The AIG (NYSE:AIG) bonus brouhaha has yielded a new angle. Indignant AIG executive vice president Jake DeSantis has resigned from the company, forwarding his resignation letter to CEO Edward Liddy to the New York Times (NYSE:NYT).
DeSantis's arguments are well reasoned. He discusses his hard work, including how he agreed to trudge on for $1 base salary while counting on the promise that a retention bonus would be forthcoming this month. He claims he wasn't at fault for the costly fiasco that left his company needing an ever-costlier bailout, and that most of those culpable have already left the company. (That said, his department did originate the AIG mess.)
Still, when the American people got wind of the bailouts, and Congress took to its soapbox to reflect that popular ire, CEO Liddy didn't defend his own employees, instead calling the bonuses "distasteful." That raised DeSantis' hackles, so he's telling Liddy to take his job and shove it. DeSantis also says he'll (rather wisely) donate his own bonus to charity instead of keeping it.
It's always good for us to get a different point of view on a controversy, especially from one of the people directly involved. And the strident words of lawmakers tend to ring hollow once you realize that the officials who crafted the bailouts should have taken the question of bonuses into account from the very beginning.
That said, one thing keeps bugging the heck out of me: Without government assistance, AIG would be bankrupt.
Less Gordon Gekko, more Oliver Twist
News flash: Once you get propped up by the government, you can't expect to keep drawing lucrative bonuses as if you were still enjoying "business as usual." Heck, given the way a natural market environment would work, it makes little sense that AIG still even exists. This isn't business as usual; it's arguably not business at all.
The government's refusal to allow failed companies to fail -- I'm also looking at you, Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE), Citigroup (NYSE:C), and Bank of America (NYSE:BAC) -- just keeps creating major problems, philosophical and otherwise. Should large "retention bonuses" be paid out to "fix" something that should have failed? How generous should those bonuses be when taxpayer money is involved? Or when something that should have failed completely has been bailed out four times so far?
I'm glad DeSantis's letter is out there. His point of view deserves to be heard. However, I still think that some financial types are out of touch with the reality of their own dire and completely unnatural situations. They still seem to feel awfully entitled to more than they may actually deserve, regardless of the performance of their companies or the financial effects on taxpayers.
Here's some bonus coverage of AIG bonuses:
