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Wednesday, March 25, 2009

The AIG Game Changer

In today's New York Times, an employee of AIG has written a commentary that is in effect his so called two weeks notice. The employee, Jake Desantis, may have spun this scandal on its heels and turned it again into a direction no one expected.

DeSantis explains that most of the current staff of its troubled Financial Products unit were not there when the unit practiced terribly irresponsible policy in marketing and writing the credit default swaps that have caused so much trouble. In fact, most of the units' current employees were brought into the division in order to try and clean up the mess as best they could. This largely makes sense. It's very unlikely that AIG would have kept around the very folks that caused its collapse. Most of the people now in the division are likely brought in from elsewhere. DeSantis, like Liddy, has spent nearly the last year working at AIG for one dollar. In fact, he largely took on the role because AIG promised him the very bonus that is now the subject of so much scrutiny and controversy.

DeSantis has spent about twelve years at AIG and most of those were spent in their profitable equity trading division. He explains that he took on his role at the FP division even though there was steadier work elsewhere. He says he feels betrayed and let down by management which didn't stand up for he and his colleagues as they were demonized for the deeds of others. DeSantis says he will donate his bonus to charity.

What this means is that Congress has spent the better part of two weeks demonizing folks even though they ultimately had absolutely nothing to do with the financial meltdown. It means that folks like, Andrew Cuomo and Richard Blumenthal, AG's for New York and Connecticut, both held as heros trying to get bonuses back, are in fact, thugs that have been harrassing and intimidating private citizens threatening them into returning money they rightfully deserved. It means that everyone that demonized these bonuses and everyone that received them did so without having most of the critical facts. It means that Congress has lead everyone on a wild game of finger pointing when in fact, all that was needed was a calm understanding of all the facts. It appears that most of the folks currently in the FP division are fine folks that were given the duty of trying to clean up a mess and for this they were promised bonuses. Now, it seems contrived populism has put those bonuses at jeopardy.

9 comments:

Anonymous said...

Awww, poor little rich boy...guess what, despite the fact that Mr. Desantis's division was profitable, the whole company has gone belly up; their bonuses could only be paid with tax payers' money!
It is being implied that if a company goes belly up due to say, the accounting staff's errors, the customer service division or executive offices should not feel any effect. Stop and think about that...I am sure you logic will kick in any second now.
So, sorry Mr. Desantis, I guess your American Dream, like those of the greedy people who bought more house than they could afford, has been washed away. Maybe you should have considered a job with the gov't, like those McMansion homebuyers should have bought a trailer instead. Sorry, that was uncalled for...but then again, so is having to put up with the wealthy whine.

mike volpe said...

That's entirely beside the point. The company didn't go belly up. It is still functioning and the reason that everyone was so upset about these bonuses is because we were lead to believe they were going to the people responsible for creating this crisis. Instead, they went to people that were brought in to try and clean up the mess.

Chooch said...

To the comments from Anonymous: Wow dude, class envy is so pathetic. Sorry you're broke, try working harder. Then you might actually get to see inside one of those McMansions that fill you with such impotent rage. Or you could continue to vote for the mutts who caused this mess, and hope they'll take somebody else's wealth and give it to you instead. Good luck with that, loser!

Anonymous said...

I agree, class envy is pathetic. I am unimpressed with your need for an immediate personal attack,which is totally unfounded and a complete assumption about who I am and how much money I earn and possess.
Don't you have any comment on the justice of this situation?
Anyhow, I do find this whole Desantis sympathy schtick today disturbing, as it shows how quickly the public is being manipulated week by week.
And by the way, AIG did go belly up...they're only still functioning due to the tax payers' money.
NO bonuses should be paid to anyone in the company, they should feel grateful they could keep their jobs...oh wait, I forgot, they should have gotten their golden parachute too.

Anonymous said...

Class warfare, begets class warfare. The power of politicians to wage same should be taken away. The progressive income tax is antithetical to the takings clause and founding prinicples underlying the Constitution. Screw Lincoln, FDR and LBJ for their contributions to the almighty Federal Government. Don't use the word "fairness." Makes my blood boil.

Anonymous said...

Maybe the fed should just refund every penny of tax money AIG and their employees ever paid?

THe US is bankrupt maybe they should stop making all their bonus, uh I mean welfare and entitlement checks as well?

Anonymous said...

The populist rage is about more than just people thinking that bonuses were given to the ones who caused this mess. Its about people disgusted with the idea that corporate executives essentially get to set their own pay.

But mostly, its about people who are just plain sick and tired that EVERYTHING in this country is designed to accommodate the financial services industry.

And Mike, that article about Georgia Republicans hesitant to pass a resolution honoring Obama sounds a lot like Democrats who complained that the Republicans in Congress used to insist on resolutions honoring both President Bush and the troops rather than just the troops.

mike volpe said...

Well, we can get into word games, but only bankruptcy has the power to renegotiate contracts.

DeSantis accepted his position at $1 per year under the assumption that there was a big bonus waiting for him at the end. He has been demonized as somehow being responsible for the crisis when in fact he was brought in to clean it up after the fact. DeSantis had nothing to do with the problems. He was there to fix them. If folks aren't paid to clean up the mess, there will be no one to work there.

mls gta said...

It's all a bit disturbing, isn't it. But for me, personally, the most disturbing fact is the way the "scandal" has been treating by the politicians.

Since the government owns 80% of AIG, it should be in its interest to get AIG back up and running without any more financial injections, i.e. make it profitable again.

It's no secret that to be successful in the financial sector, one needs to have a good name or image.

By going public, the politicians partly help to destroy whatever was left of the AIG image. I bit stupid, IMO.

Take care,
Julie