Is this why the bailout was so important? ...so executives could have a spa day?

  • auryn

    Posts: 2061

    Oct 07, 2008 9:53 PM GMT
    I just have to post the article, because this is ridiculous.
    http://www.huffingtonpost.com/2008/10/07/aig-congressional-hearing_n_132614.html

    Today, the Committee on Oversight and Government Reform explores the causes and effects of the AIG bailout.

    THE AIG LUXURY RETREAT

    At one point, Rep. Elijah Cummings brought up a costly AIG executive retreat that occurred briefly after the government bailout. The costs, he said, totaled $443,343.71.

    From Speaker.gov, here's Rep. Elijah Cummings (D-MD) on the AIG manicure, etc., expenditures:

    Have you heard of anything more outrageous - a week after taxpayers commit $85 billion dollars to rescue AIG, the company's leading insurance executives spend hundreds of thousands of dollars at one of the most exclusive reports in the nation...Let me describe for some of you the charges that the shareholders, taxpayers, had to pay. AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1,400 at the salon. They were getting manicures, facials, pedicures and massages while American people were footing the bill. And they spent another $10,000 dollars for I don't know what this is, leisure dining. Bars?
    WHY WAS AIG BAILED OUT IN THE FIRST PLACE?

    Just after it happened, the New York Times had explained why an AIG bailout seemed so important:

    What frightened Fed and Treasury officials was not simply the prospect of another giant corporate bankruptcy, but A.I.G.'s role as an enormous provider of esoteric financial insurance contracts to investors who bought complex debt securities. They effectively required A.I.G. to cover losses suffered by the buyers in the event the securities defaulted. It meant A.I.G. was potentially on the hook for billions of dollars' worth of risky securities that were once considered safe.

    If A.I.G. had collapsed -- and been unable to pay all of its insurance claims -- institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with A.I.G. securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.


  • Posted by a hidden member.
    Log in to view his profile

    Oct 08, 2008 12:41 AM GMT
    Even the crooks will get posh prisons while foreclosure recipients sleep on the streets.
  • CuriousJockAZ

    Posts: 19138

    Oct 08, 2008 4:18 AM GMT
    This is an outrage...I hope that heads will roll and every one of the AIG execs should be fired. The utter gall.
  • Posted by a hidden member.
    Log in to view his profile

    Oct 08, 2008 4:39 AM GMT
    By the way, the insurance side of AIG is solvent, and no claims by their insured clients are at risk. That's because the insurance side is heavily regulated. It's the financial side that is bankrupt.

    I heard a congresswoman interviewed about this "retreat". I do believe heads will roll. It's true....they did spend an outrageous amount of money AFTER the bailout.

    Clearly, American citizens and the government have a stake in going after CEOs and CFOs that engage in such financial rape. It started with ENRON back in 2001 or so....and these people are so untouchable in the "climate" of the past 8 years....that they feel that they have carte blanche.

    I agree with all the posters who said that there should be severe penalties.
  • Posted by a hidden member.
    Log in to view his profile

    Oct 08, 2008 6:04 AM GMT
    AIG Executive when told about people losing their homes due to this crisis...

    "What? The people are losing their homes... well that's outrageous, at least they have their condos they can go to."

    Let them eat cake.


    Smells like a revolution to me.
    They have no idea.
  • Posted by a hidden member.
    Log in to view his profile

    Oct 09, 2008 12:55 PM GMT
    AIG was awarded another some-billion today. Somewhere between $20b and $80b I believe.

    Incredible.
  • Posted by a hidden member.
    Log in to view his profile

    Oct 09, 2008 1:59 PM GMT
    Yup, the FED gave them another 35B. This is unacceptable.

    The gaul.
  • swimbikerun

    Posts: 2835

    Oct 09, 2008 2:12 PM GMT
    Shows ya who REALLY in charge!
  • Posted by a hidden member.
    Log in to view his profile

    Oct 09, 2008 3:39 PM GMT
    I suspect the AIG trip was planned before the bailout, because a party can't normally go to places like that on very short notice without reservations well in advance. And perhaps the executives felt the spa trip money was already committed and non-refundable, so they might as well use it rather than waste it.

    BUT... two questions. Why should they have gone at all on the company dime in the first place, bailout issue or not? Spas are lovely & beneficial, I use them myself, but I also pay for them myself.

    Now I'm worldly enough to know all about executive perks. But maybe that's the fundamental problem here: why SHOULD executives have perks like this at all? It isn't like they're underpaid, that they couldn't afford such things for themselves, should they want them.

    These things instill a corrosive culture of entitlement and privilege, of isolation and personal greed, that over time causes executives to forget their primary duties to their company & shareholders. And we see the results, as poor executive decisions are bringing down the economy.

    Not mistakes by the working people, but by the privileged people who think being an executive means going to a spa when the roof is caving in.

    Second question: assuming this notorious spa trip was planned in advance, why not cancel it? At least some money must have been refundable. Their lack of understanding of the symbolism involved to the American people is again indicative to me of the degree of isolation and detachment within which they have operated.

    A reference to the French revolution has been made here. I remember seeing movies depicting that cataclysmic event, where the aristocrats rode in luxurious coaches past the starving people of Paris in total detachment from the suffering around them.

    Perhaps nothing in America is quite so melodramatic as that yet, but that same spirit can be seen in the corporate jets & limousines of today, and in a single spa visit whose cost could support 10 American families comfortably for a year.

    Maybe it is time to sharpen our pitchforks.
  • Posted by a hidden member.
    Log in to view his profile

    Oct 09, 2008 3:54 PM GMT
    I think I read that the spa trip was for the top sales people as their achievement award....also, it was for the other side of AIG that is profitable and not the failed side....who knew AIG had two sides? ... icon_eek.gif
  • Posted by a hidden member.
    Log in to view his profile

    Oct 09, 2008 4:14 PM GMT
    What's really incendiary is that the Gov. continues to throw money on top of this "emergency bailout" without so much as consulting "the people." One would think if it were such a serious matter, we could have an emergency vote for the people to decide on. If anyone had any doubts, the gov. truly could give a fuck what "the people" think...

    Ugh.
  • Posted by a hidden member.
    Log in to view his profile

    Oct 09, 2008 4:15 PM GMT
    Caslon7000 saidI think I read that the spa trip was for the top sales people as their achievement award....also, it was for the other side of AIG that is profitable and not the failed side....who knew AIG had two sides? ... icon_eek.gif


    Lots of large corporations have "sides," fairly common, actually. But I still think this kind of sales incentive, if that's entirely what it was, is a bit lavish.

    Believe it or not, there's an old Yankee Conservative side to me, that hates all these excesses. I was raised to believe that self-indulgence leads to self-destruction, and that duty to others comes before duty to self.

    What I see is ungoverned, unscrupulous greed and self-interest, which the Republicans largely authored. It doesn't surprise me that their house has collapsed. I'm just sorry the rest of us got caught inside it.
  • auryn

    Posts: 2061

    Oct 10, 2008 6:05 PM GMT
    I think we need to have the Preamble to the Constitution re-written to: We the Peasants of the United States. It's more like what we are, and will be if Dictator McCain and Secessionist Palin get in power.