Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Published on March 26, 2009 By Draginol In Politics

Jake DeSantis, the executive Vice Prsident of AIG’s financial product unit has put his resignation letter online.  It’s worth reading.

 

View: http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pagewanted=1&_r=2&partner=rss&emc=rss


Comments (Page 1)
on Mar 26, 2009

This guy worked for AIG for 11 years, and rose to senior management.  In that time, AIG made decisions which destroyed the company as an independent entity.  He claims no responsibility?!  Well, I don’t know if he’s lying to us for sympathy, or lying to himself to feel better.

But he’s lying to someone.

 

on Mar 27, 2009

He makes many good points and it is fairly obvious that he really had nothing to do with why AIG failed.

However, like many executives, he really is a few levels removed from normal people:

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.

What the heck does that mean?

I think that's the reason people are suspicious of executives like him. When I ask a plumber what he does for a living, he tells me something about pipes and shit. When I ask a programmer, he tries to explain that he writes subroutines for some sort of program I might not understand. But when I ask an executive from one of those large companies, I get an answer like "I was an integral player in the RDC commodity supervision extrafinance UBS business clause contracting". What the heck...

I think it is wrong for the government to threaten to release the names of executives who might or might not have anything to do with the problem while we know that people might track them down and attack them. It is also wrong to stop all those bonusses.

But it is equally wrong to make up compensation systems that include bonusses (rather than just salaries) when those bonusses are due to be paid even if the company is not doing well. And it is wrong to be unable to explain what one actually does for a living. This is what got people angry, I am sure. People see the big banks failing and then we find out that they paid "bonusses" while losing billions and have executives who do work that nobody can explain to normal people.

This has nothing to do with those jobs being complicated. Chip designers do more complicated work, but almost everyone will understand thet a chip designer designes computer chips. They are not "integral players in the facilitation of the design of IC" but "computer chip designers". (There are "integral players in the facilitation" of the things, but they are the executives of Intel, AMD and IBM. But still everyone knows what the heck it is those people are actually doing, in general.

 

on Mar 27, 2009

Nice letter, well worded. I'll keep a copy of it just in case my company screws me then I can use parts of it in my resignation letter to sound like an executive.

I fell bad for those who got caught up in this, people who were not directly involved in the mistakes but end up paying the price for them. The guy sounds pretty sincere and I don't believe he was lying. I mean, why would anyone lie in a letter you send to your own boss? Can you possible fool your boss as if they don't know what you do?

I wonder how the other employee's he spoke of feel now, thinking that the bosses may be trying to figure out who these other employees are that feel betrayed.

on Mar 27, 2009

CharlesCS
Nice letter, well worded. I'll keep a copy of it just in case my company screws me then I can use parts of it in my resignation letter to sound like an executive.

I fell bad for those who got caught up in this, people who were not directly involved in the mistakes but end up paying the price for them. The guy sounds pretty sincere and I don't believe he was lying. I mean, why would anyone lie in a letter you send to your own boss? Can you possible fool your boss as if they don't know what you do?

I wonder how the other employee's he spoke of feel now, thinking that the bosses may be trying to figure out who these other employees are that feel betrayed.

 

The sad thing is CS... these people are also being targeted with the "hate rich" crimes I think I saw a clip last night about some AIG peoples houses getting vadilazed.

 

Why is there no outrage at the politicians who PUT THIS INTO THE BILL?

on Mar 27, 2009

Why is there no outrage at the politicians who PUT THIS INTO THE BILL?

That is the right question right there. Why are the politicians getting a pass here? I see very little outrage or complaining about how this all started, Congress for example. If I was one of these employee and found myself being hounded because my company screwed me, I would take the money, quit and move on, maybe even move away.

on Mar 27, 2009

Quoting Leauki:

But it is equally wrong to make up compensation systems that include bonusses (rather than just salaries) when those bonusses are due to be paid even if the company is not doing well. And it is wrong to be unable to explain what one actually does for a living. This is what got people angry, I am sure. People see the big banks failing and then we find out that they paid "bonusses" while losing billions and have executives who do work that nobody can explain to normal people.

I may be wrong, but it looks like you're doing what you object to in others, Leauki - generalizing on the basis of insufficient information and not fully learning/understanding something before criticizing it.  And engaging in a little class warfare on the side.  The nature of the 'bonuses' has been explained elsewhere and in his resignation letter, which was hardly an exposition on the nature of his job so to say he 'can't explain what he does' is disingenuous at best.

I also don't have a good understanding of what skills one must have to be an effective executive in the financial industry, or what those skills are worth in the open market - I just know I don't have them.  On the other hand, I have a good understanding of the skills needed to be a professional quarterback - and I know I don't have those, either.  The markets for quarterbacks and financial executives can hardly be dissimilar in terms of supply and demand.  I have a hard time understanding how a professional quarterback contributes value to an organization comensurate with his salary (and bonuses) - it's so far removed from what I do & what I make that I can't get my arms around it - but it's not for me to decide, it's for his employer to decide.  The same goes for that finance exec.

Furthermore, any individual accepts employment on agreed terms, which by definition are beneficial to both parties.  To have those terms abrogated arbitrarily while being publicly castigated for things for which one is not responsible is a bit of a tough pill to swallow, no matter the compensation involved.  The size of the compensation alone doesn't justify our willingness to let that happen to anyone - that is situational ethics at its worst.

The downsizing of the financial industry currently taking place will place downward pressure on executive compensation by becoming a buyer's market, unless public aprobation drives a disporportionate number of capable individuals away & into other lines of work.  That's how we should let those who did well during the good times reach 'equilibrium,' if you will, apart from appropriate criminal prosecution of any who engaged in illegal activity.  We shouldn't destroy the principle of contracts, and the economic certainty associated with them, on the basis of uninformed class anger, stoked by unprincipled politicians.

on Mar 27, 2009

I may be wrong, but it looks like you're doing what you object to in others, Leauki - not fully learning/understanding something before criticizing it.  And engaging in a little class warfare on the side.  His resignation letter was hardly an exposition on the nature of his job so to say he 'can't explain what he does' is disingenuous at best.

No. The point is that I don't have to learn or understand what he is doing. I am not telling him how to do his job (if I were, I'd have to learn about it first), just how not to talk to other people. I do fully understand the nature of writing an essay that is published online and am thus perfectly capable of criticising such an essay.

People are angry that bonusses are paid and believe that those executives don't deserve them. The reason they think that is because they have no idea what these executives actually do. And one of the reasons that people have no idea what executies actually do is this stupid management jargon executives (and middle managers) use. Dilbert makes fun of it all the time.

And I don't think executives really realise how far removed they are from normal people because of that.

Nobody will say that this man probably deserves his bonus because he was an "integral player".

I get that he has nothing to do with the problems of the firm. But he still seems to me to be living in a different world than I. And I am myself already a level removed from most people (I'm a geek) so this can't be a good thing for him in this situation.

 

I also don't have a good understanding of what skills one must have to be an effective executive in the financial industry, or what those skills are worth in the open market - I just know I don't have them.

My own job consists of knowing and doing things others don't understand. But when I have reason to explain to someone what I do (in earnest), I wouldn't say something like "I am an integral player in the AOB to YTB business structure trade" (even though that explanation might make perfect sense to someone who also uses that type of business jargon).

 

 

on Mar 27, 2009

A quarterback plays Football, right?

There, problem solved. That's what he does. I don't know anything about Football or what exactly a quarterback does, but the explanation "plays Football" makes sense to me. That's what he makes his money for. No problem.

But what does an "integral player" do in an insurance company? Does he sell insurances? Does he manage people who do? And why the heck do they have bonusses that have to be paid instead of just offering higher salaries?

 

on Mar 27, 2009

Sorry, Leauki - I made a couple of tweaks after you replied.

I do fully understand the nature of writing an essay that is published online and am thus perfectly capable of criticising such an essay.

It was not an 'essay' on the nature of his job - it was a resignation letter, albeit intended for publication.

People are angry that bonusses are paid and believe that those executives don't deserve them. The reason they think that is because they have no idea what these executives actually do. And one of the reasons that people have no idea what executies actually do is this stupid management jargon executives (and middle managers) use. Dilbert makes fun of it all the time.

People are only angry when bonuses get paid to someone else, not them.  That's not a rational argument for concluding they don't deserve them.  We don't have the knowledge to decide what's 'deserving' - you may make more than me and no matter how well you explain what you do or how justified in your compensation you are, I may still decide you don't 'deserve' it because it is of no tangible value to me.  The fact that what these people do is 'so far removed' from the rest of us doesn't constitute a basis for anger at their compensation.  Just the opposite - it should be considered evidence of what is possible should we work hard and pursue success.

But he still seems to me to be living in a different world than I. And I am myself already a level removed from most people (I'm a geek) so this can't be a good thing for him in this situation.

I agree with you - he is living in a different world, a privilege he earned.  To begrudge him that seems wrong to me, no matter the 'situation.'  I'm more than willing to begrudge him illegally obtained wealth, should that be the case, but post-facto condemnation of perfectly legal (and binding) contracts is something I'm not willing to do.

But when I have reason to explain to someone what I do (in earnest), I wouldn't say something like "I am an integral player in the AOB to YTB business structure trade" (even though that explanation might make perfect sense to someone who also uses that type of business jargon).

I'm sure you wouldn't.  But what relevance does that have?  Are you saying the burden of proof is on him to explain to anyone other than his boss why he's worth his compensation?  In eighth-grade language?  I can talk my head off and justify in mind-numbing detail how I'm worth at least three times what I make, but so what?  The market dictates it & that's it, whether good for me or bad.  He has no reason to apologize to anybody for his success and it certainly looks to me like he was among those who 'took one for the team' on the basis of a completely legitimate contract promising certain terms, one that should be honored.

on Mar 27, 2009

And why the heck do they have bonusses that have to be paid instead of just offering higher salaries?

That's a subject worthy of discussion at the board level of any company.  I'm sure the decision is made based on knowledge of the 'market' in insurance executives.  But once that decision is made (to offer a retention bonus) it shouldn't be subject to second-guessing or retroactive cancelation absent violation of the terms.

I'm sure Dilbert can find hundreds of thousands of people whose jobs 'make no sense.'  You want Dilbert setting everyone's compensation?

on Mar 27, 2009

Are you saying the burden of proof is on him to explain to anyone other than his boss why he's worth his compensation?

If he published the email: yes.

I would say that someone who WANTS the public to read and understand has an obligation to explain his point of view to that same public.

 

 

on Mar 27, 2009

I'm sure Dilbert can find hundreds of thousands of people whose jobs 'make no sense.' You want Dilbert setting everyone's compensation?

Is that really a question you want to ask me given the situation?

Thousands of rich executives (not the one quoted here) have received large bonusses after running their companies into the ground (and SOMEONE has done that).

Do you really want to ask me if I think whether Dilbert or those managers ought to set everyone's compensation?

 

on Mar 27, 2009

I want corporate boards to exercise actual fiduciary responsibility, not just pay lip service to it.  I would not, as a board member, weight anyone's compensation as heavily on 'performance' as many now do.  To do so without mechanisms to detect and prevent manipulation of profits (as was the case with Fannie Mae) is foolhardy (unless the board is in on the deal, of course).  On the other hand, it's not all bad that management's success be tied in some fashion to the company's profitability.  Apparently, even a foreordained salary without bonuses is wrong (in the current environment) if a company tanks, whether due to market forces or incompetence.  From the comfort of our couches at home, it is much too easy to conclude after the fact that execs 'ran the company into the ground' & therefore don't 'deserve' to be paid when the truth of the matter is much different.  Too many of us just want the Cliff Notes version and can't be bothered to delve any deeper, a reality that our thug politicians understand and take advantage of all the time.

on Mar 27, 2009

I would say that someone who WANTS the public to read and understand has an obligation to explain his point of view to that same public.

And I would say he did.  That portions of that letter (which was the letter that went to Liddy) were couched in terms the significance of which only the addressee might fully comprehend does not render the letter unworthy of publication or invalidate the remainder.

on Mar 27, 2009

BTW, I've seen other critiques of the letter.  So far, they've all boiled down to calling DeSantis a spoiled brat or whiner.  Those, I'm sure, play well to the angered mob, but are perfect examples of intellectual laziness and pandering to class envy.

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