Jake DeSantis of AIG resigns in the Times.

Jake DeSantis, an executive of AIG has resigned from his job. Now the company will probably never get out of the rut, without his expertise.

I take a lot of issue with Mr. DeSantis' rant.

"I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G."

Ah yes, the old "I got laid off/bonus cut/whatever because the other people in my company sucked" line. At Digital Equipment I heard this all the time. "My division made money". Of course it did. The problem is the group that builds the buildings, the security guys, paying for the lights, anything overhead - loses money. It's up to the divisions that make money to make enough money to offset what the parts of the company that aren't revenue producers spend. In the case of Digital, there were two or three groups making essentially the same product. All were profitable, but the sum profit of the three was not enough to pay the overhead. Combined, the same product line made by one group, and maybe you can pay the bills. In the case of DEC it was too little too late.

Anywho, AIG. This one to me is a little complex. He was working for the commodity and equity divisions and bringing money into the company - quote - "a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million."

Nicely done. He made hundreds of millions of dollars in commodity an equities in a time when stocks were in the middle of a bull market, and while Oil was going to $150 per barell. Basic commodities - metals, food, you name it, all going up. Why? Because of the massive injection of cash into the economy fueled by debt procured in the housing market, backed by credit default swaps.

OK, I'm not an economist, but that's my take. His division made a shitload of money at a time when there was free money being printed because of what was going on in other divisions. But aside from that - his division is SUPPOSED to make money. Just because they made money doesn't make him a rocket scientist. If they made more money than if they had hired someone else to do the job, maybe I'd clap. Of course this is pretty hard to measure.

"Quote" - I can't pick a quote regarding his outrage of being "cheated of our payments". Retention bonus? If these guys can quit on a whim and return the bonus to show the high road, then they aren't effective retention bonuses. These guys have been overpaid from the start, so you can't retain the good people not because other companies are trying to steal them away, but because after a couple of years they don't need the job anymore.

Sure, they make a lot of money for their companies - that is THEIR JOB. I'm not saying they've rooked the taxpayers - they've rooked the SHAREHOLDERS. AIG stock is in the tank. BofA. Goldman. etc... In large part because these guys were overpaid compared to their marginal return to the company compared to other employees that could be hired to do the same job. If one guy makes $100 million for the company and you pay him $50 million, he is not as valuable as a guy who makes $51 million for the company whom you pay $200,000. Thing is, nobody in the company wants to set the trend of lower salaries. Golden rule - the guy with the gold makes the rules. The shareholders? Large mutual funds. Even though Joe Schmoe really "owns" the shares, the mutual funds vote the shares, and those guys work in the same industry and it's to their benefit to match the salary trends.

I don't feel sorry one whit for this guy. I feel sorry for guys at ATI. They made some damn good graphics processors. They were making money, their stock was going up. Then they got bought by AMD, and AMD turned into a boat anchor. Now ATI has to suffer layoffs and paycuts because of AMD's CPU division. This isn't the same as my Digital example, ATI was a well managed company with good products that now has to share the suffering of a really poorly managed company with bad products.And guess what. The government is not bailing them out.

Jake - you picked a bad company. Your company went into the dumper. When your company is going bankrupt, they can't pay you. A white knight comes in to save the company's ass, the white knight gets to make the rules. That happens everywhere in the private sector. Somehow AIG managed to effectively be in the public sector by making its survival indispensible to the general economy, but at some point it doesn't matter - the white knight makes the rules.

The AIG employees that aren't capable of just retiring will stay on. Those that quit can easily be replaced. These guys cooked their golden goose. They got too greedy and now instead of setting their own pay, the peasants get to set their pay. There will be PLENTY of talented people who can do this job for a much lower salary. Maybe AIG can hire the folks from ATI - Graphic Processor Design is a hell of a lot more complicated than "Buy Low, Sell High".

/rant