Via Bill Arkansaw, a letter published in the NY Times from Jake DeSantis, the Executive VP of AIGFP, to Edward Liddy, AIG’s CEO, announcing his resignation. DeSantis’ main point seems to be that he had nothing to do with the deadly credit default swaps, and that he (and other upstanding AIGFP workers who were not involved with that faulty insurance idea) shouldn’t be punished for something he didn’t do. His upstandingness is confirmed by his promise to donate his whole “bonus” from this year to charity.
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.
I understand the sentiment, and I should aknowledge Mr. DeSantis’ points more than I admittedly do. I understand that not everyone at AIGFP was involved in the CDS business, but I still can’t muster that much sympathy for the others. To make a cliched sports analogy: The CDS people may have made a huge error (a careless, mental error) while playing 3rd base, and this error seems to have cost AIG the game. But the fact of the matter is, everyone on AIG lost the game: the pitchers, the other infielders, the outfielders – all branches of the company necessarily must feel the taint of (and the loss caused by) the CDS people. I can’t really get myself to feel too bad about someone who worked in a company that was managed so poorly that it allowed the CDS disaster to happen. AIG took such a hit from those guys that it needed to accept $160bn and counting from the US government, and I’m sorry but everyone at AIG is going to have to feel the pain from that.
Which is not to say that the letter shed some positive light on some unpublicized goodness by AIGFP execs. I wasn’t aware that many execs (including DeSantis) had agreed to take a salary of $1 this year, and that these same people had been promised by Liddy that their bonus contracts would be honored as far back as October, even though Liddy played dumb and called them “distasteful” in a recent Congressional hearing. This does stand a good reminder to Americans (myself included) that the whole “bonus” issue is somewhat semantic; would I and others have been so mad about all this if instead of taking a salary of $1, these workers had taken a large hit in their salary and lost their “bonus” for this year?
As it stands, I’m with Krugman that the House’s flailing populist bill to tax TARP recipient bonuses at 90% is not a good call – what’s done (with AIG) should be done, and other TARP recipients should just take this time (as in right now) to restructure future compensation to something that is more in line with what I suggested just above. Such sensible and forward-thinking management will go far to prop up morale (by not subjecting these workers to the same degree of public outrage) in these other institutions and avoid the exodus of disillusioned workers that has evidently become a problem for AIGFP.
And one last thing: Jack, who are the “handful” who were responsible for the default swaps? Name some names, man. Let’s make sure those guys never work in this town again.
On a not completely unrelated note: I just heard on NPR that AIG has changed its name to AIU Holdings, Ltd, to which “Wait Wait… Don’t Tell Me” host Peter Segel quipped:
They’re trying to be something less hated, so they’re changing their name to OJ Simpson.