The WSJ has a good story today with lots of detail about what’s going on inside AIG’s now-infamous Financial Products group.
The story jumps off a remarkably self-righteous op-ed in the Times yesterday by AIG-FP executive Jake DeSantis, who sent the paper his resignation letter to reprint.
Essentially, it said DeSantis was shocked—shocked!—at the ill treatment he and his colleagues have gotten, saying he had nothing to do with the credit-default swaps that sunk his division, his company, and (nearly) the financial system. He wrote that he earned his million-dollar bonus ($742,006.40 after taxes), somehow missing the point that taxpayers paid it—and without their assistance he would have gotten zip.
But never fear, fans of truth and justice: DeSantis was treated like William Wallace at AIG yesterday, reports the Journal:
Wednesday, employees at the insurer gave a standing ovation for Jake DeSantis, an executive in AIG’s financial-products division, who was the first to publicly refuse to return his retention bonus despite an outcry over the payments.
Joining in the ovation was Gerry Pasciucco, attendees said. Mr. Pasciucco heads the division that had $40 billion in losses last year that nearly sank AIG and triggered the government rescue.
I like the Journal’s forthright description of the unit in that last sentence, which playfully jabs at the hypocrisy of DeSantis and his embattled colleagues.
But the paper gets further inside AIG FP’s seige mentality:
In recent days, employees have huddled in small groups in conference rooms off the division’s main trading floor in Wilton, Conn., debating what to do. Some have expressed worries about retaliation. One employee said he had instructed his wife to call the police in the event his identity became known and a news truck appeared at his home. Others commiserated that their children have been verbally abused in school. Employees have passed around emails from colleagues who opposed returning the payments.
Oh, no! Call the cops when the media show up!
The Journal also nicely pricks New York AG Cuomo’s bubble here:
Meantime, some AIG employees have criticized an opponent of the bonus payments, New York Attorney General Andrew Cuomo, arguing that he had appeared to support the bonuses in October by backing the need for retention plans at the parent company.
Mr. Cuomo, who subpoenaed AIG to get the names of the bonus recipients, disputes any suggestion he specifically approved the bonuses, said a person familiar with Mr. Cuomo’s investigation. Mr. Cuomo wasn’t informed last fall of any plans by AIG to make payouts under a retention plan for its financial-products unit, said this person.
Nice try, Cuomo.
And another interesting detail: I hadn’t read that Martin Feldstein was a player here:
The bonuses were approved in early 2008 by the board of AIG’s financial-products unit, which included Harvard economist Martin Feldstein, according to a person familiar with AIG’s governance. At that time, the unit’s losses were beginning to surface. Mr. Feldstein didn’t return calls seeking comment.
Good reporting by the WSJ.