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OpEdNews Op Eds    H2'ed 3/25/09

Hubris Never Dies

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Message Michael Fox

I suppose that every disgruntled employee who has ever submitted a bitter letter of grievance upon resignation has wanted it published on the cover of the New York Times. But today, the New York Times made a very peculiar editorial decision in actually publishing the "open letter" from AIG head of commodities Jake DeSantis to that company’s CEO, Ed Liddy. I suppose it sells papers (or draws eyeballs online). Still, Mr. DeSantis’ misreading of the public’s opinion of people like himself is just stunning. Cognitive dissonance wrapped in narcissism and tied up with projection: in a word, hubris.

Mr. DeSantis sees no personal involvement or responsibility for AIG’s troubles, although he has been a commodities bundler for the last eleven years:

"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...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."

So what? He is able to distance himself from the credit default swaps, but sees no connection between those and the commodities markets. Let me remind you: the commodities markets were in rallies of their own, busted by the urgency to liquidate holdings in order to meet margin calls as the ratings for Credit Default Swap and Mortgage Backed Security paper were suddenly and dramatically lowered.

This man thinks that his high transaction fees churned out on buys and sells meant he was good for the company and, therefore, didn't contribute to the economy we now face? Three words: Wheat, Platinum, Oil.

"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."

Nonsense. There are thousands of finance guys lining up for jobs in NY - I doubt very many people had such offers. More than a thousand people show up every day at brokerage job fairs every day in New York.

“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.”

Or, I was only following orders. I deserve to be paid millions from my insolvent employer. Tell that to the UAW union workers trying to retain their $20/hour. They won’t feel too badly for those of you making fifteen times that.

This brings us to the lower-ranked unemployed financial sector workers, the IT nerds and support staff, so well documented by Lisa Kassenaar and Stephanie Baker in the forthcoming May issue of Bloomberg Markets. This is a worthwhile read, because it balances stories of arrogant traders who made millions, spent every dime and now are struggling (no sympathy), with those who worked hard, earned solid upper-middle class wages, didn’t get the big bonuses, and now are left to find a new career.

The Bloomberg piece profiles a family that was transferred by Merrill Lynch from London to New York, then, after three years, having settled in and adjusted their children to schools, found themselves stranded with no job and no visa sponsorship. This time the transfer (back to London) comes with no help from Merrill.

So there are stories that compel compassion, but they are hard to find inside the smog-filled hot air of those who still feel very sorry for themselves. Some even get that the industry was destructive, without connecting their own involvement to any damage done. But read between the lines, because inside nearly every story you’ll find truth:

“a mortgage trader who worked for 11 years at RBS Greenwich Capital Markets Inc.… was fired in December along with seven others on his trading desk…. He’s painting the inside of his house in Greenwich, Connecticut, saving the $3,000 his wife planned to spend on the job, and is worried about paying for his two teenagers’ college education.”

Oh, please. D-I-Y to save a few bucks. Must be rough. In that house. In Greenwich.

One after another, they tell tales of working 5, 10, 20 years at these firms, making annual salaries in high six and seven figures and being left nearly broke. I would have sympathy were these not the “best and the brightest”, who (not one will explain why) didn’t know how to diversify their investments to protect themselves from market volatility – even while they were perpetrating it? I’ll explain for them: Greed. And Hubris.

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Michael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare (more...)
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