Content Matters

In reading the Jake DeSantis resignation letter in this morning's Times, it's hard not to feel some sympathy for DeSantis and others in a similar position. Clearly, in this market, there are many people who had little direct responsibility for the credit crisis, but who are not feeling the brunt of the pain.

Yet one part of the letter rubbed me the wrong way. In his letter to AIG CEO Ed Liddy, DeSantis writes:

What DeSantis doesn't say here is that some portion of the value that had been boosting his life savings were the artificial profits from the credit default swaps in prior years. He's now complaining about the losses in his deferred comp plan when the CDS were losing money, but doesn't acknowledge that much of the gains in prior years were based on smoke and mirrors.

This reminds me of a post I read recently on Felix Salmon's Market Movers blog, where he shares the story of Dr. Martin Beitler, who complains that due to tight credit, he lost a nonrefundable deposit on a million dollar Chelsea condo because he couldn't get a no-income-check $1.5 million mortgage. Dr. Beitler is suing for his deposit back, and states that "he had bought and sold property before and had always qualified for no-income-check mortgages."

As Felix notes, Dr. Beitler does not offer to return the funds he earned when he had flipped apartments in the past using those no-income-check mortgages. No, like Jake DeSantis, Dr. Beitler wants someone to bail him out when things go badly, but feels a sense of full entitlement when things go well.

To some extent, all of us were complicit in the use of cheap credit and the rising economy that it funded. But some share more culpability than others. And while DeSantis and Beitler might not be the worst offenders, neither makes for a very sympathetic character, particularly when they fail to recognize that their earlier gains were built on the same smoke and mirrors that are now causing their pain.