Please Don't Blame the Plumbers

As I know many people working in the financial services industry whose annual compensation is made up in a significant amount by annual bonuses (not the million-dollar kind), as well as stock options (which are often worth almost nothing in this day and age), I wanted to reprint the below op-ed from the New York Times. It states better than I could the problem I have with the fuss over the AIG bonuses -- the real anger of the public, and the manufactured anger of wealthy politicians, is like a shotgun: it hits too many targets and is too dangerous.

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

The Talmud reads, "Never pray in a room without windows." Never pray without the world in mind, in other words. The purpose of the spiritual life is not to save us from reality. It is to enable us to go on co-creating it.

- Joan Chittister

Mutually Assured Destruction

For those of you who follow these things, I'm having another MRI on Saturday morning, of my cervical spine (i.e. neck) and brain. The spine scan is to check in on those next two disks, C3-4 and 4-5. These are the two disks above the ones that were removed and replaced during my surgery two years ago. (Has it been that long?) At the time, the disks looked pretty crumbly, but the surgeon said that nobody likes to fuse 4 disks at the same time -- makes it more likely that the fusion won't hold. Last year, my MRI showed that those two disks were looking pretty bad. The surgeon said something like, 'I don't think we have to do anything about it now, but in a year or two we'll probably need to go back in there.' So, now it's a year later. I'm a little trepidatious about what they're going to find. Considering that visiting someone in the hospital now makes me break out into a cold sweat and getting an IV gives me a panic attack, I'm not looking forward to more surgery, even though intellectually I know the surgery isn't that bad and the recovery is do-able. Besides, I'm in for more surgeries in the future no matter what, so I may as well get ready to suck it up.

As for my brain, they figured they'd throw a brain scan in there while I'm in the tube, to check to see if I've developed any of those telltale lesions that show multiple sclerosis. I've pretty much decided (no matter what they say) that I have some kind of weird, mutant MS that just isn't fitting their careful parameters for what the disease is, so I don't know that I care whether the scan shows any lesions. Either way, I feel rather vigilante about the whole thing. These docs are caring and well-meaning, but they seem very limited in their viewpoint by lists of diagnostic criteria and protocols for treatment.

I am no new-agey, holistic-medicine devotee, but I've just kind of decided that for all their brilliance and kindness, the neurologists are of limited use to me now. It's up to me to work with my body to try to help it heal, or at least to reach detente. You might know that feeling of being "in" your body versus fighting your body every step of the way. I am working on being in my body. I am very sensitive to changes in my body -- I knew when I was ovulating, I feel a migraine coming on very early, I can tell when I have allergies versus a virus, I know the weather by the state of my knees. But I often look at my body as the adversary. Time to make friends, or face mutually assured destruction.

Ornery

Abby has decided that hiding things is fun. She used to "throw" a tennis ball for Bailey, our Golden Retriever. Now she takes the ball, squirms into the tightest corner she can find behind a piece of furniture, and carefully places the ball on the floor, often peeking out to make sure Bailey knows she's being thwarted. This is what we in Maryland call "ornery."

Last night my darling daughter helped me discover that I must like these Twilight books more than I thought. I am about 3/4 through the second book, and after the baby went to sleep and I had finished straightening for the cleaning crew, I went to the end table to retrieve the book, planning to read it before bed. But it was nowhere to be found. I spent over ten minutes searching the first floor for the book. I finally found it stuck behind the couch in the sunroom. As an extra flourish, she had wrapped the book in a kitchen towel before hiding it.

Abby enjoys taking things out of the refrigerator, throwing things over the baby gate, strewing aluminum foil or waxed paper over the floor, emptying her diaper bag or my purse, changing the TV channel with the remote and wrapping "Bailey balls" (R's term for balls of fur that end up under furniture) in wet wipes or Kleenex. She likes her toys, too, for sure, and she especially likes books, but she seems to really enjoy physics, and experiments in psychology -- how to make Mommy or Silvia or doggy or kitty run, jump, search, or grumble in frustration.

I'm glad she's so intelligent (scary?) and curious (destructive?). I'm glad she is brave (fearless?) and confident (pushy?). She's ornery. She's my girl.

Cheerful Channel of God's Provision

I recently took a course at church called "Finding Your Spiritual Gifts." It was too short, and too superficial, but I still found it to be thought-provoking, and also a bit scary on the cusp of my 40th birthday (1 week from today!). One tool we used was a pamphlet put out by the Catholic Church called the Spiritual Gifts Inventory. It's a questionnaire whose results are tabulated into one's top 5 or 6 'spiritual gifts,' which are basically capacities that God has given us to empower us to freely choose to do certain things in the world. My 5th top gift was "Giving." The short definition of this gift is this: "The charism of Giving empowers a Christian to be a cheerful channel of God's provision by giving with exceptional generosity to those in need."

I will admit that I have always been a generous giver. I've given to church, to dozens of causes large and small, to personal friends or colleagues who needed it, to homeless people at stoplights. Problem is, I have also always been a prodigious spender on myself. It doesn't do much good to anyone if I break myself to give to others, and yet I never quite got the idea that if I wanted to be generous (which I very much wanted to be), I needed also to deprive myself, at least of immediate gratification. Apparently, I liked the idea of an ever-expanding pie, and when I was single and living beyond my means, it was easy to pretend that the pie kept growing.

I think I learned all this from my dad. He also broke himself giving money away. Not to church, but to friends, colleagues, causes, waitresses at the diner, and, most broadly, to his ex-wife and kids (us). When I was about 15, Dad, who was a part-time, divorced dad, gave me my first credit card, allowing me to buy gas, snacks, movie tickets and also things for my friends at the mall. Granted, our living conditions with mom were incredibly poor (not to mention dangerous), but it was still excessive. When I went to college, Dad told me I could buy as many books as I wanted. So I racked up huge bills at the college bookstore --which also sold art supplies, music, clothes, and even makeup. Perhaps out of his frustration at being taken advantage of this way, my dad has come out irked and even bitter about his history of giving, feeling that he never 'got anything' for all his generosity.

I don't have that feeling of bitterness -- only a few people have ever taken advantage of my generosity -- but I do feel abashed at how childish I have been in the past. Sure, it's easy to throw money around when you make a lot and you borrow even more. One gets a lot out of it, too -- you get to feel proud of yourself (even when you make an anonymous gift), patting yourself on your back for your sense of mercy, kindness and compassion. You get to feel "rich." Less crassly, you get to feel like you're doing something, without actually getting off your behind, to fix the injustices you see in the world.

When I went into college, my father and I had big arguments about the direction my life should take. He thought I should aim for a high-paying career, and then use the money to help others, ideally by starting a foundation or something similar. I thought I should forswear riches of my own and work in the trenches of social justice directly. To his frustration, I majored in women's studies and spent my years in school on soap boxes, in the editorial pages, and debating publicly. To my frustration, I ended up in a high-paying career, and using what money I had to help others AND myself, without succeeding in either respect.

The federal budget is similar, I think. We in the United States are rich, compared to the vast numbers of humanity. As such, we love to throw money around, feeling good about ourselves, sometimes making a positive difference, sometimes being taken advantage of, sometimes feeling holier-than-thou and sometimes feeling bitter that we can't buy love. There are so many problems to solve, and yet there are also so many strictures on the amount we can actually spend. I am clearly unqualified to decide where the boundaries should be. But I can recognize the illness.