Take note: livejournal isn’t just for cutters who think that Donnie Darko is the best movie ever made anymore. A wife of a senior IT executive at the financial products wing of AIG that blew up – AIGFP, has started a livejournal. (h/t – Felix Salmon, who also has the link to the husband’s blog.) It’s probably not going to stay up long, so I hope historians get a snap-shot for future generations. But here’s what it is like (underline mine):
…And my husband was hired [at AIGFP].
Thus began 15 years of being on call every hour of every day of every week of every year.
Never getting to read the boys a bedtime story without the phone ringing from Hong Kong or Tokyo or London or Paris because the mail server was down or someone couldn’t log on to their office machine from home or….
Eating at his desk with a phone to his ear – at dinner – at home…
Little did I know he was moving over and would use my husband as his chief geek and whipping boy for the next 10 years.
My husband was held accountable by Cassano for other people’s performance but never given direct authority over them, screamed at in public (as were most employees who had to encounter Joe) if any fault was found…Joe Cassano is a bully. I wanted very much to like the person who made our amazing London adventure possible but it was not going to happen.
Sent to London on a 2 to 3 year commitment, half a house left in storage in CT, we have been here ‘indefinitely’ for 11 years pushing 12. We were unable to press for anything more than the ex-pat package we were given at the beginning and lost even housing support after the first 5 years.Our housing costs rose to 5 times what we paid in Connecticut. The salary did not.
Raises were only given in the ‘bonus’. So imagine having to pay 5 times your mortgage or rent on your current salary with the promise of the rest of your compensation to come once a year, in December. How do you leave that job?
Do you leave in December and disrupt your children’s education? Well, not without a very good reason.
Do you leave at the end of the school year and essentially throw away 6 months of under compensated work? Not likely.
– Oh and, a percentage of your paycheck you will be forced to ‘re-invest’ in the company for 5 years before you will see it.
It is a very pretty velvet lined cage with a tyrant holding the key.
I had many reasons to trust that, though I was having to do most of the utility parenting and keep the world ticking over for the family while he spent all hours working, we would come out of the long hard road with money for the boys education and a retirement fund that would allow my husband to have time to do the things he loves.
Then Cassano betrayed us. The CDO business was his. The other businesses were profitable and still are. When the executive in charge of risk challenged him he was told to shut up. When it blew up Joe walked around the office, looking at people who had worked loyally for him (no choice there if you wanted to stay) and took home $1,000,000 per month, knowing that those around him were going to lose their savings and more. We have.
Ok, it was a huge blow but the government stepped in and my husband still had a job for now. But the description had changed…
And now Cuomo says that the security of our families can be purchased by returning the compensation we had been promised with his re-assurance in October. He is no better than a highwayman waiving a gun “Your money or your lives.”
Two things. Notice how she is able to see, and let’s assume she saw it early, that Cassano was a lunatic and a bully. She also catches how the pay structure has been set up to keep them trapped – to keep even the well employed people away from their families working shit jobs with terrible bosses thinking maybe they should just stick it out for one more bonus.
She’s smart enough to see that – but, as I underlined above, she made the mistake of thinking this insane person had any interest in providing the long-term for his employees. Read it again – “he treats my husband like shit, humiliates him, keeps him trapped here without enough money to transition out – but in the long run he’ll be taken care.” What kind of abuse-victim mentality is that?!? How do smart people fall for it?
Second – How perfect is it, and I’ve heard it from several people, that the argument for the bonus is “we deserve our bonus because we don’t really get paid a big salary and expect to live on our large bonus.” I retort “We’ll it is so large because you need to be compensated for the employer counterparty risk; you run the risk your employer will be gone, and the next one, be it a new bank or the USA, won’t want to honor it.”
A quick example – I can give you $1 a month each month for a year, or I can give you $20 at the end of the year. That’s a huge premium! Of course you’d take the $20. However you haven’t gotten free money – you’ve just leveraged up on your counterparty risk. You suddenly now have the risk that I won’t have the $20 a year from now or that I’ll be gone, and you’ll be out all that you deserve instead of just that last $1. If someone else is standing in my place at the end of the year, and he says “I don’t owe you $20; in fact I don’t owe you anything” that’s not highway robbery.
That AIG employees and other investment bankers don’t understand a simple idea of counterparty risk at the micro and contract level makes perfect sense to me, because the not being able to pay out the big premium is exactly what brought them down. “But we had these CDS contracts! You promised!”
If she’s looking for “current music” recommendations, here’s Yo La Tengo singing “Stockholm Syndrome.”