“The truth that makes men free is for the most part the truth which men prefer not to hear.”
My next True American Hero is, of all things, a corporate officer of American International Group, better known as AIG. Jake DeSantis was an executive vice president of AIG’s financial products unit for the past 12 months. It seems like a stretch to suggest that anyone from AIG is a hero, but there are many left in the company who are trying to fix the problems and many former AIG employees are speaking.
Unfortunately, the politicians and their media minions cast a wide shadowy net over all AIG as if a few bad apples make the other 116,000 employees evil. That is not the case. One of the best pieces explaining the whole mess was actually in Rolling Stone. Matt Taibbi identifies AIG Financial Products Unit’s Joseph Cassano as “patient zero.” The issues are complex, but you should take the time to read Taibbi’s article.
“In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn’t have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.
Initially, at least, the revenues were enormous: AIGFP’s returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary’s 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money.”
** Note: CDS refers to Credit Default Swaps or protection/insurance against bad debt. **
Mr. DeSantis, however, was not a part of that unit yet had accepted the thankless job of dismantling the Financial Products Unit. He accepted the job for an annual salary of $1. DeSantis and his employees have spent the last 12 months working to salvage the company. I consider Jake DeSantis a True American Hero as he dedicated himself to writing a wrong, to fix a problem that he did not create.
In the end, he could not take the abuse from AIG, the public, media, and politicians and resigned. Like true American Heroes he did not go quietly. He spoke truth to power. The following are excerpts from a letter printed on Tuesday March 25, 2009 written by Jake DeSantis. The letter was written to Edward M. Liddy, the chief executive of A.I.G. It ran in The New York Times’ op-ed section:
“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.”
“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.”
“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.”
“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.”
“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.” (Emphasis added)
Jake DeSantis did nothing wrong, was thrown under the bus, but rather than slink away, he told his story.
That’s the mark of a True American Hero.