Poor, poor, plutocrats

[ProSense]

Poor, poor, plutocrats

When President Obama declared in his press conference Tuesday night that "we can't afford to demonize every entrepreneur and investor who seeks to make a profit," he was clearly asking Americans to dial down their outrage.

Because, you know, Wall Street fat cats are really mad, and if we don't play nice, they're just going to pick up their ball and go home.

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DeSantis declares himself "disappointed and frustrated" at AIG CEO Ed Liddy's failure "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."

If the scenario that DeSantis describes is accurate -- the real villains, the credit swap traders who bankrupted AIG, are mostly long gone from the company and those who were promised bonuses are hard at work trying to shut down the company, but are getting unfairly blamed -- I think anyone can understand some level of irritation. But DeSantis' revelations about his own lifestyle are not going to assuage much of the anger out there.

DeSantis received a bonus payment on March 16 of $742,006.40. But he's going to donate all the after-tax proceeds to charity, and he can do that because "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."

If you are in a position to donate more than half a million to charity and your family finances are still secure enough during one of the worst recessions in American history that you can blithely quit your job, then you are sitting squarely within the most privileged sector of U.S. society. You are still living a life that is out of reach to the vast majority of Americans.

And I just don't think most people will care how betrayed you feel. Cue the violins.

Corporate Narcissism

by digby

Jonathan at A Tiny Revolution notices something important:

The Washington Post published an op-ed today by Martin Feldstein. Feldstein explains how Obama's proposed limitation on the deductibility of charitable contributions by upper-income taxpayers is a horrible idea. He's identified as "an economics professor at Harvard University (and) president emeritus of the National Bureau of Economic Research."

One affiliation the Post left out is that Martin Feldstein is a longtime member of AIG's Board of Directors. He's also a member of the board's Finance Committee.

Read the rest for the second punchline. And then read this petulant whine from someone who made a $750,000 bonus from AIGFP and feels so hurt and betrayed by all the mean things that are being said about him that he's going to quit and give his bonus to charity. No word about whether he thinks he should get his charitable deduction, but I'll bet he'll scream bloody murder if he doesn't get it.

This person said that despite the fact that he worked for AIGFP he was in the commodities division and had nothing to do with the CDOs and is, therefore, blameless. And for all I know, that's true. But what he seems not to want to recognize is that the whole company would have gone down without the government intervening and he would have been left with nothing. It happens every day. Bonus contracts with bankrupt companies really aren't worth the paper they're printed on.

This crisis in AIG required that people such as this, who admittedly made a ton of money over the years, work for very little for a time until they could get the company back on its feet. They might not be rewarded to the tune of 750 thousand dollars for a years work, but if they made arrangements for deferred compensation down the road, after the taxpayers were repaid, I have little doubt they would have made out very well in the long run. Instead they are having a public tantrum at a time when they should be keeping the lowest possible profile. (Why are we supposed to believe these people are so smart that thes ecompanies can't do without them, again? I keep forgetting.)

I mentioned narcissism in passing yesterday and got an interesting email from journalist and author Tim Hall, who wrote an extremely interesting article for the NY Press on the subject during the Enron scandal. He explains what Narcissistic Personality Disorder is and interviews a well known expert on the subject:

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Update: I should be clear that I'm not saying DeSantis was involved in the credit default swaps. But he was Executive VP in the AIG division that did it. It is not reasonable to believe that he didn't know about it --- or profit from it. And even if he didn't, the fact that he worked in the unit that put the entire world financial system at risk and stands to cost the US taxpayers trillions of dollars means that he is going to suffer for their sins. It's the way the world works. Look at Arthur Anderson-- they ceased to exist because of their role in the Enron scandals, and a lot of employees, good and bad, lost their livlihoods. I'm sorry people are being rude about all this but these people need to man up and realize that they are going to take some heat. Maybe they can distract themselves from their troubles by counting their money.

From the petulant whine:

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.

He received $742K after taxes, and worries that it will be less if the if taxed at 90 percent.

Before tax was his compensation $1 million or more? If so, he'll get to keep $100K or more after tax. This is a bonus. Besides he claims he plans to give his net to charity.

What was his overall compensation for the year? Did he receive a bonus during the AIG's previous handouts?

[ProSense]

1. But . . . But . . . My Bubble Was Smaller Than Theirs!

But . . . But . . . My Bubble Was Smaller Than Theirs!

By Peter A. McKay

In a resignation letter published in the New York Times today, AIG executive Jake DeSantis complains that he and other employees who weren’t directly involved in structuring credit derivatives have been unjustly caught up in the recent controversy over the company’s bonus payments. After all, their activities weren’t at the heart of the housing mania that has been unraveling in disastrous fashion since mid-September.

What’s not mentioned in the letter is that Mr. DeSantis, as head of business development for commodities, was indeed involved in a separate bubble that also held serious consequences for the broader economy and that also burst last year. That “other” bubble, which entailed gains in an array of raw materials over several years, ended shortly before the housing bubble, which has since easily overshadowed it.

Oil prices rose more than five-fold between the start of the Iraq war in spring 2003 and their peak last summer around $150 a barrel. That in turn helped the Dow Jones-AIG Commodity Index — which is jointly owned by the publisher of the Wall Street Journal — to more than double over approximately the same timeframe. Now the index has plunged more than 50% from its records hit in July 2008.

In retrospect, most traders and analysts now agree that commodities’ run-up constituted a speculative bubble fueled in large part by buying from hedge funds and other players who had no industrial need for raw materials. Among the main vehicles used by these investors to place bets on paper on the sector were various index products, including instruments that paid returns based on the DJ-AIG.

In the meantime, sharp gains on commodity-trading floors translated into increased prices for people around the world at the pump, at the supermarket, and elsewhere — a phenomenon that helped to wreck consumer confidence well before last fall’s eruption of financial crisis. (In a recent interview with the Wall Street Journal, British Prime Minister Gordon Brown — who served as his country’s chancellor of the exchequer through most of the commodity bubble — said that excess oil speculation is a problem that regulators around the world are going to have to revisit once they’re done dealing with the credit crisis.)

Now that AIG itself has melted down, it is selling its commodity-index business to UBS. A spokeswoman for Dow Jones & Co., said that deal will have no effect on this company’s stake in the index. AIG’s press office said Mr. DeSantis is declining interviews, preferring to let his published resignation speak for itself.

[Laelth]

2. I feel so sorry for DeSantis.

:sarcasm:

-Laelth