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Thread: After bailout, AIG execs head to California resort

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    Elite Member Fluffy's Avatar
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    Thumbs down After bailout, AIG execs head to California resort

    After Bailout, AIG Execs Head to California Resort


    Shortly after the US government commited $85 billion to bail out AIG, company executives went for a week-long retreat at St. Regis Resort, Monarch Beach, California. (Photo: anaheimoc.org)

    Tuesday 07 October 2008
    by: Brian Ross and Tom Shine, ABC News

    Rescued by taxpayers, $440,000 for retreat including "pedicures, manicures."

    Less than a week after the federal government committed $85 billion to bail out AIG, executives of the giant AIG insurance company headed for a week-long retreat at a luxury resort and spa, the St. Regis Resort in Monarch Beach, California, Congressional investigators revealed today.
    "Rooms at this resort can cost over $1,000 a night," Congressman Henry Waxman (D-CA) said this morning as his committee continued its investigation of Wall Street and its CEOs.

    AIG documents obtained by Waxman's investigators show the company paid more than $440,000 for the retreat, including nearly $200,000 for rooms, $150,000 for meals and $23,000 in spa charges.

    "Their getting their pedicures and their manicures and the American people are paying for that," said Cong. Elijah Cummings (D-MD).

    "This unbridled greed," said Cong. Mark Souder (R-IN), "it's an insensitivity to how people are spending our dollars."

    Appearing before the committee, Martin Sullivan, the AIG CEO until June, said the company was overwhelmed by a "financial global tsunami," and that "no simple or single cause" was to blame.

    "I am heartbroken at what has happened," Sullivan said.

    Robert Willumstad, the CEO from June to September, 2008, maintained AIG was a victim of a "crisis in confidence" and an "unprecedented global catastrophe." "Through the first week of September we were confident AIG could weather the crisis," Willumstad testified. He said the federal government offered its $85 million bail out on the afternoon it prepared for bankruptcy. Willumstad said the Federal Reserve demanded he resign, and will turn down his AIG retirement package of several million dollars.

    But Congressional investigators raised question of "mismanagement" and whether AIG executives sought to "cook the books" and hide negative information from outside auditors.

    On Dec. 5, 2007, Waxman said, CEO Sullivan told investors, "We are confident in our marks and the reasonableness of our valuation methods."

    Documents obtained by the committee show that one week earlier, auditors Pricewaterhouse Cooper had "raise their concerns with Mr. Sullivan & informing him that PWC believed that AIG could have a material weakness relating to the risk management of these areas."

    In March, 2008, the Office of Thrift Supervision wrote AIG, "We are concerned that the corporate oversight of AIG Financial Products & lacks critical elements of independence, transparency, and granularity."

    Asked about the letter by the committee, the SEC's former chief accountant, Lynn Turner, said the letter reflects "a serious problem from the top down of management, that can bring an organization down."

    Former AIG CEO Sullivan said accounting rules required AIG to mark down the value of its holdings, even though it had no plans to sell them, the "mark to market" provision.

    AIG had to sell at "fire sale prices," he told skeptical members of Congress. "Suddenly a company with a trillion dollars in assets" was in trouble, said Sullivan.

    Waxman questioned both former CEOs about a former AIG auditor who claimed he had been blocked from reviewing the books of a London-based division that has since been blamed for a large share of the company's downfall.

    Former CEO Willumstad, chairman of the AIG board at the time, said "I honestly don't remember" the concerns raised by the former auditor.

    "I find that very disturbing," said Congressman Waxman.

    Waxman also said there is evidence the two men changed the bonus schedule once the company began to post losses, so that executives under the "Senior Partners Plan" would continue to make multi-million dollar salaries.

    "Mr. Sullivan and the other top executives should have had their bonuses slashed due to poor performance," said Waxman.

    Sullivan said it was "substantially reduced" by the board in 2007 due to poor performance.

    Sullivan was given a $15 million "golden parachute" payment after being replaced as CEO in June.

    ABC News: After Bailout, AIG Execs Head to California Resort

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    A*O
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    Obama brought this up during today's Presidential Debate as a perfect example of what these CEO assholes have been getting away with for years. I'm sure the great American electorate won't forget it.
    If all the women in this place were laid end to end, I wouldn’t be surprised - Dorothy Parker

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    Elite Member McJag's Avatar
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    This just chaps me into oblivion.
    I didn't start out to collect diamonds, but somehow they just kept piling up.-Mae West

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    Elite Member LynnieD's Avatar
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    LAME AIG!! Seriously fucking lame.

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    AIG execs' retreat after bailout angers lawmakers - Yahoo! News

    AIG execs' retreat after bailout angers lawmakers
    By ANDREW TAYLOR, Associated Press WriterTue Oct 7, 11:15 PM ET


    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.
    AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.
    The retreat didn't include anyone from the financial products division that nearly drove AIG under, but lawmakers still were enraged over thousands of dollars spent on outing for executives of AIG's main U.S. life insurance subsidiary.
    "Average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," the committee's chairman, Rep. Henry Waxman, D-Calif., scolded the company during a lengthy opening statement at a hearing Tuesday. "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."
    Former AIG CEO Robert Willumstad, who lost his job a day after the Federal Reserve put up the $85 billion on Sept. 16, said he was not familiar with the conference and would not have gone along with it.
    "It seems very inappropriate," Willumstad said in response to questioning from Rep. Elijah Cummings, D-Md.
    "Those executives should be fired," Democratic presidential candidate Sen. Barack Obama said at a debate with Sen. John McCain on Tuesday, referring to the retreat participants. Obama also said AIG should give the Treasury $440,000 to cover the costs of the retreat.
    But Eric Dinallo, superintendent of the New York State Insurance Department, said he could see the value of such a retreat under the circumstances.
    "Having been at large global companies and knowing what condition AIG was in ... the absolute worst thing that could have happened" would have been for employees and underwriters in its life insurance subsidiary to flee the company.
    "I do agree there is some profligate spending there, but the concept of bringing all the major employees together ... to ensure that the $85 billion could be as greatly as possible paid back would have been not a crazy corporate decision," Dinallo told the House committee.
    The hearing disclosed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released by the committee, which is examining the chain of events that forced the government to bail out the conglomerate.
    The panel sharply criticized AIG's former top executives, who cast blame on each other for the company's financial woes.
    "You have cost my constituents and the taxpayers of this country $85 billion and run into the ground one of the most respected insurance companies in the history of our country," said Rep. Carolyn Maloney, D-N.Y. "You were just gambling billions, possibly trillions of dollars."
    AIG, crippled by huge losses linked to mortgage defaults, was forced last month to accept the $85 billion government loan that gives the U.S. the right to an 80 percent stake in the company.
    Waxman unveiled documents showing AIG executives hid the full extent of the firm's risky financial products from auditors, both outside and inside the firm, as losses mounted.
    For instance, federal regulators at the Office of Thrift Supervision warned in March that "corporate oversight of AIG Financial Products ... lack critical elements of independence." At the same time, PricewaterhouseCoopers confidentially warned the company that the "root cause" of its mounting problems was denying internal overseers in charge of limiting AIG's exposure access to what was going on in its highly leveraged financial products branch.
    Waxman also released testimony from former AIG auditor Joseph St. Denis, who resigned after being blocked from giving his input on how the firm estimated its liabilities.

    Three former AIG executives were summoned to appear before the hearing. One of them, Maurice "Hank" Greenberg — who ran AIG for 38 years until 2005 — canceled his appearance citing illness but submitted prepared testimony. In it, he blamed the company's financial woes on his successors, former CEOs Martin Sullivan and Willumstad.
    "When I left AIG, the company operated in 130 countries and employed approximately 92,000 people," Greenberg said. "Today, the company we built up over almost four decades has been virtually destroyed."
    Sullivan and Willumstad, in turn, cast much of the blame on accounting rules that forced AIG to take tens of billions of dollars in losses stemming from exposure to toxic mortgage-related securities. Lawmakers also upbraided Sullivan, who ran the firm from 2005 until June of this year, for urging AIG's board of directors to waive pay guidelines to win a $5 million bonus for 2007 — even as the company lost $5 billion in the 4th quarter of that year. Sullivan countered that he was mainly concerned with helping other senior executives.

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    Elite Member Mel1973's Avatar
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    These are the people that I hope have a special place in hell!
    Kill him.
    Kill her.
    Kill It.
    Kill everything... that IS the solution!
    П(•_•)П
    twitchy molests my signature!

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    Elite Member crumpet's Avatar
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    I hope we hear about more of these morally bankrupt fuckers killing themselves.
    Only the good die young.........................
    bitches like me live forever!!!!!!!!!!!!

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    Elite Member TheONe's Avatar
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    Just like the Lehman Bros. situation.....someone should also punch these people in their face!
    "My style is impetuous, my defense is impregnable and I'm just ferocious. I want your heart. I want to eat your children. Praise be to Allah." TEAM MILEY!!

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    Elite Member Mel1973's Avatar
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    Punch them in the face, kick them in the balls, slam their dicks in a door, steal their wallets, slap their mothers ...
    Kill him.
    Kill her.
    Kill It.
    Kill everything... that IS the solution!
    П(•_•)П
    twitchy molests my signature!

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    Elite Member Rica's Avatar
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    I picked the wrong job...

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    Elite Member Quazar's Avatar
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    More regulation of big business is a good thing - look at the mess that less regulation has gotten us into. Corporate greed is so out of hand, these execs can't be trusted. Golden parachutes and bonuses, when a company isn't performing financially should be banned. In a small business, the owner doesn't get paid until everyone else does. In larger companies, that should be the CEO. Watch how fast they do the right thing when they are now being compensated striclty on performance.

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    Elite Member AllieCat's Avatar
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    This type of shit makes me ill.

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    Default Days after bailout, AIG execs go on swanky spa retreat. Fuckers

    WASHINGTON (AP) - Less than a week after the federal government had to bail out American International Group Inc. (AIG), the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.

    The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.

    The retreat didn't include anyone from the financial products division that nearly drove AIG under, but lawmakers were still enraged over thousands of dollars spent on catered banquets, golf outings and visits to the resort's spa and salon for executives of AIG's main U.S. life insurance subsidiary.

    "Average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," House Oversight Committee Chairman Henry Waxman, D-Calif., scolded the company during a lengthy 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 hearing disclosed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released Tuesday by a congressional panel examining the chain of events that forced the government to bail out the conglomerate.

    The panel sharply criticized AIG's former top executives, who cast blame on each other for the company's financial woes.

    "You have cost my constituents and the taxpayers of this country $85 billion and run into the ground one of the most respected insurance companies in the history of our country," said Rep. Carolyn Maloney, D-N.Y. "You were just gambling billions, possibly trillions of dollars."

    AIG, crippled by huge losses linked to mortgage defaults, was forced last month to accept the $85 billion government loan that gives the U.S. the right to an 80 percent stake in the company.

    Waxman unveiled documents showing AIG executives hid the full extent of the firm's risky financial products from auditors, both outside and inside the firm, as losses mounted.


    For instance, federal regulators at the Office of Thrift Supervision warned in March that "corporate oversight of AIG Financial Products ... lack critical elements of independence." At the same time, Pricewaterhouse Cooper confidentially warned the company that the "root cause" of its mounting problems was denying internal overseers in charge of limiting AIG's exposure access to what was going on in its highly leveraged financial products branch.

    Waxman also released testimony from former AIG auditor Joseph St. Denis, who resigned after being blocked from giving his input on how the firm estimated its liabilities.

    Three former AIG executives were summoned to appear before the hearing. One of them, Maurice "Hank" Greenberg - who ran AIG for 38 years until 2005 - canceled his appearance citing illness but submitted prepared testimony. In it, he blamed the company's financial woes on his successors, former CEOs Martin Sullivan and Robert Willumstad.

    "When I left AIG, the company operated in 130 countries and employed approximately 92,000 people," Greenberg said. "Today, the company we built up over almost four decades has been virtually destroyed."

    Sullivan and Willumstad, in turn, cast much of the blame on accounting rules that forced AIG to take tens of billions of dollars in losses stemming from exposure to toxic mortgage-related securities.


    Lawmakers also upbraided Sullivan, who ran the firm from 2005 until June of this year, for urging AIG's board of directors to waive pay guidelines to win a $5 million bonus for 2007 - even as the company lost $5 billion in the 4th quarter of that year. Sullivan countered that he was mainly concerned with helping other senior executives.

    Sullivan also came under fire for reassuring shareholders about the health of the company last December, just days after its auditor, Pricewaterhouse Cooper, warned of him that AIG was displaying "material weakness" in its huge exposure to potential losses from insuring mortgage-related securities.

    AIG's problems did not come from its traditional insurance subsidiaries, which remain healthy, but instead from its financial services operations, primarily its insurance of mortgage-backed securities and other risky debt against default. Government officials feared a panic might occur if AIG couldn't make good on its promise to cover losses on the securities; investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.

    AIG suffered huge losses when its credit rating was cut, thanks largely to complex financial transactions known as "credit default swaps." AIG was a major seller of the swaps, which are a form of insurance, though they are not regulated that way.

    The swap contracts promise payment to investors in mortgage bonds in the event of a default. AIG has been forced to raise billions of dollars in collateral to back up those guarantees.

    Sullivan said many of the firm's problems stemmed from "mark to market" accounting rules mandating that its positions guaranteeing troubled mortgage securities be carried as tens of billions of dollars in losses on its balance sheet.

    This in turn, said former AIG chief executive Willumstad, who ran the company for just three months after Sullivan left, forced the firm to raise billions of dollars in capital. The federal rescue came after AIG suffered disastrous liquidity problems after its credit rating was lowered, forcing the company to come up with even more capital.

    "AIG was caught in a vicious cycle," Willumstad said in the testimony.

    Greenberg said that AIG "wrote as many credit default swaps ... in the nine months following my departure as it had written in the entire previous seven years combined. Moreover, "unlike what had been true during my tenure, the majority of the credit default swaps that AIGFP wrote in the nine months after I retired were reportedly exposed to subprime mortgages."

    But Sullivan said the complex swaps had underlying value, even as the market for them froze, sending their book value plummeting and forcing AIG to scramble for collateral.

    "When the credit markets seized up, like many other financial institutions, we were forced to mark our swap positions at fire-sale prices as if we owned the underlying bonds, even though we believed that our swap positions had value if held to maturity," Sullivan said.

    The hearing is the second in two days into financial excesses and regulatory mistakes that have spooked stock and credit markets and heightened fears about a global recession.
    My Way News - AIG execs' retreat after bailout angers lawmakers
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    A*O
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    It's disgusting and it's been going on for YEARS and while the good times rolled nobody spoke up about it. Now the shit has finally hit the fan everyone is shocked.
    If all the women in this place were laid end to end, I wouldn’t be surprised - Dorothy Parker

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    Super Moderator twitchy2.0's Avatar
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    Thesmokinggun has the receipt.

    Rock Out With Your Bailout - October 7, 2008
    "But I am very poorly today & very stupid & I hate everybody & everything." -- Charles Darwin

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