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.
[...] 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."
Point one: Liddy has agreed to take one dollar as compensation, despite the fact that most of this happened off his watch. Thuis writer has, as well.
Point two: The writer, Jake DeSantis, is an executive vice president of the Financial Products division of AIG, as "head of business development for commodities", the division that has very nearly, and still may yet, sunk the entire global economy. So I think the question must be asked...
Um, dude? WHERE THE FUCK WERE YOU????
OK, you had a different responsibility, I get that. But you know something?
I am an officer at a firm. My niche is very narrow, and I'm well paid for it. But as a point of order, we officers make it our business to understand what's going on in the rest of the company. Why?
You never know when you'll be put in charge of something else. That's the way American corporations work.
You ask why your CEO "betrayed" you. WHERE THE FUCK WERE YOU???? when your co-workers were scamming money and making bets on bets on bets?
If you want to understand what happened at the Financial Products division of AIG, let me put forth this analogy. It's simplistic and flawed, but it's not completely wrong.
I sell you a homeowner's insurance policy. That's a bet that I make that your house won't burn down. If it does, I owe you the agreed amount. If it doesn't, well, I've scored pure profit from you (your premiums, which are pooled and invested in order to cover any losses suffered by policyholders) but you've had the peace of mind of knowing you won't take a loss.
The way I make money is not directly from your premiums, but by spreading my risk around by selling more and more policies and trying to diversify who buys them, so that if a big fire hits a neighborhood, it will only affect a percentage of the money I'm holding onto.
That's the traditional insurance business. A similar scenario works in the traditional mortgage market.
Now let's move onto the Financial Products division.
I take that policy, and in order to score some quick cash, I let people bet that the policy will earn money. Then, in order to make even MORE money, I sell insurance to the gamblers that will cover their losses.
Oops. You'll notice what just happened: I've taken what risk I had spread out and consolidated it. Worse, I'm on the hook at both ends in the event the house burns down: I pay the policyholder and now have to pay all the gamblers who bet on the policy!
So, Jake, I ask the question again: WHERE THE FUCK WERE YOU???
If a simpleton like me, who only has an accounting degree, can understand that you're betting against yourself, why couldn't a high-powered executive vice president figure out from washroom conversations that your entire division was one big-ass house of cards? You're the head of development of business commodities! How could you not be curious about the products your own people are developing????
And there, right there, that's the problem. These aren't commodities. We're not talking about pork bellies or corn or oil.
We're talking about people's homes. Their lives. Their jobs.
So shut up, walk away, and be glad you got out with your skin and dignity.
UPDATE FOR THE GALATICALLY STOOPID It seems there's some discussion that DeSantis was "one of the good guys", brought in to fix the problem.
That's simply not the case, by his own admission. DeSantis has been employed by AIG for eleven years and worked his way up to his current position as EVP in the Financial Products division. Furthermore, former AIG chairman and CEO Hank Greenberg, in 2005, warned on his way out the door (thanks to Eliot Spitzer, who really was ahead of the curve on this) with regards to the mortgage debacle and AIG's exposure issues.
At which point, Cassano, DeSantis' boss, DOUBLED THE EXPOSURE!
Furthermore, the truly quasarly idiotic have downplayed the losses at the FP, comparing them somehow favorably to the losses at the insurance unit.
Utter rubbish. Although the life insurance division earned $6.9 billion, the financial services division lost $40.4 billion, according to the annual report I have looked at.
The other two business units, asset management and general insurance COMBINED lost $1.1 billion dollars.
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