Analysis: AIG Letter Reflects Tone Deaf Wall Street

By: Brian Montopoli
Topics: AIG

4876635The New York Times today printed a resignation letter from Jake DeSantis, an AIG executive vice president, to AIG CEO Edward M. Liddy.

In the letter, which DeSantis appears to have given to the Times, the now-former AIG executive explains that he had nothing to do with the credit default swap transactions that led to the company needing a massive government bailout.

He complains that Liddy has failed to defend him and others at the company who were not involved in the problematic transactions, writing that he feels 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."

He also writes that the New York and Connecticut attorneys general have effectively tried AIG employees in the press and that their threats to "name and shame" bonus recipients were "baseless and reckless."

Some of DeSantis' complaints are valid. Subtleties and important distinctions were lost amid the populist uproar over the AIG bonuses, and threats to name bonus recipients, which were never acted upon, were misguided. DeSantis and others who did not act improperly did not deserve to have been lumped in with those at his company who did.

And yet DeSantis' letter reflects a tone-deafness that is particularly galling during the current economic crisis. He writes that he has been "spending 10, 12, 14 hours a day away from my family" working for AIG and that the "profitability of the businesses with which I was associated clearly supported my compensation."

(AP Photo/Mark Lennihan)

Many Americans work long days for far less compensation than DeSantis accumulated over his 11 years at AIG. Though DeSantis deserves to be well paid for his work, his complaints about his recent treatment – coming at a time when many Americans are being paid far less for their hard work, if they can find a job at all – reflect a Wall Street culture that is so insulated from the rest of the country that even the relatively good actors do not realize the privileged space they occupy.

Despite the AIG debacle, after all, DeSantis remains a clear economic winner. While he does not specify his salary in the letter, he does note that his bonus this year $742,006.40, after taxes. While he is giving back all or most of that bonus, he is presumably keeping the millions of dollars he has made from the company over the years.

There is nothing wrong with that. But there is something troubling about his apparent belief, reflected in both the decision to release the letter and in its contents, that he is somehow deserving of our sympathy.

Did DeSantis experience unfair treatment over the past year? Yes. Would most Americans nonetheless trade places with him in a heartbeat? Most definitely.

Yet there is little indication in the letter that DeSantis realizes as much, other than a quick acknowledgment that "some might argue that members of my profession have been overpaid, and I wouldn't disagree." He writes that "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."

But Mr. DeSantis is not a plumber. He is a Wall Street executive who has made millions of dollars. And it's safe to assume that most plumbers don't believe he has gotten a bad deal, AIG scandal notwithstanding.

President Obama has spoken of the need to change a Wall Street culture of "excess greed, excess compensation, excess risk-taking," which he says has helped lead us to the current economic mess. While DeSantis did not directly act to get us there, his letter suggests that he has lost perspective on the situation faced by most of his fellow citizens. His decision to give up his bonus is laudable. His play for our sympathy is not.

Brian Montopoli
Brian Montopoli is the senior political reporter at CBSNews.com.
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by rsmik April 1, 2009 5:45 AM EDT: I don't see a disconnect as much as the usual entitled contract or union employee's attitude. DeSantis wants everyone to know that he didn't do anything wrong, he was promised a huge bonus in exchange for his dollar salary, and his vague reasons as to why and how and to whom he is going to donate that bonus is just a spoiled child's attempt to make everyone feel sorry for him.; Reply to this comment


by truthdragon March 27, 2009 9:11 PM EDT: I've worked for many companies who went belly up. I usually saw the symptom's within my first year there and fought like hell to get them to change their personnel behaviors as well as the President and CEO's way of looking at things. No one changed their behaviors. I was a peon. Hourly paid and saw through the smoke, mirrors, bravado, egotistical prowess. So with all my fights and several layers of scarring I've received. Builders Emporium failed, and another company just recently blew its feet off with poor product design. I guess its not worth it anymore to work for anyone as they don't seem to have their heads on straight caring about everyone's future for the long haul. It was all immediate gain and self inflicting-political turmoil. Forget the quality or sound judgment. AIG, I'm happy that he resigned. Maybe in a few years he can look back and see where he truly fit in and maybe can build a more responsible company in the future. But my sympathy or empathy for him I can't give. I've been there myself and watched company people tear the company apart. I kept my perspective and how the collapse affected everyone. Here it seems these Exec's have lost their way and a few years living out of a cardboard box will do wall street and main street some good. Me, hell I'm part of the Unemployed...with how companies are run now days just might become permanent. Mostly because we are in a society called "I get what I deserve syndrome"..."Golden Parachutes" for poor judgment and lack of ethics. Streets and cardboard boxes belong to those who know the differences and are mostly kicked to the curb 90% of the time. Having a head on ones shoulders is a mistake in the USA. Thus the Repug's are a mistake and pugs are cute, Repugs are not. As most of the business's that failed who I worked for were mostly Repug's and thus were very ugly with over 3000 wrinkles per square inch on their bodies. Wonder if this makes them their own breed u think?; Reply to this comment


by markangeloo March 27, 2009 10:29 AM EDT: Tone deaf ?
The politicians in congress
& the foreclosed ex-home owners
or Brian Montopoli
aren't exactly singing in the choir !!; Reply to this comment


by WITHINMEANS March 26, 2009 4:11 PM EDT: This article fails to note that DeSantis was working for a salary of $1 (one-dollar) trying to clean up the mess that long departed AIG staffers had left.
Posted by Widget101 at 10:05 AM : Mar 26, 2009

How many years do you have to go back to be part of the mess? 11 years seems to put him in the thick of it. Also he made no claims to trying to fix what was wrong or repair the damage already wrought. he just whined about what he lost. Hard to feel sorry for a multimillionaire made on the backs of those who know how to actually toil for their small share. At his supposed level to claim he did his part and his little space of the company was ok is rediculous to the point of disgusting.; Reply to this comment


by wongae March 26, 2009 2:53 PM EDT: I agree with the article that the letter writer (while sounding like a good guy) still shows a disconnect with the people on Main Street. Sure, he may have taken a $1/year salary for this last year, but that doesn't count any multi-year vesting of stock options or RSUs.
If he can take a token salary, then he's not living paycheck-to-paycheck; Reply to this comment


by bessfithian March 26, 2009 2:02 PM EDT: I feel that the banks do need a morgage bailout in order to help the people that received these morgages. How ever I do blame the realistate agents as well as the banks morgage officers who talked people into buying homes that they could not afford!

But the bail out money should not go to executives bonuses that is out ragious especially the AIG bail out and there executives receiving there bonuses all of that money should be returned to the tax payer especially those that have lost their jobs and their homes.

As a tax payer and home owner that has been severly affected by the economic crises I feel that those executives that received bonuses of over 27, 000 dollars should give that money back to the tax payer. The reason that I stated that amount is because that is what I and my two children had to live on last year.; Reply to this comment


by cadoras March 26, 2009 1:49 PM EDT: "If AIG had gone out of business, he would not have received a bonus or his $1 salary."

Yep. And Desantis would have gotten work elsewhere, or hell, just stayed home for a year, and would be better off.; Reply to this comment


by cadoras March 26, 2009 1:21 PM EDT: This is ridiculous sensationalism, that dilutes our focus on the real issues.
First, the guy was not responsible for the economic situation.
Second, if his letter is correct, he received $1 for a years work, with the promise of a bonus at the end. When he gets the bonus he was promised, he is vilified.
740k is a lot to make in one year, sure, but what is the average yearly pay for someone doing his job?
And if he is gives that up as he says, the money that was promised to him for compensation, he worked for $1 for a year.
Rich or not, how many people can honestly say they would do that?
The press, as usual, only reports the spicy angles of news items, to drive sales and click-throughs. They have no interest in investigating the issue to see if maybe Desantis is not the "bad guy" after all. They know the drama of painting him and those with him as evil rich people stealing yet more of taxpayer's money is what people want to read.
Even though the real culprits are the lawmakers who deregulated, or did not regulate enough, these financial institutions. The executives of these companies are no more accountable than the average Joe who foolishly bought a house they could not afford.
No one wants to take their own piece of the blame, they want to lay it all on an easily visible scapegoat, handed to them on a platter, by "news" media that these days is more entertainment than substance.
This whole thing is a sideshow.
Let's get back to fixing the issues.; Reply to this comment


by standto March 26, 2009 1:14 PM EDT: Jake whines when the U.S. taxpayer declines to give him a standing ovation. AIG contracts and bonuses are like the "no blue M&Ms" rock artist contracts and Jake was not paid for outstanding outcome, witness the company performance--his bonus was extra money for a mediocre job. A plumber would be embarrassed to receive a bonus for work performed at AIG.; Reply to this comment


by bobnjersey March 26, 2009 11:47 AM EDT: [You clearly missed the entire point of the article. No one begrudges anyone with "a profitable business or career" their salary UNTIL they business were given taxpayers money, and then had the gall to whine about how unfairly they were treated when it was discovered that they were being rewarded for the failures of their company while their company is being given taxpayer money. ]
[Posted by raflin1 at 8:05 AM : Mar 26, 2009 ]

you're clearly missing the point of the whole issue ... and the damage that will ensue as a result of the infantile behavior of many on this issue.

once again ... the bonuses have nothing to do with performance ... and they were contractual obligations entered into prior to any govt intervention.

congress provided the money without conditions ... that means 'no whinning about how the money is spent' ... and all that results ... from congress ... from the public ... from everyone ... is 'give the money back' ... 'you didnt earn it' ... 'let them fail' ... and 'we are going to publish the names of the execs'.

the money was provided by congress with no conditions ... aig spent the money honoring their contractual obligations ... there's a rule of law in this country and you can't just change the rules in the middle of the game becasue you don't like the way it 's going.

what are you going to say when you can't get anyone to commit to anything ... because they're concerned that the rules will be redefined later by the whinning babies who don't make out so well start their witch hunts for those they despise?

this is a very dangerous path to follow ... and all those that are crying for their heads now will be responsible for what comes from it.; Reply to this comment