Yesterday, I published a link to a resignation letter by Jake DeSantis, an executive vice president from AIG Financial Products that was sent to the New York Times as an Op-Ed piece. After rereading the letter and thinking about it way too much, I believe that his letter deserves a rebuttal.
Dear Mr. DeSantis,
Thank you for writing your clear description of your feelings. As an owner of AIG (now that the US government owns 80% of the firm), I wish to respond to you regarding the issues brought up in your letter.
As an executive vice president of the AIG Financial Products group, I fail to see how you can be totally without blame for the economic mess that your teammates left us with. As a senior manager with responsibility for business development for commodities, you had to be aware of the shenanigans that were taking place in your own groups.
I know a little about this. In the late ’90s and 2000, I worked for Computer Associates. There were times that many of us in management talked about deals that came in on March 34th. We chuckled and thought that somehow the powers that be had figured out a way to get more sales revenue. I guess it is not as funny today with 5 former executives (including the CEO and CFO) behind bars for fraud. I left the company in 2000, in part because there were too many corners cut, too many ethical dilemmas. I wish today that I had had the fortitude to confront those with ethical lapses directly. It might have made a difference to the people that I worked with. But enough about me.
You are a smart guy, MIT, years on the street. You had to be aware in years past — the good years — that some of the rewards that came to you, both financial and career-wise were due to corporate (and divisional) behaviors that were wrong and possibly even were company threatening. But you assuaged your conscience by the thought that “at least my hands aren’t dirty”.
Now, you worked hard for 11 months to close down AIG Financial Products. During this time, you accepted a $1 salary. But you were promised a bonus for staying on. The problem is that AIG Financial Products is bankrupt in all but the court of law. If the Federal Government had not stepped up and invested billions to prop AIG up, AIG would be under the leadership of a bankruptcy trustee and all contracts would be open to cancellation or renegotiation by a bankruptcy judge. This would most likely include your contract for retention.
Clearly, for the past 11 months, you have been doing better than a majority of Americans. You have had a job and benefits. Compare this to the many people who have lost their jobs because of the havoc wrought by AIGFP. Think about the folks who have lost their homes because of your company and others on Wall Street that created magic to hide the financial risks that they were taking. There are many people in America today, who like your parents are working multiple jobs, who have it tougher today and have a cloudy retirement future because of this magic that your group peddled.
Think for a moment about the auto workers. I am not a big fan of either auto manufacturer management or unions, but there haven’t been retention bonuses like yours for people in Lansing or Flint. There are a whole lot of people who have it much worse and are being asked to take it just a little longer. If the auto examples don’t work, check out Circuit City, Linens ‘n Things or Lehman Brothers. Think about others who contracts have been changed on a one-sided basis — forced furloughs, auto worker’s contracts, pay cuts. It is bigger than an AIG thing.
It amazes me that the folks within AIG are so tone deaf with regard to the PR aspect of this. They are surprised that there are a lot of people in this country (aka the owners of AIG) who have a problem with $165 M being paid to the people that had a hand in the crisis that they are living. Even Mr. Liddy, who should know better, seemed caught off-guard by the vehemence of the public response.
I guess my main message to you, Mr. De Santis, is to Grow Up. You have been richly rewarded by a company that failed on so many levels. If the company had succumbed to bankruptcy, most likely you would not have received your bonus. The message that the financial industry has always put out was that the pay was so high due to the risks involved. Now, Mr. DeSantis you get to see up close what risk reciprocity means in the bad times. So welcome to the growing team of folks that has been screwed by AIG.
I wish you luck in your upcoming job search and hope that you can put this episode behind you where it belongs.