Dear President Obama,
I say this as a supporter and as someone who wishes you success as we face extreme challenges on many fronts. I work among conservative Republicans and actually had to sneak out of the office to watch your inauguration. It was a touching and historic moment I will never forget.
You are on the verge of losing whatever political capital you had coming into office due to your refusal to acknowledge that the people you are relying on for economic policy are the very people who are responsible for getting us into this situation. Greenspan, Bernanke, Paulson, and now Geithner (and Summers) all continue to fail to see the causes of the crisis. As a consquence, current proposed regulatory reform is bound to fail yet again.
At this point, the rapid loss of confidence in both Geithner and Bernanke are weakening your ability to push your agenda in other critical matters. You must do something to remove them both or you will imperil your potential to accomplish lasting and necessary change.
He enunciates six unacceptable weaknesses in your proposal:
1) No major changes for the ratings agencies!
2) Turn Derivatives into Ordinary Financial Products
3) If they are too big to fail, make them smaller.”
4) The Federal Reserve, Despite its Role in Causing the Crisis, Gets MORE Authority
5) Require leverage to be dialed back to its pre-2004 levels.
6) Restore Glass Steagall
All of which suggests that the status-quo-preserving, sacred-cow-loving, upward-failing duo of Lawrence Summers and Tim Geithner are still in control of economic policy. The more pragmatic David Axelrod and the take-no-prisoners, don’t-give-a-shit-about-Wall-Street Rahm Emmanuel have yet to assert authority over the finance sector.
All these should be considered uncompromising requirements of any regulatory reform. Anything less than these six items will have no positive effect and will likely lead to another crisis before the end of your first term.
You are running out of time.
Barry Ritholtz is a phenomenal blogger and has been a huge influence on the way I think about things. He’s got a new article this morning
One sentence in particular caught me a little off guard:
The spat in question is between Sheila Bair, the exemplary FDIC chairwoman, and the asshat being the speaker of the above WTF quote, John C. Dugan, the comptroller of the currency.
I tried to leave a comment there, but apparently it didn’t make it through his new souped up spam filters (which is understandable due to its length and the fact it contains little more than a link, i.e. the markings of “spam”).
Here it is:
Sheila Bair an examplary FDIC chairwoman? I’m afraid I’m with John Hempton on this one:
Other than that, I agree that Dugan seems to be an “asshat”.
PS: I love your blog and you’ve been a huge influence on the way I think about things, so I’m pretty shocked to see your comments about Bair. She is an idiot and maybe even an “asshat” as well.
Dear Mr Jake DeSantis,
I am writing in response to your recent Op-Ed published in the New York Times that was thinly veiled as a resignation letter.
I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P.
What did you do? It must have been a pretty awesome year to receive a seven figure bonus. You are aware that most CEOs outside of the hyperinflated finance industry make less than that, right?
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.
Did you ever consider that perhaps you could afford to forgo your bonus this year because you received ridiculous unwarranted bonuses every year for the past 11 years? That is quite noble of you to make such a grim sacrifice.
I take this action after 11 years of dedicated, honorable service to A.I.G.
Wait. You worked in finance, right? Honorable service? I’m sure the troops in Iraq and Afghanistan appreciate that. What makes you think you are entitled to describe yourself as honorable? Who are you trying to kid?
I can no longer effectively perform my duties in this dysfunctional environment
Yeah, when things get tough and the money machine stops pumping, it’s time to head for exit. It’s the only honorable thing to do.
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.
I think you might have done well for yourself by reading your letter out loud one time before publishing it. Do you see how ridiculous this is? “Honorable service” ? “Duty”? Come on, man. You got rich milking pension funds and university endowments. Don’t try coming off as a hero. You are no hero.
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.
Does that include the commute time to your mansion in Greenwich? How many days, really, in the past 11 years were you in the office more than 12 hours? The markets open at 9:30am and close at 4:oopm. That is 6.5 hours, what were you doing the rest of the time? Just so you know, drinks after the closing bell doesn’t count as “work”.
The profitability of the businesses with which I was associated clearly supported my compensation.
Really? What special skills did you bring to the table? What did you do that someone else could not have done? Were you personally responsible for bringing in all that money? Should the guy on the assembly line make seven figure bonuses too because of the business he is associated with?
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. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.
Are you seriously asking us to feel sympathy for you? What is your net worth now? How many tens of millions? Do you think you honestly deserve to make 20 times what your parents made? Were you really adding that much more value to the economy than a couple of teachers? Wake up. You were a truck driver driving a truck loaded with gold and got paid based on the value of the cargo. Anyone could have done what you did.
I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust.
It is this sense of entitlement coming from you and others like you that contributes to the brewing outrage felt by Americans. Keep it up.
Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”
Don’t let the door hit you on the way out.