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Analysis: AIG Letter Reflects Tone Deaf Wall Street

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.