Only one thing is clear regarding the AIG debacle and that one thing is that nothing is clear.  Last week the current  CEO Edward Liddy was paraded in front of congress and the media to answer questions regarding excessive retention bonuses.  Since those hearings there have been reports of protests outside of some Connecticut homes of AIG executives.  This came at a time when congress was threatening a 90% tax on AIG bonuses.


In a new twist, the New York Times profiled the recent AIG resignation letter today from Jake Desantis, who was allegedly working for only $1 per year along with CEO Edward Liddy.  Jake Desantis has decided not to give back his yearly rentention bonus of $742,000, but will instead donate the money to “organizations that are helping people who are suffering from the global downturn”.

It’s a well written letter and perhaps one that will help dampen the public anger over current AIG employees.  But despite the letter, you can be sure that the entire story is still not being told, even by Jake DeSantis. He may not have been part of the scandals that nearly destroyed AIG, but he does openly admit to being overpaid during his career  – “Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.”   All those “overpayments” have to come from somewhere.

The real tragedy of AIG is the failure of capitalism.  A handful of idiots employees at AIG were allowed free reign to destroy the company, but the American government refused to allow it to go under.  Systemic risk was to often cited for the need to prevent AIG’s collapse.  Months later we all learned what that systemic risk really meant.  AIG was not the only financial company with a handful of idiots who had nearly destroyed their companies and the entire global economy.  What systemic risk really meant is that the government needed a scapegoat, and AIG was the obvious choice. They could spend hundreds of billions of dollars on an AIG bailout, and in the process bailout dozens of other incompetent financial institutions through CDS payments made through the biggest idiot on the block, AIG. According to businessweek, other U.S. financial institutions have gotten $43.5 billion of CDS payments from AIG, courtesy of the American taxpayer.