The executive director at AIG's Financial Products unit hid his blog behind a firewall last night, after we linked to it yesterday. Fortunately, we had already grabbed his latest entry.

Here it is:

For 15 years, I have helped tend to the portfolio of positions making up the whole of the business. As a member of the support team, I am still, for as long as I am here, responsible for all of the practical technical things - computers, data, lights, air conditioning - that keep the place running. The job is highly technical, spanning multiple disciplines (hardware, software, an understanding of the business, familiarity with multiple classes of market data, facilities management, disaster recovery and business continuity, the list goes on) and the business critical nature of the portfolio has meant that I have been, for the past 15 years, on call 24x7x365, for any operational problem which could affect the business.



And for many years, the business was good. The vast majority of the deals done were sound. And the portfolio grew, and became more intricate, and encompassed more classes of products.



Contrary to what is being said - by people who don't know anything about the business - about "unhedged positions", the business worked on hedging. This is not a hedge fund, which is a particular kind of investment company. The entire portfolio had to be valued and hedged every night, and new axes (hedging instructions) generated and actioned. For over 20 years, the nightly cycle was never skipped. To do so would have lost track of the true value of the book, and that would have been a true disaster, because we would no longer be able to predict cashflows. The entire machine worked on cashflows. Fixed cashflows across variable foreign exchange rates would generate profits or losses, likewise, cashflows of fixed interest rates flowing against variable interest rates would generate profits and losses.



Although risky, it thrived on volatility. But it has always required maintenance.



Unwinding thousands of intertwined, complex deals in a market where your counterparties know what you are trying to do, without losing even bigger amounts of money, takes specific knowledge of the transactions, and knowledge of the systems, the vast majority of which were developed in-house. Business continuity plans, reporting to our regulators (there's another lie being told, that it isn't regulated - it was most certainly regulated!), and paying the bills have to happen right to the close of the last book. Whatever moron that started flogging people already on a death march, obviously does not care about the 1.6 trillion dollars in contracts still on the books, which can still blow up, making the world that much poorer. Perhaps by blowing up the economy, bigger targets than the maintainers can be claimed. I don't know.



As it was, we managed to wind down nearly 40% of the whole portfolio - another news item being ignored - derisking almost a trillion dollars worth of risk that the American taxpayer doesn't have to pay for. We hope to finish the job. We're professionals like that.



It's amusing to hear people say we should be fired, or that the job isn't all that hard, or there's 50 people willing to do any of our jobs. To all of those folks, here's a clue: This is not a going concern, we have been working ourselves out of a job for the last 6 months, we will not have jobs when we are done, and any replacement will be doing it slower than we can, and is very likely to screw it up much worse than it already is. Oh, and a replacement might not get paid at all, if the government changes its mind again. The only reason I stayed was because I was told that I was a valued member of the team and I was promised a payment. Nobody ever actually tried to renegotiate the terms. It was never a secret, the ERP was disclosed many times. Anybody telling you otherwise is lying. Anybody - Geithner, Cuomo, Blumenthal, Dodd, all of them and also those guys in Congress - they all had that information back in October. Cummings has been railing at Liddy about it since at least October.



Here's something Cuomo wrote in October regarding the ERP. This is after he reduced the DCP and SIP to zero for all of us.



"These actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG's employees, including retention and severance arrangements, who are essential to rebuilding AIG and the economy of New York."



In the financial industry, generally there is a nominal salary paid, and then a bonus. The salary never changes - mine stayed the same for 15 years. Worse, being an expat, I was paid in dollars - taxed at UK rates (40%), and subject to FX rate fluctuations that have ranged from $1.60 to the pound in 1998 to $2.10 for a while in late 2007. It did not help us to save much money against the eventuality of losing the job and then being stuck in a foreign country with a toxic CV. The bonus was what got us through the year, though, and through careful budgeting, we were able to stay afloat. We didn't make all that much money, especially for London, and especially as an expatriate. Our house in Fairfield Country cost us $2100 in mortgage payments in a month, which meant we could live off the salary. The smaller house we have in London, as far out as we can live without being too far from my son's school, is around $10,000 a month, and utilities and taxes cost another $1800 a month. My son's school is about $30,000 a year. He cannot actually go to any others, he has to go there.



I cannot work for 1/5 of my previous compensation and remain in London. In my case, my monthly paycheck doesn't cover 2 weeks of rent in London, let alone anything else. This is not at all a pleasant job, and going broke whilst also having our souls destroyed is, to be frank, not something I feel I can stomach indefinitely. They could have, at any time, renegotiated the terms, the salary, anything to make it fairer. They chose instead to throw us under the bus. I sure hope the BlackRock guys can finish this job, and I know they get paid a lot more than I do. I am, ultimately, just a support guy, albeit a highly compensated, highly qualified and highly professional one. I am certainly not looking for sympathy, I already knew I was losing my job and I was preparing for my time. I had made my peace with the events which had led up to the unwind. Certainly one should not expect sympathy from the likes of Andrew Cuomo. I just hope I can roll out of the way before he reverses the bus to back over me again.