Quelle surprise! AIG staff matter.

I had a hard time explaining to Gregg Jarrett on Fox News (see prior post “O.K., to be crystal clear on AIG’s bonuses….” March 22-09) that many of the folks who were still plying their trade in the Financial Products Group at AIG actually mattered, had other career choices, and should be retained to defuse the US$1.7 trillion bomb that is now AIG. How else would the U.S. Taxpayer hope to get their US$175 billion loan back from AIG? This was heresy last week.

Fortunately, the Gods have shined this week and two different data points have emerged supporting this unpopular theory (and it’s only Thursday).

First there was the wonderful, open resignaton letter to the New York Times from Jake DeSantis, an EVP (oh, the joys of having “F.U.” money set aside). Here’s an excerpt:

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. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

Then this story from AIG France (via the WSJ). It seems that there are still plenty of sought-after people at AIG, as I argued on Fox last Saturday (see prior post “Fox News interview tomorrow” March 20-09):

“Amid the flap over bonuses at American International Group Inc. two of the company’s top managers in Paris have resigned. Their moves have left the giant insurer and officials scrambling to replace them to avoid an unlikely but expensive situation in which billions in AIG trading contracts could default.

Representatives of the Federal Reserve, AIG’s lead U.S. overseer, are talking with French regulators and AIG officials to deal with the consequences of a complicated legal scenario in which the departures of the managers in Banque AIG, a subsidiary of AIG’s Financial Products unit, could trigger defaults in $234 billion of derivative transactions, according to people familiar with the situation and a document AIG provided to the U.S. Treasury.

Defaults, by no means inevitable, could not only hurt AIG but also could force European banks involved in the trades to raise billions in capital to cushion potential losses, according to AIG documents.”

The departure of just two individuals from AIG might mean a blow-up of US$234 billion of derivative contracts, requiring European banks to raise billions in new capital? Wow. I look forward to seeing Gregg Jarrett tackle the topic on Fox News again this weekend.

MRM