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Thread: What truly went down in AIG, MUST READ

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    Default What truly went down in AIG, MUST READ

    the following is a letter from an AIG employee to the president, announcing his resignation from the company. In the letter he describes the situation from his inside perspective. I've also got some audio to accompany this that i will upload later.

    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.
    Readers' Comments

    "Hint: If your company accepts tens of billions of dollars from taxpayers, consider your bonus renegotiated."

    Rolf, New York

    * Read Full Comment »

    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.”
    GLENN: Fantastic. What was it the president said? Didn't the president say that he was no longer going to let us be ruled by fear? Where is anyone on the left! Where are the good Democrats on the left! I believe in you. I don't agree with you, but I believe in you. I believe you're a human being and a thinking American, not just a zombie. Where are you? Where are you? What have we turned into? We are now -- we now have ACORN lining up buses, a media that does not expose that the buses were rented and paid for and organized by ACORN! We have them going to poor districts, rounding up a bunch of people: Hey, you've got to come with us; you want to do it; quick, come on the bus; it will be fun. And then taking them to these AIG houses and then calling the press and saying, "There's protests, there's people protesting right in front of the houses." And the press comes and nobody asks, "Who rented the buses? How did you guys get here? Who are you people?" And the day before that, the day before that there were protests in front of AIG: Take these taxes back! These people are criminals!

    You've got -- while congress is saying these people should commit Harry Carey, nobody in the media decided to ask, who are these people in front of AIG. Do you know who they were? They were organized by the Service Workers' Union. Wait a minute, the service workers, the service workers, the service workers, why do I know that union? Why does that sound -- oh, I remember. ACORN is in bed with Barack Obama. ACORN helped get out the vote. ACORN is now getting billions of dollars. ACORN and these community groups getting all kinds of money. While you can't donate any more if you're in a certain tax bracket and actually, you know, write it off, you don't need to do that because the government will take care of the community needs through organizations like ACORN. While they're in bed, who's doing the bidding in front of the AIG houses and stirring up the hate? ACORN. Who's in front of AIG? The Service Workers' Union. How are they connected? Let's go back to Nevada, shall we? Let's go back to that crucial race in Nevada. Do you remember? Hillary Clinton, Barack Obama, everyone was saying, "Well, Barack Obama, he's going to be the winner. Hillary Clinton should just get out. No, no, no, Nevada, she's popular, it could work there." All of a sudden there's this big scandal about, you can't ask people to leave work, we need to be able to put these voting stations in the casinos so our people can vote.

    When did anyone ever say that they were going to put a voting booth in your cubicle? When did they ever come to your office: "You have to leave work." But the unions arranged it so they could put voting booths in casinos. Which union was it? Oh, my goodness, it was the Service Workers' Union. Oh, that's weird that they're now -- why is the Service Workers' Union, why would they be organizing that in front of AIG? It's an insurance company. What is the service workers? You mean the people who work in hotels, that union? Why are they involved in front of AIG?

    America, there is a show going on. This is incredible to me, and it's incredible to me that no one in the press is doing their job and asking the damn questions! Who really was responsible for the CEOs at AIG? Where did they disappear to? Where are there bigger bonuses going to Fannie and Freddie, two government institutions run by... oh, my goodness, wait a minute. Run by Barney Frank and Christopher Dodd. Hey, by the way, didn't we just find out that Christopher Dodd's wife worked for AIG in Bermuda? Why did AIG have a business in Bermuda? That's not a place to have a business. Oh, unless it's a tax dodge. Oh. So she was working -- he lives in Washington, or in Connecticut. She does, too, but she works in Bermuda for AIG. I wonder if there's any connection there. Oh, my gosh, by the way, did you hear about that bank that Barney Frank helped out? It was funny. Barney Frank was sitting there and a local bank from his district walked in. It was a minority bank. And they walked in into a meeting with the treasury and Barney Frank and Maxine Waters, they are all sitting there and they say, hey, guys, we need some money, we need a bailout right now. And the treasury starts to say, no, no, wait, guys, this is not what this is for, we just want to find out -- they went right to Barney Frank and Maxine Waters and talked to them and said, we need this money, we need it right now or we're going to fold. They got the money. Treasury says they were surprised that all of a sudden how that one happened, how this bank just turned the tables on everything and they got their money right away. You know what's weird? This is so incredibly weird. Do you know who's on the board of directors of this bank? Oh, my gosh, I didn't know. Maxine Waters' husband. Maxine Waters' husband. Isn't that weird. My gosh, I'm glad we're not paying attention to that story. I'm glad we're just nailing the people who are working for a dollar a year, I'm just glad that we're nailing their ass to the wall. You know, t he ones who had nothing to do with it.

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