Young Poor & Angry Press

New York Times-

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

Huffington Post-

Some big news emerged Tuesday in regards to the debate over the Employee Free Choice Act, with a prominent Republican strategist declaring that Sen. Arlen Specter will vote against cloture on and passage of the bill.

Americans for Tax Reform president Grover Norquist broke the news during a speech at the Capital Research Center Labor Summit, saying that Specter’s chief of staff had let it be known that he would oppose the legislation, which would make it easier for unions to organize. Norquist’s remarks were subsequently reported on the Twitter account of Larry Farnsworth — the former Speechwriter and Deputy Press Secretary to Speaker Dennis Hastert — and seconded by Dave Weigel of the Washington Independent.

If true, it represents a major blow for EFCA supporters. Specter was the one Senate Republican to vote for cloture when the bill came to the floor in 2007. And with 60 votes needed to avoid a filibuster, his defection presents a major parliamentary hurdle for the legislation’s passage.

The Pennsylvania Republican is likely to face a major primary challenge from Club For Growth president Pat Toomey in the 2010 election, which may have factored into this apparent decision. Several unions, however, had let it be known that they would have put their political muscle behind the Senator had he voted to support EFCA.

According to an attendee at the CRC Labor Summit, Norquist “was giving a speech at lunch time” when he told the crowd: ‘By the way I have breaking news. When I was eating lunch I got a call from Specter’s Chief of Staff saying he was voting against cloture.’ [The Chief of Staff] had apparently read a prepared statement to Grover over the phone and the Senator’s office will apparently be releasing that statement later today.”

A call and email to Americans for Tax Reform were not immediately returned.

UPDATE: From Americans for Tax Reform’s twitter account:

Sen. Specter has confirmed to Americans for Tax Reform that he will vote against both cloture and passage on the Employee Free Choice Act

Labor officials, meanwhile, are nervous about the development, though one cautioned that this could be another example of “Norquist overreaching.”

Bernake and Geithner take center stage at today's congressional hearing on AIG

WASHINGTON — Treasury Secretary Timothy Geithner asked Congress on Tuesday for broad new powers to regulate nonbank financial companies like troubled insurer American International Group whose collapse could jeopardize the economy.

“AIG highlights broad failures of our financial system,” Geithner told the House Financial Services Committee. “We must ensure that our country never faces this situation again.”

At the same time, Federal Reserve Chairman Ben Bernanke revealed that he had considered filing suit to keep AIG from paying millions in executive bonuses but that his legal advisers counseled him against it.

Geithner acknowledged that the current climate of anger, including the furor over those retention bonuses, will complicate any effort by the Obama administration to get more bailout money from Congress. “We recognize it will be extraordinarily difficult,” he said.

The administration sought to use that rancor to build support for its financial overhaul proposals.

Geithner joined Bernanke in calling for greater governmental authority over complicated and troubled financial companies _ power they likened to the authority wielded over banks by the Federal Deposit Insurance Corporation. That includes the power to seize control of institutions, take over their bad loans and other illiquid assets and sell good ones to competitors.

AIG is a globally interconnected colossus, with 74 million customers worldwide and operations in more than 130 countries. The government decided it was simply too big to let fail.

“Its failure could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income and jobs,” Bernanke told the panel.
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Geithner, Bernanke and New York Fed President William C. Dudley testified in a rare joint appearance before the panel. Their testimony came a day after the Fed unveiled a new bank rescue plan under which the government would take responsibility for up to $1 trillion in sour mortgage securities with the help of private investors.

That delighted Wall Street and the Dow industrials shot up nearly 500 points. On Tuesday, Wall Street gave back some of its gains and the Dow was down just over 45 points in midday trading.

Much of Tuesday’s discussion centered on ways to help the government better deal with future AIG-like companies whose failure could devastate the financial system and the drag down the economy.

“As we have seen with AIG, distress at large, interconnected, non-depository financial institutions can pose systemic risks just as distress at banks can,” Geithner said. “The administration proposes legislation to give the U.S. government the same basic set of tools for addressing financial distress at non-banks as it has in the bank context”

Geithner made it clear he believes the treasury secretary should be granted unprecedented power, after consultation with Federal Reserve Board officials, to take control of a major financial institution and run it. The treasury chief is an official of the administration, unlike the FDIC, which is an independent regulatory agency.

The witnesses were asked if AIG would have been treated any differently, including the payment of $165 million in bonuses earlier this month, if such powers had existed last September, when the Fed began the government bailout of the insurer.

“Quite differently. It could have been taken into receivership or conservatorship. …The bonus issue would not have arisen,” Bernanke said.

He said that contracts providing for the bonuses could have been adjusted and “we could have taken haircuts” against some of AIG’s financial obligations to other companies.

AIG has become a symbol of reckless risk-taking on Wall Street. The bonuses came even as AIG reported a stunning $62 billion loss, the biggest in U.S. corporate history.

The government has bailed out AIG four times, to the tune of more than $180 billion altogether.

New York Attorney General Andrew Cuomo said Monday that 15 employees who received some of the largest bonuses from AIG have agreed to return them in full, totaling about $50 million.

The House last week voted overwhelmingly to slap 90 percent taxes on the largest bonuses. Similar but more limited legislation is before the Senate.

Still, White House support for using the tax code in such a fashion has been tepid at best. And Democrats seem to be moving off the concept.

“If the money is returned, the legislation may no longer be necessary,” said House Majority Leader Steny Hoyer, D-Md.

As to Geithner seeking more authority, Hoyer said he wanted to discuss with committee Chairman Barney Frank, D-Mass., “whether or not such delegation is appropriate or whether there should be greater oversight.”

Geithner has been sharply criticized for his role in the AIG bailout because he helped put the deal together last September as then-president of the New York Fed, yet said he did not learn of the big bonuses until two weeks ago.

In a sharp exchange, Geithner was asked by Rep. Brad Sherman, D-Calif., whether there were other financial companies besides AIG who took taxpayer bailouts and then paid big bonuses to their executives.

“You’re right, this goes well beyond AIG,” said Geithner.

Sherman asked for a public list of those companies and an accounting of the bonuses they paid.

Geither was noncommital. Sherman told him he was trying to “hide the ball.”

“I’m not going to hide the ball,” Geithner said. “I’ll reflect on the suggestion you made.”

Bernanke said it was “highly inappropriate to pay substantial bonuses” to the employees. Bernanke said he asked that the payments be stopped but was told that they were mandated by contracts agreed to before the government seized control of AIG on September 16.

“I then asked that suit be filed to prevent the payments,” he said. Bernanke said that his legal staff counseled against this action on the grounds that Connecticut law provided for substantial punitive damages in the event any such suit failed. AIG’s financial products division has a base in Connecticut.

The AIG bonuses created a public relations headache for President Barack Obama at a time when he was trying to gin up public and political support for his economic policies, bank-rescue plan and overhaul of the nation’s regulatory structure.

Government bailouts of AIG, Citigroup Inc., Bank of America Corp. and others have put billions of taxpayers’ dollars at risk over the past year and have angered the American public.

___

Associated Press writer Martin Crutsinger contributed to this report.

Someone please tell Ms. Bruce that if she wants a good example of a feminist she should contact Rachel Maddow. Not that Maddow would take her calls.

Tammy Bruce, guest host for Laura Ingram’s radio show, had some disgustingly harsh words for First Lady Michelle Obama. Bruce should grow up and look in the mirror before she calls someone trash. The gun crazy quasi-journalist went on a rant on Laura Ingram’s show worthy of Rush Limbaugh. Too bad Rush Limbaugh wouldn’t look twice at her, because of course to Rush, gays aren’t citizens.

Discussing the first lady’s visit to a Washington D.C. classroom last week, Bruce recalled Obama’s story about wanting to get A’s in school and called out her use of a “weird, fake accent.” This is opposed to the last first lady who remained silent and the President who was a C student throughout school. In fact George Bush Jr. is more reminiscent of Billy Madison than he is an actual president.

“That’s what he’s married to,” Bruce said. “…You know what we’ve got? We’ve got trash in the White House. Trash is a thing that is colorblind, it can cross all eco-socionomic…categories. You can work on Wall Street, or you can work at the Wal-Mart. Trash, are people who use other people to get things, who patronize others, who consider you bitter and clingy…”

LISTEN:

BRUCE: But here’s Michelle Obama explaining to some kids what it was like for her growing up because she sounded like a white person, whatever that means.

OBAMA [audio clip]: I did do my best, getting good grades was always important to me, and it wasn’t because my parents were -

BRUCE: It’s all about her.

OBAMA [audio clip]: — hounding me or that they had the expectation, it was just something that I wanted for myself. I wanted an A. And I didn’t care whether it was cool, ‘cause I remember there were kids around my neighborhood who would say, “Ooh, you talk funny, you talk like a white girl.” I heard that growing up my whole life, and I was like I don’t even know what that means, but you know what? I’m still getting my A.

BRUCE: What? What? What — what is that? And then she devolves into that weird fake accent, like Hillary did when talking to black people. What? What is that? That’s, that — you know what that is.

DAVID AFTER DENTIST [audio clip]: Is this going to be forever?

BRUCE: Yeah, that - remember nitrous oxide kid, on You Tube. No it’s not going to be forever, nitrous oxide kid. It’s not. Can you — can you believe that?

OBAMA [audio clip]: So do I need to introduce myself?

BRUCE: What a shame. That must’ve just ruined her damn day. “I wanted the A for myself, and I wanted to do it, and ooh, they said you sounded like a white person, I don’t know what that means, but uhh.” Huh?

Man, oh, man. That’s who he’s married to, what does that tell you? This is what we’ve got — you know what we’ve got? We’ve got trash in the White House. Trash is a, is a thing that is color blind, it can cross all eco — ecosocionomic kind of categories, you can work on Wall Street or work at the Wal-Mart. Trash are people who use other people to get things, who patronize others, who consider you bitter and clingy.

 

Bruce is a self described  openly gay, pro-choice, gun owning, pro-death penalty, voted-for-President Bush authentic feminist. A lifelong Democrat, in the 1990s she worked to help elect Senators Feinstein and Boxer, and aided the Clinton for President campaign. Before we knew he was a sexual compulsive and “did not have sexual relations with that woman.”