[Crossposted from my comments over on Fred Wilson’s blog]
Sorry Fred — “Financial McCarthyism” ?
McCarthyism was tarring the innocent with innuendo to ruin the accused lives.
What is happening now is anything but. AIG, Merrill Lynch, Bank Of America, et.al. are NOT innocent victims. They are the perpetrators of the biggest heist of all time.
These financial “wizards” have demonstrated that the only financial knowledge and ethics they have is that of a swindler.
This is a perp walk for a reason. They are the criminals – not victims.
Read Jack deSantis’s sob letter. My answer is …. so?
AIG is bankrupt. At a bankrupt firm, bonuses aren’t paid, contracts are torn up – usually by bankruptcy court. Look at the UAW, GM, GM’s creditors, and bondholders – pennies on the dollar for them.
AIG should be in receivership. Instead, we the sheeple taxpayers, *paid* for the privilege of declaring AIG bankrupt. Instead of dumping billions down the AIG rathole in the first place, AIG should have just been seized like a bank in a similar situation would have been.
My wife and I both at various times were promised bonuses at startups that went through an asset sale and shutdown. Not always were those bonuses delivered. Should we have have been able to write such a letter to the NYT.
Some more points:
- The letter writer (Jack) claims he had nothing to do with CDS. How do we know? Was he in meetings when the issue was brought up and went along with/and or encouraged CDS? We only have his word on this.
- How do we know that his work didn’t “blow up” in later years? Only his word on it.
- “$742,006.40, after taxes”. As a bonus. In a bankrupt firm. “$1” annual salary. Show me many people who could take that kind of salary cut. My wife who is a tax accountant has some people coming in with $300K+ in W-2 wages crying about how much taxes they have to pay. A client who makes more in tax-free California muni’s than my wife and I have all year. I am sorry, cry me a river. The *average* income for a family of 4 in the San Francisco Bay Area is about $85,000. Cry me a river.
- Jack claims to have suffered as a result of the economic downturn. Oh really? Is Jack being foreclosed on? Are his kids having to pass up on dreams of going to college? Is Jack looking at his medication and deciding which prescription he isn’t going to renew? Or maybe its powdered milk this month, or a trip to Second Harvest. Are creditors calling him? Considering that Jack’s firm helped with the 2005 bankruptcy law re-write, that helped result in so many foreclosures — cry me a river.
- When deciding to hold out for the bonus, he should have factored in the possibility that AIG wouldn’t be able to pay up on the promises. Are GM and Chrysler execs writing such letters? Probably not. Would a UAW member looking at a slashed pension get the same sympathy?
Once again, Jack is not an innocent victim. Jack may not be a criminal. No one is talking jail for Jack (yet). But Jack just learned a hard lesson in not-counting-chickens-before-they-are-hatched, and he is “upset”. I bet half the country would switch places with Jack and not be upset at all. Maybe Jack needs to step back, clear his head, and go work at a homeless shelter for some time to get a proper perspective.
Final question — how come is it that people like Jack who don’t actually make anything, who don’t actually increase the value of the world are so highly compensated? Jack is just a fancy pants banker. Fred, you as a VC add value. You help create companies and bring new ideas to fruition. My wife makes sure that her companies spend their money wisely. I am building a company, Amplafi. What did Jack and his ilk build or create? Near as I can figure, they built a fancy casino.