I caught this post on Greg Mankiw’s terrific blog. The following resignation letter from one of the bonused executives at AIG appears in today’s edition of the NY Times. I’ve written quite a bit about Wall Street compensation, on this blog, for Forbes and in Friday’s Boston Globe. The issue is poorly understood by the media, has been demagogued by politicians, and is understandably misconstrued by the public. The bottom line has always been that talented people command higher compensation (although the tax code has amplified and distorted Wall Street’s pay structure). Arbitrarily cut the compensation and you lose the most talented people:
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:
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.
Read the rest here.