Outrage Over AIG's Resort Retreat After US$85 Billion Bailout

[Math Is Hard]

Is there a thread on this yet? I am outraged!

http://www.financialpost.com/news/story.html?id=866284

American International Group Inc. spent US$440,000 on a conference at a California resort less than a week after an US$85-billion government takeover, lawmakers said.

The bill from the St. Regis resort in Monarch Beach included US$23,380 for spa services, according to Representative Henry Waxman, chairman of the House Committee on Oversight and Government Reform. Mr. Waxman led questioning Tuesday of former AIG chief executives Martin Sullivan and Robert Willumstad as Congress probes events that led to federal intervention.

"Average Americans are suffering economically," Mr. Waxman, a California Democrat, said in his opening statement. "Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."

The St. Regis, located on a bluff overlooking the Pacific Ocean midway between Los Angeles and San Diego, is "devoted to the pursuit of service and elegance," according to its Web site. A "health and wellness" package costs US$600 a night, with a two-night minimum.

 

[Astronuc]

Well I'm sure the AIG management feel they deserve to be pampered after all their hard work.

Wealth begets privilege. It's the American way. (Pardon me, but I'm being facetious here)

Look at Richard Fuld of Lehman Brothers who earned something like $500 million from 2000-2008, while LB accumulated huge obligations and over-leveraged themselves.

Or the former CEO of Exxon-Mobil who got a nice $400 million package when he left. He worked really hard to get tax credits from Washington even though his company made billions of dollars in profit.
http://abcnews.go.com/GMA/story?id=1841989
http://www.forbes.com/static/pvp2005/LIRUZ74.html


I imagine a lot of people are upset at the moment when they are facing financial hardship while top CEOs whining about not being bailed out, or complaining about their hardship because they're not getting a bonus or whatever. However, excessive CEO/executive compensation has been an issue for a long time. It's only when things get really bad do people stop and look at how unfair/disparate the US and global economies really are. And right now things are really bad for a lot of people.

Hopefully - things will improve. I expect they will.

 

[Jimmy Snyder]

Keep it down would you. Spas are the only growing segment of the economy just now.

 

[Alfi]

With all the money floating around, you don't think these guys are going to go to Denny's do you.

Tue Oct 7, 7:34 PM ET

WASHINGTON (AFP) - AIG executives escaped to a pricey California beach resort to unwind just days after the insurance giant was rescued by an unprecedented 85-billion-dollar US government loan, lawmakers said Tuesday.

"Less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation," Democratic Congressman Henry Waxman told the House Committee on Oversight and Government Reform.

The US Federal Reserve stepped into save American International Group from imminent collapse on September 16, with a loan that gave the US government a stake of 79.9 percent in the insurance behemoth in the deal.

"Less than one week later, AIG held a week-long retreat for company executives at the exclusive St. Regis resort in Monarch Beach, California," Waxman said.

Invoices showed that AIG paid the Pacific Ocean getaway resort more than 440,000 dollars, Waxman told the committee on its second day of hearings on the Wall Street economic crisis.

. . . .

Cummings later told CNN that revelations of the resort spree "upset my constituents, many of whom are losing their houses and losing money in the 401(k)s (retirement savings plans). They are upset and rightfully so."

http://news.yahoo.com/s/afp/20081007/bs_afp/financebankinginsuranceuscompanyaig_081007233438

 

[Math Is Hard]

Do you guys have any idea how badly I need a manicure? But I can't go because I am on a tight budget now.

This really burns my biscuits!

 

[Astronuc]

Do you guys have any idea how badly I need a manicure? But I can't go because I am on a tight budget now.

This really burns my biscuits!

Oh, I can do manicures.

 

[Math Is Hard]

McKnia and I cut hair. Astro does manicures. If we could find a masseuse on PF we could open an overpriced spa.

 

[montoyas7940]

OH YEAH!

A PF barter system. Tax free trade. I like it.

 

[CaptainQuasar]

You should call up Alaska Senator Ted Stevens, I hear he's really into bartering.

⚛​

 

[Astronuc]

McKnia and I cut hair. Astro does manicures. If we could find a masseuse on PF we could open an overpriced spa.

or a masseur for the PF sisterhood - I can do that too! I'll keep my eyes closed and I promise not to enjoy it.

 

[BobG]

To be fair, there's two things that should be considered:

1) The vacation was for independent insurance agents that sold AIG insurance to their customers, not AIG executives. In other words, cancelling the affair would be similar to a company cancelling advertising.

2) I'm not sure how much money AIG would have recovered if they had canceled the event. I would imagine a lot of the costs would have been committed well before the event took place.

I remember a similar incident when Clinton-Dole shut down the government in a feud. All of the civil service employees in our squadron were sent home since there was no budget. Military have to work whether they're paid or not, so we weren't sent home. Contractors were paid via a contract the military couldn't break, so they weren't sent home. To make matters worse, at the same time civil service employees were streaming out the door, they had to keep stepping aside to make room for a huge delivery of new furniture. Sure, the furniture had been paid for months ago, but the unfortunate coincidence in delivery date really made for great morale. The employees were being sent home because there was no money to pay them, but at least the contractors would have new furniture.

As bad as the event appears, the appearance is probably worse than the action.

Edit: More importantly, I want to apply for the masseur job, too. I have no training, but that's okay. I'll sleep in a Holiday Inn the night before.

 

[Astronuc]

To be fair, there's two things that should be considered:

1) The vacation was for independent insurance agents that sold AIG insurance to their customers, not AIG executives. In other words, cancelling the affair would be similar to a company cancelling advertising.

2) I'm not sure how much money AIG would have recovered if they had canceled the event. I would imagine a lot of the costs would have been committed well before the event took place.

As bad as the event appears, the appearance is probably worse than the action.

It's true that the beneficiaries were the top 100 sales people of AIG products, but still, why is AIG lavishing such luxury on these people? It doesn't look good. The bill is about $4400 per sales person. Aren't these people paid very well to begin with?

I remember a similar incident when Clinton-Dole shut down the government in a feud. All of the civil service employees in our squadron were sent home since there was no budget. Military have to work whether they're paid or not, so we weren't sent home. Contractors were paid via a contract the military couldn't break, so they weren't sent home. To make matters worse, at the same time civil service employees were streaming out the door, they had to keep stepping aside to make room for a huge delivery of new furniture. Sure, the furniture had been paid for months ago, but the unfortunate coincidence in delivery date really made for great morale. The employees were being sent home because there was no money to pay them, but at least the contractors would have new furniture.

I remember that. My previous company had a contract with the DOE. We had a hundred or so people involved - and the payments stopped with a stop work order, so we started letting people go. Then the contract we had got cancelled, and our company and others were told to rebid the contract. Well, we ended up on the losing team of one big contract and that pretty much sent the company into a nosedive. My division go sold to another company, so that the original company could collect some capital and pay off some of the retirement accounts. I lost more than $40 K (probably close to $50K) or about 80% of what I have accumulated in my retirement account.

The presidents (one retired) of the company got golden parachutes and their stock was somehow purchased at the max value before the company went down.

Edit: More importantly, I want to apply for the masseur job, too. I have no training, but that's okay. I'll sleep in a Holiday Inn the night before.

Make sure it is a Holiday Inn Express.

 

[mgb_phys]

Even if it was all pre-paid it's still a ****** stupid thing to do from a PR standpoint.
If the new executive jet has just been delivered you should still go to the bailout meeting flying coach.

 

[BobG]

It's true that the beneficiaries were the top 100 sales people of AIG products, but still, why is AIG lavishing such luxury on these people? It doesn't look good. The bill is about $4400 per sales person. Aren't these people paid very well to begin with?

That raises lots of ethics questions. I wonder what kind of perks the lowest priced insurance company offers independent insurance salesmen. If I knew my insurance agent were attending the event, I think I'd do some comparison shopping with a couple different insurance agents next time - especially if he'd sold me an AIG policy.

That doesn't mean it doesn't make economic sense for the insurance branch of AIG. Happens all the time. If you want independent insurance agents to push your company's policies, you have to give them a reason.