Fantastic, must read OpEd in the NYT today by Jake DeSantis, the soon-to-be-former head of equity trading at AIG.
DeSantis argues that anyone not involved in the CDS side of FP was entitled to their contractual bonus, and that penalizing those people with nothing to do with bringing down AIG is counter-productive. He makes a very persuasive argument:
“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.”
The bonuses are a flea on an elephant’s arse, a few million dollars out of trillions, and the tail was wagging the dog. On the radio yesterday, I tried to make the point (over a very insistent interviewer) that we are in danger of missing the bigger crisis.
Unfortunately, this is an easily understood concept, where as how we got here is not.
Go read the full DeSantis piece . . .
Dear A.I.G., I Quit!
NYT, March 24, 2009