Dear A.I.G., I Quit!
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
Op-Ed Contributor - Dear A.I.G., I Quit! - NYTimes.com Page 1 of 4
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.
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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
Op-Ed Contributor - Dear A.I.G., I Quit! - NYTimes.com Page 3 of 4
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
Well put Jake. Well put.
Coble
