Another Letter to President Obama

[wintergreen48]

Dear President Obama,

Thank you for helping my neighbors with their mortgage payments. You know, the ones down the street who, in the good times, purchased their house for no money down, refinanced it several times, then bought SUV's, ATV's, RV’s, a pool, a big screen plasma TV, two Wave Runners, a boat, and a Harley. I was wondering, since I am now paying my mortgage and theirs, could you arrange for me to borrow the Harley now and then?

Sincerely,
"Concerned in CA"

P. S. They also need help with their credit cards; when do you want me to start making those payments?

P. P. S. I almost forgot - they didn't file their income tax return this year. Should I go ahead and file for them? or will you be appointing them to cabinet posts?

[themanintheseersuckersuit]

Dear A.I.G., I Quit!

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:....

http://www.nytimes.com/2009/03/25/opini ... wanted=all

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.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

[Jeemie]

Dear A.I.G., I Quit!

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:....

http://www.nytimes.com/2009/03/25/opini ... wanted=all

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.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

Ouch!

I'm sure we'll hear "But that's just spin!"

But the NYT published it. I thought they were "a liberal rag"?

[Jeemie]

Dear President Obama,

Thank you for helping my neighbors with their mortgage payments. You know, the ones down the street who, in the good times, purchased their house for no money down, refinanced it several times, then bought SUV's, ATV's, RV’s, a pool, a big screen plasma TV, two Wave Runners, a boat, and a Harley. I was wondering, since I am now paying my mortgage and theirs, could you arrange for me to borrow the Harley now and then?

Sincerely,
"Concerned in CA"

P. S. They also need help with their credit cards; when do you want me to start making those payments?

P. P. S. I almost forgot - they didn't file their income tax return this year. Should I go ahead and file for them? or will you be appointing them to cabinet posts?

A little unfair, wintergreen.

Most of those people went under in the first wave of foreclosures.

Many people going under now did nothing fishy or risky with their mortgages.

[frogman042]

Dear President Obama,

Thank you for helping my neighbors with their mortgage payments. You know, the ones down the street who, in the good times, purchased their house for no money down, refinanced it several times, then bought SUV's, ATV's, RV’s, a pool, a big screen plasma TV, two Wave Runners, a boat, and a Harley. I was wondering, since I am now paying my mortgage and theirs, could you arrange for me to borrow the Harley now and then?

Sincerely,
"Concerned in CA"

P. S. They also need help with their credit cards; when do you want me to start making those payments?

P. P. S. I almost forgot - they didn't file their income tax return this year. Should I go ahead and file for them? or will you be appointing them to cabinet posts?

Just curious. Is this a real neighbor of yours or did you make it up? Can you cite any specific examples where someone in the situation you outlined has been helped in the way that you are claiming?

Thanks in advance.

---Jay

[silverscreenselect]

Dear A.I.G., I Quit!

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:....

http://www.nytimes.com/2009/03/25/opini ... wanted=all

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.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

Ouch!

I'm sure we'll hear "But that's just spin!"

But the NYT published it. I thought they were "a liberal rag"?

That these people want to quit is not surprising. What should be surprising is that anyone would want to hire them when the last thing on their resume was having a major position of responsibility for a company that lost billions of dollars as a result of continued poor executive decisions. Exactly how is this experience supposed to lead to another company's increasing profitability?

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead. They would like to believe that there was something peculiar about this one particular type of asset that just went wrong and that it will never happen again so it will be back to business as usual... until the next bizarre attempt at producing paper profits out of risky behavior blows up in their faces.

Continuing to hire these people at other firms to do the same things with essentially the same compensation structure is going to get the same results somewhere down the line. It's like hiring Willie Sutton to work as a security guard at a bank. He knows the business, but it's not the type of experience you really want.

[Jeemie]

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead. They would like to believe that there was something peculiar about this one particular type of asset that just went wrong and that it will never happen again so it will be back to business as usual... until the next bizarre attempt at producing paper profits out of risky behavior blows up in their faces.

Actually, how can we expect them to have learned anything, and why shouldn't they expect better and brighter days to be around the corner, when everything that has been done by both GOP AND Dem has been designed to bail them out and let them go on with business as usual...with no guarantee the next bubble will take the middle class along for the ride this time?

Such is the "hope and change" we were promised.

[SportsFan68]

. . .

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead.

. . .

I think this is 100% correct.

[minimetoo26]

Someone defecated that Chuckie Reese column Sirge posted on my vpFREE bored, and it was closed for cleaning this morning. Sometimes I would love to disable all cut-and-paste, since it ruins the fun for everyone else...

[SportsFan68]

. . .

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead. They would like to believe that there was something peculiar about this one particular type of asset that just went wrong and that it will never happen again so it will be back to business as usual... until the next bizarre attempt at producing paper profits out of risky behavior blows up in their faces.

. . .

Except it's our faces it's blowing up in. Silverado, Enron, the mortage fiasco -- how many times does this stuff have to blow up before we say enough. . .

[Jeemie]

. . .

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead.

. . .

I think this is 100% correct.

And they're being government-enabled all the way.

[Jeemie]

. . .

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead. They would like to believe that there was something peculiar about this one particular type of asset that just went wrong and that it will never happen again so it will be back to business as usual... until the next bizarre attempt at producing paper profits out of risky behavior blows up in their faces.

. . .

Except it's our faces it's blowing up in. Silverado, Enron, the mortage fiasco -- how many times does this stuff have to blow up before we say enough. . .

Tell the Democratic-controlled government to stop following the GOP's lead by being an enabler would be a good start...

[wintergreen48]

That these people want to quit is not surprising. What should be surprising is that anyone would want to hire them when the last thing on their resume was having a major position of responsibility for a company that lost billions of dollars as a result of continued poor executive decisions. Exactly how is this experience supposed to lead to another company's increasing profitability?

Wall Street firms haven't learned one thing from this fiasco. Instead, they view it as a temporary pothole on their way to bigger and better days ahead. They would like to believe that there was something peculiar about this one particular type of asset that just went wrong and that it will never happen again so it will be back to business as usual... until the next bizarre attempt at producing paper profits out of risky behavior blows up in their faces.

Continuing to hire these people at other firms to do the same things with essentially the same compensation structure is going to get the same results somewhere down the line. It's like hiring Willie Sutton to work as a security guard at a bank. He knows the business, but it's not the type of experience you really want.

Much as I hate to admit it, I basically agree with you on this. But one caveat is that, if (1) the letter/opinion piece in the Times is accurate, and (2) the writer and the other AIG people who received the bonuses were not in fact the ones responsible for the AIG problems, but actually were being paid these bonuses specifically because they were the 'good guys' who did well and who are capable of fixing things (to the extent that they can be fixed), and (3) they did give up other opportunities in order to try to salvage AIG, then they have a legitimate gripe about all this.

[themanintheseersuckersuit]

That these people want to quit is not surprising. What should be surprising is that anyone would want to hire them when the last thing on their resume was having a major position of responsibility for a company that lost billions of dollars as a result of continued poor executive decisions. Exactly how is this experience supposed to lead to another company's increasing profitability?

from the referenced article

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. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.

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. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses.

[wintergreen48]

Just curious. Is this a real neighbor of yours or did you make it up? Can you cite any specific examples where someone in the situation you outlined has been helped in the way that you are claiming?

Thanks in advance.

---Jay

This is just 'one of those things' circulating around. There are hundreds-- probably thousands, actually-- of examples of this type of thing, the situation in the 'letter' may be a bit exaggerated, but it actually does reflect a lot of typical behavior on the part of people who are involved in this stuff.

One thing that a lot of people probably do not recognize is that 'sub-prime' has nothing to do with income or status or anything else of that sort: 'sub-prime' is entirely behavioral-based, and the behavior outlined in the letter is classic sub-prime behavior (but in that specific instance, it would be a sub-prime person with a pretty high income to begin with). The statistically average sub-prime borrower is a white woman in her forties who earns about $50,000/annum; the statistically average prime borrower is a white woman in her forties who earns about $50,000/annum. 'Statistical averages' are problematic-- if you put your head in a fireplace and your feet in a bucket of ice, your 'statistically average' ambient temperature is probably around room temperature-- but the point is, the differences between people who are 'prime' and people who are 'sub-prime' generally has nothing to do with who they are, it has everything to do with what they do. There are sub-prime people at all income ranges and and all ages and among all racial or ethnic groups, just as there are prime people at all income ranges and all ages and among all racial or ethnic groups. The bottom line is that sub-prime people tend to live for the moment and spend without regard to financial limitations, and prime people do not.

From a pure numbers standpoint, 'sub-prime' is defined (statistically and in federal regulations) as someone whose FICO score is below 660 (FICO scores range from 300 to 850); a 'prime' borrower typically has a FICO score in the 660-719 range, a 'prime plus' plus borrower has a FICO score in the 720-749 range, and a 'super-prime' borrower is 750 or higher (different lenders may define the non-sub-prime groups a little differently, but these are the usual ranges). The statistically average American has a FICO score in the 670-690 range, which means that most people are 'prime,' but not 'outstanding' (and outside Lake Woebegone, most people are not going to be 'outstanding' in any event). What has been going on over the last several years is that we had a system of 'easy credit' in which we made credit available to a lot of people who just cannot handle it, and the chickens have come home to roost. There is some spillover from the sub-prime people to the rest of the world (some 'prime' and even 'super-prime' borrowers have run into problems that were completely beyond their cotnrol, as where, despite their own best personal financial management efforts, the companies they work for got into trouble and they lost their jobs, and if they were unable to find a new job quickly enough, their own finances collapsed). But if you look at all the remediation programs being provided under the various stimulus packages, and the problems they are addressing, you will see that very little seems to be targeted toward the people who are in trouble only because they got caught up in the overall economic problems (if someone is in trouble simply because he lost his job and cannot get a new one, it doesn't matter whether or not 'the government' buys his loan, or forces his lender to rewrite his mortgage at a lower rate, or any of the other stimulus package items like that), but an awful lot of effort is still being directed toward making things easier for people who just screwed up (such as the people who borrowed more money than they should reasonably have expected to repay and ran into problems when they could no longer refinance or otherwise borrow from Peter to pay Paul, people who took out adjustable rate loans that they could barely afford that became totally unaffordable when-- as anyone could have expected-- the rates reset and they ran into problems when they could no longer refinance or otherwise borrow from Peter to pay Paul, etc.)

[Sisyphean Fan]

I do not have a mortgage. Therefore I have no sympathy for anybody who does. Whether or not they are paying said mortgage.

[silverscreenselect]

from the referenced article

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. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.

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. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses.

There is a concept called Enterprise Risk Management that lots of companies pay lip service to that basically states that companies should always be alert to the possibility of systemic risk and should be acting proactively to limit the risk. It's not the responsibility of one person or one committee or one department or one division.

The problem is that risk management costs money. It costs money to install sprinkler systems and computer safeguards and to properly insure any financial decisions you make. You can either spend the money and limit your short term profits or you can refuse to spend it (justifying it by saying that the worst won't happen because you're too smart for it to happen) and roll the dice. AIG and a lot of others rolled the dice.

This guy and a whole lot of others benefitted from the activities that went on with the credit default swaps. At the very least, the value of AIG stock went up as a result of the paper profits and customers were far more willing to deal with AIG because the company looked profitable and looked like it knew what it was doing. And for all anyone knows, the activities this guy was engaged in could have been every single bit as risky as what happened with the credit default swaps, only the right (or wrong) set of circumstances didn't come together to bring down this guy's house of cards.

The problems at AIG were part of a corporate culture that encouraged the type of behavior that brought them down. One way or another, anyone who was a part of the company at a high enough level to garner that sort of compensation was a participant in that culture.

And I'm still trying to figure out exactly what did happen to all those "bad apples" who got the company involved in the risky paper in the first place. Are they with Jimmy Hoffa or with Sawyer and Hurley? Because they seem to have vanished off the face of the earth.

[MarleysGh0st]

Much as I hate to admit it, I basically agree with you on this. But one caveat is that, if (1) the letter/opinion piece in the Times is accurate, and (2) the writer and the other AIG people who received the bonuses were not in fact the ones responsible for the AIG problems, but actually were being paid these bonuses specifically because they were the 'good guys' who did well and who are capable of fixing things (to the extent that they can be fixed), and (3) they did give up other opportunities in order to try to salvage AIG, then they have a legitimate gripe about all this.

When a large corporation sinks, it takes the profitable divisions down with the unprofitable ones. Had AIG filed for bankruptcy, I presume the bonus contracts would have been null and void. So...bankruptcy for AIG was deemed too risky for the nation's economy, so here's this bailout, which the public is recognizing as the moral equivalent of a bankruptcy.

Preemptively breaking up every firm that is "too big to fail" is one way to resolve the problem in the future. Perhaps another would be to organize a faster moving bankruptcy process that could take over a failing enterprise overnight without any catastrophic systemic interruptions, similar to how the FDIC sends in a team to take over failing banks on a Friday evening and has them back open, under new management, by Saturday morning.

[frogman042]

Just curious. Is this a real neighbor of yours or did you make it up? Can you cite any specific examples where someone in the situation you outlined has been helped in the way that you are claiming?

Thanks in advance.

---Jay

This is just 'one of those things' circulating around. There are hundreds-- probably thousands, actually-- of examples of this type of thing, the situation in the 'letter' may be a bit exaggerated, but it actually does reflect a lot of typical behavior on the part of people who are involved in this stuff.

... BIG SNIP ....

That was my point - sure that description may account for the reason of the meltdown and all the 'smart financial people' involved in buying and trading financial products that were built on them, but they aren't the only people effected by the meltdown. Many people real assets were destroyed by those, as Jon Stewart so aptly put it, who treated these things as a game. Real damage has been done it will take some tough choices to fix it - which I'm optimistic can be done. Yet, I want to know if this is the profile of the people who are the target of those recieving assistance. I haven't seen the evidence for that. If there are hundreds or thousands of examples of those people recieving the benefits of the bail-out then asking for a single real example shouldn't be that tough to produce.

Although I haven't looked at the details, my impression was that in order to meet the eligability of recieving assistance your profile would have to be almost the exact opposite of what you describe. I'm asking for evidence that you support you contention that these are the people who are getting the bail-out.

Personally I view this as just the type of poison that uses riducule instead of real analysis - the result being that viable solutions are destroyed without honest debate - and that bothers me.

[wintergreen48]

Just curious. Is this a real neighbor of yours or did you make it up? Can you cite any specific examples where someone in the situation you outlined has been helped in the way that you are claiming?

Thanks in advance.

---Jay

This is just 'one of those things' circulating around. There are hundreds-- probably thousands, actually-- of examples of this type of thing, the situation in the 'letter' may be a bit exaggerated, but it actually does reflect a lot of typical behavior on the part of people who are involved in this stuff.

... BIG SNIP ....

That was my point - sure that description may account for the reason of the meltdown and all the 'smart financial people' involved in buying and trading financial products that were built on them, but they aren't the only people effected by the meltdown. Many people real assets were destroyed by those, as Jon Stewart so aptly put it, who treated these things as a game. Real damage has been done it will take some tough choices to fix it - which I'm optimistic can be done. Yet, I want to know if this is the profile of the people who are the target of those recieving assistance. I haven't seen the evidence for that. If there are hundreds or thousands of examples of those people recieving the benefits of the bail-out then asking for a single real example shouldn't be that tough to produce.

Although I haven't looked at the details, my impression was that in order to meet the eligability of recieving assistance your profile would have to be almost the exact opposite of what you describe. I'm asking for evidence that you support you contention that these are the people who are getting the bail-out.

Personally I view this as just the type of poison that uses riducule instead of real analysis - the result being that viable solutions are destroyed without honest debate - and that bothers me.

Jay, consider the provision that more or less requires banks to rewrite mortgages so that the payment will not exceed a specified percentage of the customer's income (I think it is 38%-- which is pretty whack, under traditional mortgage underwriting standards, but that goes to show how whack the really bad mortgage loans are). Banks would accomplish by either cutting the rate or reducing the mortgage loan balance, either of which is a bonanza to the borrower who essentially gets something for nothing. Who are the borrowers who will benefit from this? The guy who has generally properly managed his finances, who has a 'reasonable' mortgage loan and got into trouble only because his employer went bust and laid him off is not going to benefit from this-- his problem is the lack of an income, not a freaky loan. The beneficiaries of this will be those people who borrowed more than they could handle in the first place and could not keep up, or who 'bet' that rates would never go up (almost by definition, that is a stupid bet)-- the people who have pretty much just gamed the system by entering into stupid transactions and will be bailed out, once again. And who will pay for bailing them out? As always, it will be the people who acted responsibly, who were careful in what they did, and who are now essentially being told they were suckers for having done so. That's the problem with bailouts.

And that criticism of bailouts applies as well to the banks and other business that are being bailed (the ones that would not exist but for receiving bailout money)-- I don't just single out stupid consumers for mockery.

[MarleysGh0st]

Today's "Non Sequitur" is fitting.

http://www.gocomics.com/nonsequitur

[TheConfessor]

This is just 'one of those things' circulating around. There are hundreds-- probably thousands, actually-- of examples of this type of thing, the situation in the 'letter' may be a bit exaggerated, but it actually does reflect a lot of typical behavior on the part of people who are involved in this stuff.

So now I'm left wondering which of your posts are things you wrote and which are just things that are circulating around. The long post you made yesterday about "Credit Advice" seemed quite good, but I don't know if it's your own work or just something you came across. The first post in this thread didn't seem up to your usual standards, but I figured everyone is entitled to an off day once in a while. I would always place a higher value on something you wrote than on something that was just circulating around. It would be helpful to know which is which.

[wintergreen48]

This is just 'one of those things' circulating around. There are hundreds-- probably thousands, actually-- of examples of this type of thing, the situation in the 'letter' may be a bit exaggerated, but it actually does reflect a lot of typical behavior on the part of people who are involved in this stuff.

So now I'm left wondering which of your posts are things you wrote and which are just things that are circulating around. The long post you made yesterday about "Credit Advice" seemed quite good, but I don't know if it's your own work or just something you came across. The first post in this thread didn't seem up to your usual standards, but I figured everyone is entitled to an off day once in a while. I would always place a higher value on something you wrote than on something that was just circulating around. It would be helpful to know which is which.

The thing that started this thread was someone else's work, as I noted earlier. Most of my 'joke' posts ('two guys walk in a bar...')-- and the thing that started this thread is a 'joke' post, at least, I thought it was obviously a joke-- are borrowed material, although I often revise them for style, spelling, etc. I think the same is true for most of the 'joke' posts that other folks post here-- someone sends you something that amuses you, or you see something online that amuses you, it has some relevance to a topic on the Bored or to another poster, and you forward it the Bored. Mayhap I will start headlining those kinds of posts with 'this was in my e-mail' or something in the future.

To the best of my current recollection, every 'non-joke' post I submit (including yesterdays essay) is, for better or worse, me, unless I specifically attribute it elsewhere.

[Estonut]

C'mon, people, doesn't everyone know that wg is not "Concerned in CA"?

[tlynn78]

C'mon, people, doesn't everyone know that wg is not "Concerned in CA"?

Ya think??
Apparently, some were confused. Shame on wintergreen. Shame, I say.

t.