why wasn't we concerned when Fanny and Freddie paid even larger bounses' because it belongs to the Goverment an there is nothing that can control what the run away train does. This pirmid system is taught by congress. Look at our banking system that congress has invented.Do away with the Federal Reserve and make the money be backed by something of value.
I part company with other comments. I regard DeSantis to be what I think he is: a filthy, greedy liar. He wants me to believe that he was "Little Bo Peep" who didn't know A THING about what those "bad evil guys" were doing over in that other department just down the hall from him? Yeah, right.
Did this sanctmonious little DeSantis ever cry out in protest?? I didn't think so.
Ya'll who live up there in Yankee land can do what you want with all those filthy liars (a/k/a A.I.G. employees), Down here in Texas we'd have one simple response to the likes of pretty boy DeSantis:
"Let's get a rope, and find the nearest tree."
May God Bless Texas.
Ha-ha-ha! What else would you expect from the subtle intellect of the VP?! That he will tell everybody about the bonuses for the previous years of the work of collecting money from traders like us, being the market maker? I burst into tears reading "employees of the financial products unit needed SOME incentive to stay". Poor-poor VP! If you want "some" remuneration then earn it and not enjoy the taxpayers' hard earned money which would rather be directed to fight the unemployment! Have a nice resignation! I hope that all other top managers will follow you instead of getting the community money as bonuses to stay with the companies (including other financial giants). For such poor money management of the people's money the resignation period for you has already started in the Fall of 2008.
It is not much of an eye opener this letter of DeSantis, rather narcistic. He claims he made money for the company but individuals always tend to forget that it is only because of the name of the business thay can conduct that business. And everybody in the company, including the postbox officer made this possible. In good times bonusses were paid (some to extreme excessive and ridiculous levels) and now that the company is under, bankrot and saved with tax payers money, there is NO ONE deserving a bonus. The company does not perform anymore. If a producing company in the REAL world fails and the employees are made redundant, without their INDIVIDUAL faults, there is no taxpayer money to pay their salaries let alone a bonus. So mR de Santis shut the F up!!
That letter was printed in the op-ed of the New York Times today. Mr. DeSantis seems to have been unfairly tarred with the public brush meant for other employees in his branch of the company. Had AIG not been rescued by the government and allowed to go into receivership, there would have been no retention bonuses to quarrel over. It is unlikely a conservator would have allowed them to be distributed. Hence there are other views of this matter, in addition to the one Mr. DeSantis ably presents. Probably the truth is that he is a victim whose talents have fortunately rescued him from adversity.
For INO to stimulate the capitalists to revolt is no more helpful than urging the peasants to snatch up their pitchforks.
I feel I understand his position and reason to feel betrayed. However, in the past I also worked for a company that was on the verge of bankruptcy. Every employee and manager within the corporation knew and understand that a paycheck, let alone a bonus, would be available on payday. It was probably incorrect for AIG to have employees working for a $1 per year and offer large bonuses to offset the lack of normal compensation. When a company goes down, all divisions and departments suffer equally as each contributes to overall success or failure of the firm. If AIG were on top of the issue, the profitable segments should had been previously sold off to reduce the overall burden on the firm and utlimately on the tax payer.
Our government leaders knew these bonuses were in the package to be paid out and should had dealt with the issue upfront rather than sounding like a pack of wolves after the fact. What they really are is more of an Ostrage, if we stick our heads in the sand long enough we do not need to deal with the fear.
As we treat AIG is how we should all expect to have our government leaders treated. They should be held accountable for the pork barrell spending, exessive use of government funds for "business trips" and should absolutely freeze their compensation until the current economic crisis is not only under control but until our country has been able to recoupe the monies forwarded for the "bail out" programs.
Disparately sad state of affairs with the leftovers of what used to be a great American company worldwide.
What's next? The JP Morgan derivatives in hundreds of trillions???? Or the Goldmann Sachs short silver positions to be covered by buying Barclay's iShares??
this letter to Mr. Liddy is disappointing in that everyone at AIG, just like the people in the broader economy, are being tarred with the same brush. That is, some very good people with strong skills, profitable business models, and high moral and ethical standards have been caught in the same net, to the detriment of most.
Talk about throwing the baby out with the bathwater.
Although I have only a general understanding of CDS's, it seems that together with easy credit and poor lending practices, all fingers point to poor risk management practices at these "too big to fail" companies" that are at the center of this mess.
It is ironic that your previous blog post was an article about how becoming a successful trader requires having strong discipline to manage risk properly, conserve capital, and grow your account in a slow but steady manner.
If only these "high flying geniuses" could have been convinced to follow the "basics" instead of going "all in". Their lack of foresight has hurt everyone. Unfortunately I don't think the pain is over yet as there are probably still a lot of skeletons in a lot of closets.
As for the issue of whether Mr. DeSantis was too highly compensated for doing his job, he only accepted what his employer (and by extension the market) was willing to pay. I have never heard of any person, from the corner store cashier, to a union grunt, to a company manager cutting their own pay because their employer was being "too generous". Has never happened, never will.
Sorry for the long rant...I just had to vent a bit, and I haven't even been affected much by this chaos, mostly inconvenienced. I truly feel bad for the people that have been steam-rolled by events that are not of their making and are beyond their control. Good luck to all.
Revealing and cogent. I rather expected AIG resignations after Liddy's appearance on capitol hill. The company is now eating itself.
Obama made a mistake when he indiscriminately tarred all AIG executives with being greedy and of being rewarded for incompetence with bonuses paid for by taxpayer money. The political reaction was just way over the top.
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