Today I sent the following “Letter to the editor” to a few local papers, and a few national ones.  I don’t expect it to be published, but we have to do what we can.

Last night, Saturday November 7th, the house of Representatives passed H.R. 3962, the Affordable Health Care for America Act.

This has been billed as a “historic accomplishment” that is being compared to Social Security and Medicare. That sounds about right, so let’s take a moment to look at those two programs. At last count, the unfunded Social Security liability is just under 14 Trillion dollars, adding in Medicare and the Prescription Drug benefit our total unfunded liabilities is estimated at just above 106 Trillion dollars.

Just to put those in perspective, that 14 106 Trillion Dollars is just above $344,000 per citizen of the United States of America. That’s right, a family of only three is on the hook for more than ONE MILLION dollars of unfunded liabilities just to keep Social Security and Medicare afloat.

I believe it was Albert Einstein who said “the definition of insanity is doing the same things over and over again and expecting a different results.” Well, here we go again. We are on the verge of creating another gigantic government program that could very well be the straw that broke the camels back.

Granted, our health care system isn’t perfect, it could use a good does of tort reform and some other “non politically popular” reforms; however, a “Public Insurance Option” isn’t the answer.

Democrat, Republican, Independent, but more importantly American, we MUST stop this power grab from our elected leadership. In the words Ronald Reagan, one of our greatest Presidents, “Government is not the answer to our problems, government is the problem.”

Edit: 14 stuck out to correctly be 106 in the 3rd paragraph.

This article from Peggy Noonan at the WSJ is awesome.  A must read:

The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren’t rising, they’re bobbing, and will settle. No one believes the bad time is over. No one thinks we’re entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They’ll miss the meaning of this moment, too.

The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.

It is a story in two parts. The first: “They do not think they can make it better.”

I talked this week with a guy from Big Pharma, which we used to call “the drug companies” until we decided that didn’t sound menacing enough. He is middle-aged, works in a significant position, and our conversation turned to the last great recession, in the late mid- to late 1970s and early ’80s. We talked about how, in terms of numbers, that recession was in some ways worse than the one we’re experiencing now. Interest rates were over 20%, and inflation and unemployment hit double digits. America was in what might be called a functional depression, yet there was still a prevalent feeling of hope. Here’s why. Everyone thought they could figure a way through. We knew we could find a path through the mess. In 1982 there were people saying, “If only we get rid of this guy Reagan, we can make it better!” Others said, “If we follow Reagan, he’ll squeeze out inflation and lower taxes and we’ll be America again, we’ll be acting like Americans again.” Everyone had a path through.

Now they don’t. The most sophisticated Americans, experienced in how the country works on the ground, can’t figure a way out. Have you heard, “If only we follow Obama and the Democrats, it will all get better”? Or, “If only we follow the Republicans, they’ll make it all work again”? I bet you haven’t, or not much.

This is historic. This is something new in modern political history, and I’m not sure we’re fully noticing it. Americans are starting to think the problems we are facing cannot be solved.

Part of the reason is that the problems—debt, spending, war—seem too big. But a larger part is that our federal government, from the White House through Congress, and so many state and local governments, seems to be demonstrating every day that they cannot make things better. They are not offering a new path, they are only offering old paths—spend more, regulate more, tax more in an attempt to make us more healthy locally and nationally. And in the long term everyone—well, not those in government, but most everyone else—seems to know that won’t work. It’s not a way out. It’s not a path through.

And so the disheartenedness of the leadership class, of those in business, of those who have something. This week the New York Post carried a report that 1.5 million people had left high-tax New York state between 2000 and 2008, more than a million of them from even higher-tax New York City. They took their tax dollars with them—in 2006 alone more than $4 billion.

You know what New York, both state and city, will do to make up for the lost money. They’ll raise taxes.

I talked with an executive this week with what we still call “the insurance companies” and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress “are trying on every front to increase the role of government in the regulatory area.” The executive said of Washington: “They don’t understand that people can just stop, get out. I have friends and colleagues who’ve said to me ‘I’m done.’ ” He spoke of his own increasing tax burden and said, “They don’t understand that if they start to tax me so that I’m paying 60%, 55%, I’ll stop.”

He felt government doesn’t understand that business in America is run by people, by human beings. Mr. Frank must believe America is populated by high-achieving robots who will obey whatever command he and his friends issue. But of course they’re human, and they can become disheartened. They can pack it in, go elsewhere, quit what used to be called the rat race and might as well be called that again since the government seems to think they’re all rats. (That would be you, Chamber of Commerce.)

***

And here is the second part of the story. While Americans feel increasingly disheartened, their leaders evince a mindless . . . one almost calls it optimism, but it is not that.

It is a curious thing that those who feel most mistily affectionate toward America, and most protective toward it, are the most aware of its vulnerabilities, the most aware that it can be harmed. They don’t see it as all-powerful, impregnable, unharmable. The loving have a sense of its limits.

When I see those in government, both locally and in Washington, spend and tax and come up each day with new ways to spend and tax—health care, cap and trade, etc.—I think: Why aren’t they worried about the impact of what they’re doing? Why do they think America is so strong it can take endless abuse?

I think I know part of the answer. It is that they’ve never seen things go dark. They came of age during the great abundance, circa 1980-2008 (or 1950-2008, take your pick), and they don’t have the habit of worry. They talk about their “concerns”—they’re big on that word. But they’re not really concerned. They think America is the goose that lays the golden egg. Why not? She laid it in their laps. She laid it in grandpa’s lap.

They don’t feel anxious, because they never had anything to be anxious about. They grew up in an America surrounded by phrases—”strongest nation in the world,” “indispensable nation,” “unipolar power,” “highest standard of living”—and are not bright enough, or serious enough, to imagine that they can damage that, hurt it, even fatally.

We are governed at all levels by America’s luckiest children, sons and daughters of the abundance, and they call themselves optimists but they’re not optimists—they’re unimaginative. They don’t have faith, they’ve just never been foreclosed on. They are stupid and they are callous, and they don’t mind it when people become disheartened. They don’t even notice.

It’s not April 1st, so this can’t be a huge joke… Wow, incompetence at its best.

After determining pay packages…. Via the NYTimes:

“I wouldn’t begin to say how much money you should make on Wall Street,” Mr. Feinberg said in an interview last week, as he prepared to slash pay for the top 25 earners at seven firms that received significant government aid. “I’ve never worked on Wall Street. I don’t claim to know the ethos of Wall Street.”

[snip]

“If any one of these people left, I would be very disappointed,” he said.

Whoops, on the same day as the NYTimes article – Via Business Insider and here:

As if we needed any proof of the fact that arbitrarily cutting salaries drives away top people.

It turns out that a quarter of the execs targeted by our new Pay Czar Kenneth Feinberg jumped ship before their pay cuts were even finalized. [emphasis mine]

Where did they go?

To their old firms’ competitors of course where they can command market rates for their work.

No kidding?  You mean that the marketplace works that that when the government sticks is grubby fingers where they don’t belong it leads to unintended consequences?  So now, we the people effectively own these firms that are a shell of there former selves and are left with the managers who couldn’t get hired by the other firms.  Excellent… If there was any doubt we are going to lose all of our “investment” it should be gone now.

Can we fire this incompetent czar?  I’d like to have at least had the opportunity to vote for someone with a fricking clue.  This guy doesn’t even know what the market rate is for a financial exec and somehow expects to arbitrarily slash pay and hope that they won’t change employers.  That is change we can believe in.  Of course, the message from the execs is keep your damn change, I’m out.

I’ve recently been turned onto the Business Insider.  So far, I’ve been fairly impressed with the content, this is a great article from their site:

Paul Krugman is trying to have it both ways when it comes to the deficit. On the one hand, he says it isn’t a big problem, and that we can afford a lot more spending. On the other hand, he says if there is a problem it’s all Bush’s fault — which may be true, but that doesn’t change the current reality.

Either way, some are finding his reasoning to be lacking. James Hamilton at Econbrowser points to Political Math, which debunks the claim that the $9 trillion debt is okay because it’s on par with where we were post WWII.

…implicit in his observation is the concept that since we did fine after WWII, we’ll do fine now. But the years after WWII saw drastic reductions in the inflation-adjusted debt driven by drastic reductions in spending. Mr. Krugman points to no similar possibility in the post-Obama world…. Back in 1945, at the height of the spending that saw our national debt rise so dramatically, entitlement spending and interest on the national debt made up a meager 5% of our total budget.

Just look at the composition of our spending, then vs. now:

Without painful adjustments to entitlements (mandatory) there’s just no way spending will shrink the way it did after 1945. What’s more, it seems far fetched to believe that America will enjoy the same kind of growth it did after WWII, when we stood alone in the world as an economic giant, and rode the wave of booming families, highways, cars and the suburbs.

This is one of the most concise pictures of why we are absolutely screwed if we don’t get off of the government feeding tube.  The gigantic Mandatory piece of the pie has to be cut down rapidly.

We must find a way to reform Social Security, Medicare and Medicaid.  We must cut excessive programs and practice fiscal discipline.  No longer can this country spend as though it is going out of style, it will be the undoing of what made America great.  Sadly, we don’t seem to have the political will or leadership to do this.

Sometimes you just read something and think to yourself…. WHAT ELSE DID YOU EXPECT WOULD HAPPEN!?!

From the WSJ:

The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout.

snip

The FHA insures private lenders against defaults on certain home mortgages, an inducement to make such loans. Insurance from the New Deal-era agency has enabled lending to buyers who can’t make a big down payment or who want to refinance but have little equity. Most private lenders have sharply curtailed credit to those borrowers.

Exactly… Lenders won’t lend to folks who can’t make a down payment or don’t have equity because they are a credit risk.  When the government gets involved to fix the system it almost always does more harm than good.  By insuring borrowers who are on the bubble, the government is simply encouraging reckless behavior. A lot of the time this won’t cause any major problems, but when things go bad, they will go bad very quickly.

Policymakers have used the FHA to stabilize the housing market by pushing it to offer credit with far easier terms than that offered by most private lenders. For example, it will back loans with down payments as low as 3.5%.

Much of the FHA’s risk comes from its growing exposure to the broader economic downturn. The FHA is particularly sensitive to home price declines because of the small down payments it will accept, which can quickly become wiped out by fall in home values.

Ooh-ooh, let’s muck with the market some more, and go broke even faster!  In today’s environment when home values are collapsing, why on earth would we want to allow even lower down payment loans?  You’d think an ounce of economic sense would be called for in our situation – except that isn’t politically palatable.  Just remember as things have fallen apart, the FHA standards have continually been loosened.  Just when it is time to start tightening things up, we loosen them the other way.

Wake up people… Giving more credit to folks that shouldn’t have it in the first place, paying for cars that shouldn’t be purchased and attempting to press the consumer to buy is a recipe for disaster.  Anyhow, buy puts, lots of them.  We are building up another house of cards that will come tumbling down harder than ever before.

From the WSJ:

GM sales were off 20% in August, Chrysler was off 15%.  Of course that non-government owned company you may have hear of Ford, well its sales were up 17%.

I don’t wish any ill will on the employees of GM or Chrysler, but you have to wonder how on earth these companies are going to survive when they can’t even sell cars during a 3 billion dollar government giveaway.

Here is the basic data:

Ford Motor Co. said its August light-vehicles sales in the U.S. rose 17% from August of 2008 as the car maker benefited from the government’s “cash for clunkers” rebate program.

Hyundai Motor Co. said its U.S. results set a record in the month, with sales up 47% from a year earlier to 60,467. The Korean maker has been on a tear in the American market and was a big beneficiary of the clunker rebates.

Chrysler Group LLC, meantime, reported a 15% drop in its year-over-year August U.S. sales as the lack of inventory hindered potential purchases.

And Nissan Motor Co. reported its North American sales fell 2.9% in August from a year ago to 105,312 vehicles, though it said it also saw a boost from clunkers customers.

Later in the day from WSJ Breaking News:

GM reports U.S. light-vehicle sales fell 20% in August. Nissan sales dropped 2.9% while Hyundai sales surged 47%.

From the WSJ:

WASHINGTON — Recent town-hall uproars weren’t just about health care. They were also eruptions of concern that the government is taking on too much at once.

That suggests trouble for the president’s Democratic Party, and fears of losses in next year’s midterm election are likely to shape the party’s fall agenda.

At August’s town-hall meetings, voters often started with complaints about health care, only to shift to frustrations about all the other things President Barack Obama and the Democrats have done or tried to do since January. The $787 billion economic-stimulus package, the government-led rescue of General Motors Corp. and climate-change legislation all came in for criticism.

“I have seen a level of dissatisfaction and even anger that I haven’t experienced in the years that I’ve been a member of Congress,” Sen. John McCain, an Arizona Republican, told an audience at a health-care meeting in Kansas City on Monday.

Although the election is still far off, political forecasters predict that Democrats could run into trouble in the 2010 midterm vote.

“What we’re seeing now, both in terms of numbers and the feel out there, this is how big waves feel early on,” said Charlie Cook, editor of the Cook Political Report.

Health-care may be the hot button issue of today, however the people are beginning to rise up against this overreaching regime.  It’s funny to me how something like this (see below) gets used as the mandate for everything…

Last year’s election gave Democrats a mandate for big changes that they feel still applies. They won seats by arguing that Republicans had failed to act to keep the housing market and financial system from crumbling. – emphasis mine

Okay, so you argued that the housing market sucked, and it was W’s fault for the financial blow up.  Political posturing at best, but how does that equate to a government takeover of health-care, a nine trillion dollar projected deficit (don’t try to blame that one on W, some yes, most, no) and the rest of this overreach?  The administration is quickly running of of rope.  We’ve left them enough to tie the noose, and they are doing it very, very quickly.

2010 – The Senate will likely hold with a Democrat majority, the House I think flips back to the Republicans.  Hopefully it isn’t too late.

This was on my mailbox today:

You cannot legislate the poor into freedom by legislating the wealthy out of freedom.  What one person receives without working for, another person must work for without receiving.  The government cannot give to anybody anything that the government does not first take from somebody else.

When half the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that, my dear friend, is about the end of any nation.  You cannot multiply wealth by dividing it.

… Join the upcoming Boston Tea in Chicago’s Loop at noon sharp, April 15th! ( TeaPartyDay.com)

I guess I’ll be heading downtown on the 15th. I’m not really the protesting type, but this is getting totally out of hand.

Remember when President Obama was outraged at A.I.G. bonuses and wanted to use every legal avenue to stop them?

Funny how now, only a few short weeks later that same president and his administration are seeking an Out on Bailout Rules for Firms via Washington Post:

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.

The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.

This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration’s efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers’ interests.

Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, said the congressional conditions should apply to any firm benefiting from bailout funds. He said he planned to review the administration’s decisions and might seek to undo them. “We have to make certain that if they are using government money in any sort of way, there should be restrictions,” he said.

A Treasury spokesman defended the approach. “These programs are designed to both comply with the law and ensure taxpayers’ funds are used most effectively to bring about economic recovery,” spokesman Andrew Williams said.

In one program, designed to restart small-business lending, President Obama’s officials are planning to set up a middleman called a special-purpose vehicle — a term made notorious during the Enron scandal — or another type of entity to evade the congressional mandates, sources familiar with the matter said.

In another program, which seeks to restart consumer lending, a special entity was created largely for the separate purpose of getting around legal limits on the Federal Reserve, which is helping fund this initiative. The Fed does not ordinarily provide support for the markets that finance credit cards, auto loans and student loans but could channel the funds through a middleman.

At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private.

Obama’s team is also planning to exempt financial firms that participate in a program designed to find private investors to buy the distressed assets on the books of banks. But Treasury officials are still examining the legal basis for doing so. Congress has exempted the Treasury from applying the restrictions in a fourth program, which aids lenders who modify mortgages for struggling homeowners.

Congress drafted the restrictions amid its highly contentious consideration of the $700 billion rescue legislation last fall. At the time, lawmakers were aiming to reform the lavish pay practices on Wall Street. Congress also wanted the government to gain the right to buy stock in companies so that taxpayers would benefit if the firms recovered.

The requirements were honored in an initial program injecting public money directly into banks. That effort was developed by the Bush administration and continued by Obama’s team. The initiative is on track to account for the bulk of the money spent from the rescue package. All the major banks already submit to executive-compensation provisions and have surrendered ownership stakes as part of this program.

Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury’s plan to bypass the restrictions may be unlawful.

“They are basically trying to launder the money to avoid complying with the plain language of the law,” said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. “They are trying to create a loophole to ignore Congress, and I think the courts will think that it’s ridiculous.”

The federal watchdog agency overseeing the bailout is looking into the matter, trying to determine whether the Treasury’s actions are legal.

Of the two major restrictions imposed by Congress in the bailout legislation, the limit on executive pay has been the most politically explosive issue.

Obama himself has called for these limits. “We’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street,” he said earlier this year.

But officials at the Treasury and the Fed said they worry harsh pay limits will undermine critical bailout programs by discouraging financial firms from participating. Although many of these companies could survive without government help, they might lack money to ramp up lending, which officials consider critical to turning the economy around.

In private meetings with officials in both the Bush and Obama administrations, firms’ leaders have pushed back against pay limits.

A major test of whether the Treasury would apply the congressional restrictions was a $1 trillion program developed last fall to revive consumer lending. The initiative, known as the Term Asset-Backed Securities Loan Facility, or TALF, will be seeded with up to $100 billion from the financial rescue package, with the rest coming from the Fed.

The program set up a special entity providing low-cost loans to hedge funds and other private investors so they can buy securities that finance consumer debt from banks and other lenders. This would free these companies to make more loans.

When the Bush administration announced the program in November, officials directed the Fed to apply the pay limits to the lenders because they stood to benefit the most from the program. “There was a public hunger for executive-compensation restrictions, and we knew we couldn’t be tone-deaf to the politics there,” a former Bush administration official said.

In February, Obama administration officials at the White House and the Treasury began reviewing that decision. Treasury officials consulted with Department of Justice attorneys, who said they could legally avoid the pay restrictions, according to a government official. The requirements were removed just before the initiative was launched.

The concerns persisted as the administration crafted other initiatives. Some private investors said, for instance, that they would not help the government buy toxic assets from banks if the congressional restrictions were applied to them. And every major provider of small-business loans has said that it will not participate in the government’s program if it has to surrender ownership stakes to the government or submit to executive-pay limits.

I don’t think that I really need to comment much on this.  The letter speaks for itself.

From the NYTimes today:

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:

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.

You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.

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. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.

I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.

That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”

That may also be why you authorized the balance of the payments on March 13.

At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.

I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.

You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

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.

So what am I to do? There’s no easy answer. 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. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.

That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.

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.”

Sincerely,

Jake DeSantis