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Obama stunned by bonuses given by bailed out AIG
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Topic Started: Mar 19 2009, 08:52 PM (1,129 Views)
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Dark Founder
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Mar 25 2009, 08:21 AM
Post #21
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Lt. Commander
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Unpopular as it may be, here is the perspective of an AIG employee who would have received a bonus. (emphasis added by me)
http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=1
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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 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.”
Sincerely,
Jake DeSantis
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wissaboo
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Mar 25 2009, 08:29 AM
Post #22
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Admiral
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how much money has actually been paid out in bonuses? and what percentage is that of total bailout money? I think this may be blown way out of proportion because it just involves numbers that people can understand. Rather than all those zeros in the grand total
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Corwin8
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Mar 25 2009, 10:13 AM
Post #23
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Panic, Chaos, Disorder....My work here is done.
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Obama is stunned by stray oxygen molecules.
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Jack Sparrow: "Did no one come to save me just because they missed me?"
Jack Sparrow: "Why should I sail with any of you? Four of you have tried to kill me in the past." [looks at Elizabeth] Jack Sparrow: "One of you succeeded."

 Let the bridges I burn light the way.
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Dark Founder
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Mar 25 2009, 11:28 AM
Post #24
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Lt. Commander
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- wissaboo
- Mar 25 2009, 08:29 AM
how much money has actually been paid out in bonuses? and what percentage is that of total bailout money? I think this may be blown way out of proportion because it just involves numbers that people can understand. Rather than all those zeros in the grand total The bonuses came to $165 million. That's a lot of money, no argument there.
However, AIG took $173 billion in bailout money. That's over 1,000 times the amount of the bonuses. As noted earlier, the larger scandal is the $120 billion that AIG gave to foreign banks.
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wissaboo
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Mar 25 2009, 02:55 PM
Post #25
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Admiral
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- Dark Founder
- Mar 25 2009, 11:28 AM
- wissaboo
- Mar 25 2009, 08:29 AM
how much money has actually been paid out in bonuses? and what percentage is that of total bailout money? I think this may be blown way out of proportion because it just involves numbers that people can understand. Rather than all those zeros in the grand total
The bonuses came to $165 million. That's a lot of money, no argument there. However, AIG took $173 billion in bailout money. That's over 1,000 times the amount of the bonuses. As noted earlier, the larger scandal is the $120 billion that AIG gave to foreign banks. I think it's just about impossible for most people to grasp numbers that big.
why were they paying out foreign banks? had they borrowed money from them?
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Kosh131
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Mar 25 2009, 05:45 PM
Post #26
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Vorlon Ambassador
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A few things....
I think that the problem here is that the these AIG execs have been incredibly tone deaf to the anger. Mr. DeSantis' column shows some of that tone-deafness.
It's NOT his fault other divisions of AIG screwed this up so badly. It's not my fault that my last job lost its biggest accounts or my current job is only making 60% of its sales goal. But I've been forced to make sacrifices, and so should they.
He whines about maybe having to give up 90% of 764K. For the 10% of that amount, I could settle all my debts and live quite comfortably on the pittance I am being paid. Honestly, the guy is kind of a whiner.
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Understanding is a three-edged sword.
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CaptDennyCrane
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Mar 25 2009, 06:16 PM
Post #27
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Shat Happens
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- Kosh131
- Mar 25 2009, 05:45 PM
A few things....
I think that the problem here is that the these AIG execs have been incredibly tone deaf to the anger. Mr. DeSantis' column shows some of that tone-deafness.
It's NOT his fault other divisions of AIG screwed this up so badly. It's not my fault that my last job lost its biggest accounts or my current job is only making 60% of its sales goal. But I've been forced to make sacrifices, and so should they.
He whines about maybe having to give up 90% of 764K. For the 10% of that amount, I could settle all my debts and live quite comfortably on the pittance I am being paid. Honestly, the guy is kind of a whiner. I am in Complete agreement. $74.6K will not only wipe all my debt, but will still leave me enough to put my kid through 2 years of her chosen college.
I'd like to bring this blurb to detail...
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...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...
First off....with regards to that whole letter, cry me a fucking river and let me break out the smallest violin I can find. there are people out there digging for a peach pit in a dumpster, of which that 10% of $746K that he gets to keep, would completely turn the lives of those people around, whereas to him its just another $75K to add the "enough that he saved during the economic boom".
...and what economic boom? There was a boom? I sure as hell missed it or it went right by me because I've been struggling my entire career and adult life. One payment of $746K....it took me between 15 and 20 years have ever earned that much in my life as a whole.
I have no pity or compassion for any of these people - let them deal like the rest of the people deal getting the ass-end of life seated on their face, and to take a big whiff....He has a hell of a lot of nerve complaining about getting to keep $75K in one payment - that's more than the average working American makes in a year. Is not my problem if he's elevated his living conditions to a level that less than that will not sustain him.
I'm sure his kid's ivy league college education and future career with all the "fuck-WHAT-you know, its-WHO-you-know" connections are already set and that his kids arent driving around in "heaven help them, hopefully its not a death trap" cars, with 2 or maybe 3 fully stocked refrigerators and freezers, with every single latest contraption and gadget they could ever want or even need and not needing to ever carry cash or worry about where they are going to sleep.
There are millions of people living much less modestly and I dare say barely living at all, with far far less.
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You cant expect 110% from others, when most times, they don't expect even 90% from themselves. -- Me. No matter how hard your day, no matter how tough your choices, how complex your ethical decisions, you always get to choose what you have for lunch.
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Dark Founder
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Mar 25 2009, 06:59 PM
Post #28
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Lt. Commander
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Well, it's getting a bit emotional in here and I'm not really interested in stoking the fires.
A few points though- If I hired either of you for a job and promised to pay you $750,000 $75,000, $7,500 or even $750, you'd expect that payment, especially if we had a legally binding agreement.
Furthermore, I'd bet you a Klondike bar that a bankruptcy court would have approved of those bonuses.
If we're going to be angry at anyone, it should be Congress and the new Administration. They are the ones who made the bonuses possible and are hoping that we will fall for their manufactured outrage.
Lastly, remember that this is chump change compared to the billions that AIG gave to foreign banks. I'm certain that money could have been used to extend unemployment benefits even further for those people who are barely living.
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CaptDennyCrane
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Mar 25 2009, 08:31 PM
Post #29
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Shat Happens
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Tell it to the guy whose out there working for a living, wondering what he's going to feed his family tonight out of the empty refrigerator and freezer and has to get creative with $5 worth of ground beef and some rice and figure out how to stretch it for 2 days.
This is the also the same guy who wont see money again until next Thursday, and all but $55 of it has to cover the rent check....which by next Thursday, will be late......again.
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You cant expect 110% from others, when most times, they don't expect even 90% from themselves. -- Me. No matter how hard your day, no matter how tough your choices, how complex your ethical decisions, you always get to choose what you have for lunch.
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Dark Founder
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Mar 26 2009, 08:14 AM
Post #30
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Lt. Commander
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Tell them what? That our government approved these bonuses and lied about it? That tax dollars that could have been used domestically went to foreign banks?
Sure, I can do that. Will they listen?
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