AIG, those MFers…..

Tagged with: Economics, Financial Crisis

Posted by ep on Tuesday, October 7, 2008, 22:28

This news item was posted in Economy category and has 3 Comments so far.

In case you didn’t know AIG just dropped over $440,000 for a retreat to the St. Regis. AIG claims the retreat was to reward to sales performers and have the executives who needed to be there to lead discussions (3).

Here is a breakdown of some of their spending:

$200,000 for rooms (1)
$150,000 for meals (1)
$23,000 for the spa (1)
$7,000 for golf outings. (2)
$1,500 for haircuts and manicures/ pedicures (3)

Some other interesting things coming out around AIG:

Just days before Lehman Bros. Holding Inc. filed for bankruptcy protection last month, the company altered its executive pay plan to give senior managers multimillion-dollar bonuses regardless of recent losses.(2)
AIG tried to hide negative information about its condition from auditors before the bailout plan took shape(2)
Joseph Cassano, the Lehman exec in charge of the company’s financial products division, received more than $280 million over the last eight years, according to Waxman. Even after he was shown the door in February, Cassano was placed on a $1 million-a-month consulting retainer. (2)

Fundamentally I don’t have a problem with AIG’s retreat. Currently the US taxpayers have only loaned AIG money at an interest rate that gives us a pretty good return. As long as AIG stays current on that obligation then we can’t be too upset with how they spend their extra funds. The alarming thing is that the executives didn’t realize all of the negative press the retreat would draw and cancel it to avoid that attention.

Actively trying to hide information from auditors and investors is criminal. If it turns out to be true there will be some Enron convictions.

I’m betting that I have folks who disagree with me on this. I look forward to your comments.
St. Regis - http://www.stregismonarchbeach.com/

1- http://voices.washingtonpost.com/livecoverage/2008/10/after_bailout_aig_executives_h.html?hpid=topnews
2- http://www.latimes.com/business/la-fi-lazarus8-2008oct08,0,5596966.column
3- http://www.azcentral.com/business/articles/2008/10/07/20081007biz-aigresort07-ON.html

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3 Responses to “AIG, those MFers…..”

Hyperboles

8 October, 2008, 6:30

How can you not disagree with the fact that they took the retreat, even as their company was imploding? Our government felt that they were put in to a position where they had to step in, and did so. Then, their sales performers and executives go on a retreat as a reward for their performance?

Inappropriately using investor funds for retreats and bonuses even as your company is being bailed out is just as criminal as hiding information from investors.
ep

8 October, 2008, 8:23

There company isn’t imploding now that they have the government loan. Plus, I never said that I didn’t disagree with the decision to hold their retreat.

What I said was, since we are not investors in their company (we are lenders right now) the government has no legal right to meddle with their operations. Until they miss a threshold, then we can go in swinging.
Antigrammatik

8 October, 2008, 9:10

On the surface, this sounds terrible. However, if they don’t keep their sales people happy and they start leaving, then they will truely implode. I understand why they have to continue to do the things they need to in order to retain their staff.

Cassano on the other hand…