AIG putting your $85B to good use

[The Real Rick Springfield]

Days after it got a federal bailout, American International Group Inc. spent $440,000 on a posh California retreat for its executives, complete with spa treatments, banquets and golf outings, according to lawmakers investigating the company's meltdown.

http://www.cnn.com/2008/POLITICS/10/....ap/index.html

the execs that raved it up are not from their financial products division. they are all from their insurance division, so it's ok.

john

[tricky]

can we consolidate these aig threads?

[Tortures Dionysos]

Here is what I had in another thread. It is now consolidated:

http://www.usatoday.com/money/indust...g_N.htm?csp=34

Lawmakers put AIG execs on the spot

Six days after the government rescued AIG (AIG) with an $85 billion loan, the insurance company spent $443,000 on a week-long event for agents at a California resort, according to invoices produced during a congressional hearing Tuesday.

"Average Americans are suffering economically," said Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government Reform, which held the hearing. "Yet less than a week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."

Testifying at the hearing, Robert Willumstad, AIG's chief executive before the government took over the company last month, said he did not know about the event. "I was not aware of it, and if I had been, I would not have let it happen."

According to records the committee obtained, the event's expenses included nearly $200,000 for rooms, about $150,000 for banquets and $23,000 for spa services.

In testimony, Willumstad and Martin Sullivan, his predecessor who headed AIG from 2005 until July, avoided taking responsibility for its collapse.


Although Willumstad refused the $22 million severance package the company offered him at his departure, he testified, "I don't believe AIG could have done anything differently."

Martin said, "At the time I left the company, I thought it was well capitalized and had liquidity."

Willumstad and Sullivan said the company was hurt by "mark-to-market" accounting rules that forced the company to write down the value of its credit default swaps by tens of billions of dollars, requiring AIG to raise more capital.

Although AIG's insurance businesses remain healthy, the company's crisis accelerated last month because of its sales of insurancelike securities known as credit default swaps, which buyers of mortgage-backed securities bought to protect themselves against defaults. As defaults increased in mortgage-backed securities, AIG's credit rating dropped, and that forced it to raise billions of dollars in additional collateral.

Former CEO Maurice Greenberg, who headed AIG for more than 35 years until his retirement in 2005, said in a written statement to the committee that risk controls his team put in place were weakened or eliminated after his retirement.

Also during the hearing, the House committee revealed that Joseph Cassano, the head of the finance division largely responsible for AIG's $5 billion loss in the last quarter of 2007, was allowed to keep up to $34 million in unvested bonuses and placed on a $1 million-a-month consulting retainer when he left AIG in February.

AIG spokesman Joe Norton said only seven to 10 AIG executives attended last month's California gathering, a reward for the top-producing AIG independent life insurance agents and guests.

"It is common practice in the industry and is viewed as an expected part of the higher-performing agents' compensation," Norton said.

He also said AIG's consulting contract with Cassano ended by mutual agreement on Monday.

[PETA]

big whoop... I don't give a rat's ass how they spend their money as long as they repay their note timely. Does it look unseemly? Probably but $500k is chump change and could well be a very useful mechanism to build relationships in order to get executives working better together in a company as huge as AIG.

[Tortures Dionysos]

Originally Posted by St. Stalin the Apathetic

big whoop... I don't give a rat's ass how they spend their money as long as they repay their note timely. Does it look unseemly? Probably but $500k is chump change and could well be a very useful mechanism to build relationships in order to get executives working better together in a company as huge as AIG.

Well, if they can spend $500,000 on a trip for their employees... they can spend $500,000 on paying off some of that loan they were just given.

I liken it to borrowing money from a friend. If you beg for money to pay for bills and then go blow that money on partying... that makes you looks pretty bad and your friend wonders why you had to borrow money in the first place.

[PETA]

Originally Posted by The Blob

Well, if they can spend $500,000 on a trip for their employees... they can spend $500,000 on paying off some of that loan they were just given.

I liken it to borrowing money from a friend. If you beg for money to pay for bills and then go blow that money on partying... that makes you looks pretty bad and your friend wonders why you had to borrow money in the first place.

AIG will have expenses like any other company. That people will wish to substitute their judgment for the comapny's is their prerogative but imo invalid when based on nothing more than a brief news article.

Not a very fair analogy. $443k to $85B as a ratio is not worth the accounting time to factor when you consider that the company has assets worth nearly $1.8T.

[e-brake]

Originally Posted by St. Stalin the Apathetic

big whoop... I don't give a rat's ass how they spend their money as long as they repay their note timely. Does it look unseemly? Probably but $500k is chump change and could well be a very useful mechanism to build relationships in order to get executives working better together in a company as huge as AIG.

It shows that they have learned absolutely nothing.

Its like a child who is allowed to do whatever he wants, and each time he falls down the Us tax payers jump under him and make sure he never scrapes his knee or hits his head.

These douchebags going right back to business as usual and spending $500,000 on partying for a weekend shows that they did not learn anything and they are heading right back to business as usual to setup the next big failure.

We allowed them to get out of trouble without facing a single consequence of their own actions. They only learned that they are allowed to do anything they want and someone else will clean up the mess at the end if the day.

[Tortures Dionysos]

Originally Posted by St. Stalin the Apathetic

AIG will have expenses like any other company. That people will wish to substitute their judgment for the comapny's is their prerogative but imo invalid when based on nothing more than a brief news article.

Not a very fair analogy. $443k to $85B as a ratio is not worth the accounting time to factor when you consider that the company has assets worth nearly $1.8T.

Ok, right... well I hate to know that my company blows money, even when it's on a small scale relative to our general spending. It pisses me off to see money being wasted when money could be used in a more productive manner. With my company I could give you many examples of this. I hate it with my company and I'm going to hate it with any other company as well.

Here's the deal, when your company is going in the shitter and you have to be bailed out by the government not to go under, you don't get a spa vacation. All you get is a paycheck. And if you want more than a paycheck then get another job.

I hope AIG is held to the fire for being to flippant with their money after taking a loan from the goverment.

[david austin]

how far in advance was this scheduled and what would have been the expenses to cancel such plans?

[PETA]

Originally Posted by The Blob

Ok, right... well I hate to know that my company blows money, even when it's on a small scale relative to our general spending. It pisses me off to see money being wasted when money could be used in a more productive manner.

Again, you're substituting your judgment. You are claiming to know better than AIG how to spend AIG's money based on nothing more than your visceral reaction to a notice that they spent $443k on a retreat. That's a small amount of money and could very easily have a very significant and helpful impact on the business.

Originally Posted by e-brake

It shows that they have learned absolutely nothing.

They didn't need the loan because they spent too much money on parties Kevin. Further, a business retreat probably will include a lot of partying but they also foster relationship building amongst executives who probably know each other only by email and occassional phone calls. Building those relationships helps companies run more efficiently. Lastly, $443k... come on - that's a ridiculous sum to get upset about.

Originally Posted by david austin

how far in advance was this scheduled and what would have been the expenses to cancel such plans?

For a little perspective my wife's section is probably cancelling their yearly retreat and that's for about 30 lawyers.... cancelling would cost over $10k. What do you think cancelling for a couple hundred execs would cost?

[david austin]

yeah thats what im getting at

if this was planned a year in advance it may have cost just as much to cancel

[PETA]

Originally Posted by david austin

yeah thats what im getting at

if this was planned a year in advance it may have cost just as much to cancel

I'm sure booking rooms and banquets for a couple hundred execs doesn't take much advanced warning.

Originally Posted by The Blob

Six days after the government rescued AIG (AIG) with an $85 billion loan, the insurance company spent $443,000 on a week-long event for agents at a California resort, according to invoices produced during a congressional hearing Tuesday.

Yeah, I'm sure that one could pull that off....

A: "Hey we just hoodwinked the Gov't for $85B lets get a couple hundred of our pals to come to Cali for a big party this weekend"

B: "Um, but isn't that short notice to book that many rooms and banquets?"

A: "Nah, I can get it done"

B: "But isn't that awfully short notice for people to get flights, baby sitters, cancel other plans etc etc etc?"

A: "Stfu man I wanna spend money foolishly"


I'm sure that's how it probably went down

[KING SIZE]

xian, why don't you just come clean and change your name on here to "Defender of the Right". no matter what the topic is, whatever.. you're always on the same side and that's cool, just go ahead and change your name to that though, so it can be official.

[PETA]

Originally Posted by KING SIZE

xian, why don't you just come clean and change your name on here to "Defender of the Right". no matter what the topic is, whatever.. you're always on the same side and that's cool, just go ahead and change your name to that though, so it can be official.

Well, because my sympathies are pretty much explicit and self apparent and require no further notice?

Do you think AIG acted foolishly to not cancel a retreat that obviously had been scheduled well in advance of the loan which certainly required a great deal of logistical planning and rearranging of people's lives.... arranging for child care, flights, cancelling other plans, traveling across the country for many etc etc which would have probably cost them nearly as much to cancel the reservations for rooms, banquets and flight (as well as the plans made at home) as to keep them?

[Tortures Dionysos]

Yes it would have cost money to cancel it.

BUT to cancel the trip would have made a statement to the American people. And it would have cost less than doing the actual trip.

Or maybe they could have trimmed it down some? Ditched the massages and what not. Come on, you don't need to get a massage to better know your coworkers.