We’re beginning to see the talent exodus from TARP-funded financial institutions. Yesterday in an op-ed Jake DeSantis of AIG-Financial Products wrote his “resignation letter” saying why he was leaving AIG. One major reason was the raging mob calling for the heads of those who received retention payments, now called bonuses, and the tepid defense that AIG’s $1-per-year chairman gave before Rep. Barney Frank’s rabid committee.
Today we learned from the Wall Street Journal that several top managers at Banque AIG in France are leaving, which experts say could cause defaults in $234 billion of derivative transactions. That’s because Banque AIG has to get French banking regulators to approve their replacements. If the regulators instead put in their own manager that could lead to defaults, since under the derivative contracts, such an appointment would mean a change in control and could null the contracts.
On top of that, two top Merrill Lynch strategists are leaving Banc of America Securities-Merrill Lynch research unit.
Retention payments to try to keep good managers in these trying times — to help resusitate ailing and failing financial firms — seem like a good idea, but not in the face of mob frenzy whipped up by policymakers and so-called community groups like ACORN, which has been leading protests and bus tours to point out “bonus” recipients’ homes.
An earlier post had speculated that London’s financial center could grow in power with U.S. financial talent being driven out. But that was before vandals attacked the Edinburgh home of the former head of the Royal Bank of Scotland, where they broke windows in his house and his car. Is London still safe from the anti-capitalist mobs that have threatened chaos at the G-20 meetings next week? Don’t bet on it. They too have been stoked up by policymakers’ — and world leaders’ — anti-capitalist rhetoric.