Open Letter of Resignation from VP at AIG

[TheOsakaKoneko]

Letter of Resignation, posted at the New York Times

The following is 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.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

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.

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.

My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.

That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”

That may also be why you authorized the balance of the payments on March 13.

At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.

I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.

You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

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.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.

That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.

Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”

Sincerely,

Jake DeSantis

My favorite comment from the New York Times website.

I just think this comes decently close to how I feel about it instinctually.

[n0Mad]

While everyone else seemed to be lauding Obama's statements that nobody from AIG deserves a bonus, I tend to not trust the media and knew that there was more to the story than what we were told. The above article does bring to light some things I suspected and I feel sorry for all who suffered, both taxpayers and executives alike. Sure, high level executives may seem like they're overpaid, and maybe they are. But somebody getting minimum wage in a hot, sweaty factory may look at your cushy $9/hour job and think you're getting overpaid to stand behind a cash register and do nothing but push buttons all day. It's all relative, and I think that just maybe some people deserve to get paid for all the hard work they've done.

[Simon Bar Sinister]

Fuck this douchebag and all of his thieving collaborators. Bring back the Eisenhower-era top tax rate.

[candyman]

While everyone else seemed to be lauding Obama's statements that nobody from AIG deserves a bonus, I tend to not trust the media and knew that there was more to the story than what we were told. The above article does bring to light some things I suspected and I feel sorry for all who suffered, both taxpayers and executives alike. Sure, high level executives may seem like they're overpaid, and maybe they are. But somebody getting minimum wage in a hot, sweaty factory may look at your cushy $9/hour job and think you're getting overpaid to stand behind a cash register and do nothing but push buttons all day. It's all relative, and I think that just maybe some people deserve to get paid for all the hard work they've done.

Yes, very true. What about athletes? I know that the way they get paid is different but...you get told what you are being paid and if you do something wrong or get fired...they can take that away. And athlete signs a contract from millions and can spend half of the years on a bench, and still get it.

Not everyone in the corporate world is a greedy asshole...some of them just can't easily change the way that their company treats them.

[n0Mad]

Good point candyman. It reminds me of the hypocrisy of those celebrities (actors, musicians, athletes, etc.) who hop on a bandwagon and chastise corporate executives for getting paid six, sometimes seven figures for running a failing company. Yet tell that same actor or athlete that they're not going to get their millions because their movie tanked at the box office or their team lost more than they won. See what they say then.

[candyman]

Good point candyman. It reminds me of the hypocrisy of those celebrities (actors, musicians, athletes, etc.) who hop on a bandwagon and chastise corporate executives for getting paid six, sometimes seven figures for running a failing company. Yet tell that same actor or athlete that they're not going to get their millions because their movie tanked at the box office or their team lost more than they won. See what they say then.

Well, you would cry too if you couldn't afford your third Hummer or get that gold plated shark tank!

[Shade Everdark]

I can understand this fellow's indignation at what may seem to him to be a breach of his employment contract, but I cannot conjure any sympathy for him. Circumstances have changed, for him and everyone in the country, and increasingly around the world. I have to suck up not getting a measly cost of living increase, so he can deal with not getting his retention bonus. I don't like it, but I'd sooner have no increase than no job. The world's a hard place, and as I'm often reminded, not fair.

Piss on his subtle, unconscious arrogance.

[TitsMcGee]

I can understand this fellow's indignation at what may seem to him to be a breach of his employment contract, but I cannot conjure any sympathy for him. Circumstances have changed, for him and everyone in the country, and increasingly around the world. I have to suck up not getting a measly cost of living increase, so he can deal with not getting his retention bonus. I don't like it, but I'd sooner have no increase than no job. The world's a hard place, and as I'm often reminded, not fair.

Piss on his subtle, unconscious arrogance.

I don't think he should have gotten it either, but the fact of the matter is that Mr. Liddy knew for months about the bonuses, and never bothered to try and get the contracts changed. Frankly I'd be pissed too since Liddy just threw them under the bus.

[torn asunder]

you know what?

the fact is, that if they hadn't gotten this bailout, they likely wouldn't have had the money to pay those bonuses. if they hadn't gotten it, what would they have done? obviously, they wouldn't have paid it! why the fuck do they think that gov.'t money entitles them to those bonuses?

it's asinine. the gov't needs to take their money back, & let the fucker fail...

[ttogreh]

Mr. Liddy lied to the people that were expecting these "bonuses", which by the way, are only called "bonuses" because of our byzantine tax code.

The fact of the matter is, these people would have left and may have found employment if they were not lied to. Instead, they stayed in jobs that were tainted with the stench of failure. These people wasted months of their lives doing thankless work that had to be done.

Did they deserve more than a million dollars? I doubt it. Did they deserve to be lied to? No, they did not.

Gee, it's not like Mister Liddy could have warned these folks ahead of time, and asked them to give back some of their money, or took control of the story weeks in advance and explained what was happening...

No... that would have been too difficult...

[Troy Spiral (13)]

Big Banking: SURE we'll resign (and give back our bonuses) right after all you politicians give us back all the campaign contributions we been stuffing your pockets with for years.... heh. Yeah right.

Or it could be done in the reverse order the way Torn Suggests. Neither is gonna happen though too far gone, would take a time machine to do it properly.

[candyman]

I reall don't know why people are bitching about this. It has been like this way back before we even had money and proper clothing.

Know this: You are not dead, your friends are still with you, and funky is is funky...so stop bitching or I will be forced to come over there and show you in person how much I could care, which is not much, and I could make a pie chart of all the things that I care more about that...the list includes global warming which I care very little about too...

My favorite bit of advice that I like to give people: This is life, try not to shit your pants, its not very comfortable through the long hall...if you make it that far that is....

[Troy Spiral (13)]

I'm not sure there is a whole ton of "bitching" is there? Seems more like commentary. At least the fire-breathing seems to be minimal in comparison to some other subjects.

[candyman]

I'm not sure there is a whole ton of "bitching" is there? Seems more like commentary. At least the fire-breathing seems to be minimal in comparison to some other subjects.

Yeah, it is mostly commentary. However, I keep seeing how people are stuck on little points like this that, while they still suck, cannot be changed. Why not start looking at how to fix things?

There is bitching in this thread...either that or the message was put up very poorly.

These happenings are something that, even when put into terms we can understand, is still something that we cannot understand...if that makes any sense.

I might just be staying up too late though...

[Troy Spiral (13)]

These happenings are something that, even when put into terms we can understand, is still something that we cannot understand...if that makes any sense.

If i'm understanding (pun? that the right word?) you right it goes along with a point I'm always trying to highlight.... that is... stuff is complicated. A lot more than people like to think.

Many tend to snap to a conclusion of a complicated subject and then entrench in it. When in reality many things are very complex and detailed to the point that making any overly solidified assumption about what the "right" answer is, typically is very premature.