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AIG after bailout scandal, executives party in California
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by Tina Kells | October 3, 2008 at 09:44 am
21841 views | 13 Recommendations | 64 comments
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The OC Watchdog Blog has reported that American International Group corporate executives, and representatives of various AIG subsidiaries, were partying in style at the posh St. Regis Monarch Beach Resort (see attached YouTube videos for a look at the hotel), in Southern California, just 2 weeks after taxpayers bailed out the insurance corporation for $85 billion.
Was this really an effective use of taxpayer money? And after this scandal, why would the U.S. Federal Reserve see fit lend AIG another $37.8 billion in bailout bill funding? Somebody has clearly dropped the ball on this one; or does the U.S. government just not care that taxpayer money is being used to fund elaborate spa vacations for executives and their favourite AIG insurance sales reps?
Remember how, just last month, AIG teetered on the brink of financial apocalypse? The effects of the insurance giant's imminent collapse were deemed so dire that the Federal Reserve galloped to the rescue with $85 billion of your (and my) tax dollars. What a difference two weeks make.
Last Friday, as the rest of America was in financial crisis overload, preparing to watch the Presidential debates, and reeling from the aftershocks of Congress rejecting the first bailout plan; executives and insurance representatives from AIG subsidiaries were living it up with champagne and caviar in a swanky ocean front hotel.
No word yet as to what the conference was about, or why it wasn't canceled after the taxpayer funded bailout went through, but AIG did offer a weak explanation that the event was "not what it seems." Now that the American taxpayer is effectively footing the bill for these types of questionable corporate decisions, an off-the-cuff answer is as insulting as the event was inappropriate.
AIG says it’s not what it seems.The St. Regis conference included recognition for vital independent agents who distribute AIG American General’s products - insurance for individuals and businesses. AIG American General - a subsidiary of parent AIG - is in much, much better financial shape than AIG itself. ”It’s one of our viable businesses,” said AIG spokesman Joseph Norton. “They’re fully capitalized. They’re fine. It wasn’t a corporate kind of thing.”
Appearance, though, is powerful.
If this is how AIG executives prioritized spending before the financial crisis hit, no wonder the insurance giant was sinking! While average Americans are losing their homes and tightening their belts, the fat-cat executives in the US financial sector don't appear to be losing a thing - not even unnecessary perks like this "conference."
In the words of Speaker of the House Pelosi, after the second bailout plan passed in Congress, executives in the financial sector have operated, "unregulated and unsupervised (and) they created chaos." In the post-vote speech she said that this would change with the passage of the second bailout proposal.
Let's hope the US government does a better job of "supervising" the spending of the more than $800 billion they are giving to financial giants, like AIG, in the latest bailout deal. If this incident is any indication, taxpayers may just be funding another unsupervised financial sector party.
Less than two weeks after Uncle Sam gave American International Group (AIG) an $85 billion loan - staving off financial collapse - execs from one of its insurance subsidiaries, AIG American General, gathered for a conference at the uber-swank St. Regis Monarch Beach Resort, billed as “California’s only Mobil Travel Guide Five-Star Resort,” where ocean-view rooms start at $565 a night and “world class luxury” is the rule.
On Friday, before the presidential debate got under way, caterers for the St. Regis were setting up dozens of tables on the grounds of Mission San Juan Capistrano for AIG American General’s sumptuous off-site dinner. Tables were draped with soft Tuscan-gold tablecloths that cascaded to the grass; elegant fresh flower centerpiece graced each table; and what appeared to be fine crystal stemware, at least from a distance, glistened in the fading light.
Workers set up a lengthy bar stocked with bottles of liquor. A half-dozen tall space heaters stood sentinel in case the evening turned cool. There was a large center stage with lighting and a sound system, and once the sun went down, the whole scene took on a magical patina as tiny white lights twinkled in the trees.
More from NowPublic.com on the AIG executives scandal
- After Bailout, AIG Execs Head to California Resort
- After Bailout: Let the good times roll at taxpayers' expense!
What is NowPublic?
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Tina Kells
Vancouver, Canada
Most RecentMost Recommended Comments (64)
at 10:09 on October 3rd, 2008
More partying tonight! and singing: 'They bought our toxic assets when we tossed in the pork!'
at 10:11 on October 3rd, 2008
I'm Canadian, and I feel ripped off by this news!!!!
at 10:23 on October 3rd, 2008
We've all been ripped off. and the Feds are just going to 'print' up more money since they obviously don't have it.
at 03:35 on November 11th, 2008
why didn/t they give the money to the people/so they can buy cars and trucks and save there homes/the ploblem still there if you give to aig/give a million dollar to each person in the usa/and you see things will changed around
at 10:25 on October 3rd, 2008
Tina Kells, I like this story. It's good stuff.
at 10:33 on October 3rd, 2008
Vote for McCain. Obama is in with the crooks.
at 15:40 on October 3rd, 2008
I was there. Was a good time. Why can't we have some fun these days? Everyone is so negative. I'm in a party mood.
at 18:44 on October 3rd, 2008
They party on our tax dollars. Who is to blame? Find out for yourselves go and watch this video.
http://www.youtube.com/watch?v=1RZVw3no2A4
at 19:58 on October 3rd, 2008
We lost complete control of our country.The bill lost but they didn't like that outcome so lets vote on it again and again and again until it passes.Lets add raises to our saleries and perks and benifits to it so everyone votes for it.Lets not listen to the people,what do they know.I give up on my country we gave it away to low life scum bags who are in it for their own benifit.I will never vote again.welcome to The United States of Corruption.
at 20:46 on October 3rd, 2008
Tina Kells, I like this story. It's good stuff. Let the waterslide to depravity begin.
at 00:14 on October 4th, 2008
Are we funding Sharia Financing? Funding the agenda of Sharia, our own demise? AIG is up to its neck in it. First thing they should do is get rid of it.
at 08:55 on October 4th, 2008
I am so angry I could spit. I've been fighting with A.I.G. to cash in my annuity (even willing to take huge penalties) for 3 weeks now. They are nothing more than greedy thieves.
at 10:07 on October 7th, 2008
Well, I don't know about the rest of you, but my husband and I watched the debate thanks to Hurricane Ike in a hotel room that certainly DID NOT cost $1000.00 per night, . Our evenings menu included munching on pretzels and sandwiches from Domino's on a coffee table draped with a large bath towel. As far as anyone setting up a lengthy bar stocked with bottles of liquor, well that didn't happen either. We washed our cuisine down with bottles of water purchased from the vending machine. No fine crystal stemware, just the plastic bottle the water comes in. And to think the government didn't even offer to pay for our room or food!!
at 10:49 on October 7th, 2008
and just think, this crisis will once again happen down the road, guarantee it will and us tax payers will once again be bailing them out w/o any say in the matter. Like we vote every year, we should be able to vote on a bailout or no bailout.....Leave it up to the American's, the taxpayers......and rest assure, how we can not be bailed out on our bad judgement calls, we are told "NO!" for help, these firms/companies/Wall Street will be told "NO!"
at 16:58 on October 7th, 2008
Why doesn't congress indite, all executives deserve a lesson. We the tax payers bail them out so they should relinquish their salaries or go to jail for mismanagement of funds or something in that order. It was their bad business practices that got these corporations where they are today so why not let them pay. Most of of can't afford to eat out for dinner anymore but to these so called high powered executives it's a joke that they have the audacity to give themselves raises and spend money foolishly at the taxpayers expense.
at 17:15 on October 7th, 2008
I can't believe this crap. I'm so pissed. Those execs should be crucified and not only that, senate should force them to forfeit the golden umbrella and pay back every cent they spent of our money- How dare they! I never hate somebody or something but that feeling is slowly surfacing on the actions of what they just did.
at 17:16 on October 7th, 2008
This is crap, They should have to replace the money and go to jail. If you or I did that this would be are punishment.
at 17:36 on October 7th, 2008
I spent the weekend on my couch because I have had to borrow from my overdraft. Not quite the lavish party AIG employees had. If my hard earned money from teaching was really spent on this I am angy. The government offered $600 to me in the Spring which barely helped pay the rent in NY. Something has to change.
at 17:37 on October 7th, 2008
I spent the weekend on my couch because I have had to borrow from my overdraft. Not quite the lavish party AIG employees had. If my hard earned money from teaching was really spent on this I am angry. The government offered $600 to me in the Spring which barely helped pay the rent in NY. Something has to change.
at 18:37 on October 7th, 2008
This isn't completely what it seems, and no I don't work for AIG, or have any connection to them.
The trip was planned months in advance and was intended as an incentive for independent sales people.Incentive travel programs such as this are not put together on a whim with a couple days planning and a bunch of cash thrown in.
To cancel the trip completely would have incurred countless financial penalties from the hotel and other service providers that AIG would have been forced to pay, while those in the hospitality/service industry local to Orange County, California, would likely not have received the hourly wages and tips vital to their livelihoods. The AIG sales people - regular, hard working Americans like you and me - who had worked to achieve this trip, meanwhile, would have had nothing to show for their efforts.
It's easy to characterize this issue as corporate greed and waste at its worst in difficult economic times, as commentators from both ends of the political spectrum have done, but if you understand the nuances, AIG had no choice, and the best solution was for this trip to happen.
at 19:27 on October 7th, 2008
Well, Tommy
The cancellation fees would have probably been less and considering they may or may not have an account with the hotel firm and considering the situation, if it didn't happen most of the money would have been returned, Why? Because the Hotel wants future business!
at 20:08 on October 7th, 2008
Are you kidding??? With the multi million golden umbrella bonus- who or what do you think should have been done? The cancellation fees would not have added up to $400K. Realize something here- we are not stupid or dummies. Most of us are hard working people and own businesses or affiliated one way or another with a corporation. I happen to own my own business and actually cancelled a trip to Vegas for my managers for their appreciation week. Although I was not going to spend $400K, but I was certainly going to spend about $30K. Instead I am now going to take them out for a nice dinner somewhere locally. I know all about planned trips & cancellation fees. That is just a cheap cop-out. Corporations have ways to make deals and get deals for their employees. Don't be blind to all this hype. You're talking to someone whos been around the block and know how things work. Trust me, I have certainly taken advantage of 'offerings' in my time.
at 09:15 on October 9th, 2008
Cancelling this conference or moving it to Motel 6 with ham sandwiches would basically be telling the independent agents that AIG was no longer going to be paying them so take your business elsewhere. It would be the same as refusing to pay an outstanding earned commissions check.
This story is being reported in either a purposely deceptive manner or out of complete ignorance of the manner in which independent insurance agents are compensated by insurance carriers.
I work for a competetor of AIG so I have no interest in making them look good. However, the manner in which this story is being reported is very disturbiing.
The fact is that this conference is part of the way insurance companies pay independent brokers for the business they send to AIG. The brokers choose these types of compensation packages that involve lower commissions in exchange for participation in incentive programs that involve prizes and usually trips such as this for reaching certain preestablished sales goals. These conferences are then used as a reward (in many ways part of their salary) for the sales people and an opportunity for the carrier to maintain relationships with valuable agent brokers. I guarantee you that most of the AIG people at this conference were working, giving presentations, educating agents on their products, etc.
You may not like the way the sales process works and the fact that independent brokers need to be incented to send their business your way but that is the way sales works.
at 13:36 on October 9th, 2008
I disagree that this is reported badly. Times change, and decisions you make in one economic climate can't be held up in another. People are losing their retirement funds, their homes, their jobs, their vacations; and AIG's independent representatives and the exec who deal with them don't have to give up this perk?
That is crazy! Everybody is hurting from this situation and saying that "it would be unfair to take this prize away from them" to justify why something like this is allowed to happen is just plain silly. If anybody should be giving things up it should be the cogs in the AIG machine, not the taxpayers. It is wrong for AIG to conduct business as usual, and that include rewarding sales reps, when they have just been given the largest government bailout loan in the history of the United States. If AIG had gone under, that perk would have gone with it, why should the fact that taxpayers bailed them out make that any different?
Pretty sure the "incentives and prizes" that Lehman Bros offered its independent contractors have been abandoned.
at 19:41 on October 9th, 2008
Taxpayers paid NOTHING for the American General Life event in CA. Get the facts straight. It has nothing remotely to do with money coming out of your pocket or anyone else's. American General Life will be sold and you will get money INTO your pocket. Why are you slamming the company that had NOTHING to do with AIGs mess. Why can you say nothing about AIG-FP? That's who you should be made at because that's where the bailout/rescue money went...not to American General Life. AIG is WAY bigger than people are grasping here.
at 00:51 on March 27th, 2009
have you lost your damn mind. are you a politicians partner or a politician yourself. get real.
at 19:19 on October 9th, 2008
Orionsbelt,
Thanks for your cogent post. It seems that people are so angry that they don't stop to think how many companies fall under the umbrella of AIG and how most of those companies have nothing to do with the downfall. It is AIG-FP that caused the problems with Joe Casano, but no one is talking much about that and I'm not sure why. I do wonder if it has to do with deception and with distraction. Confusing the public.
The confusions began, though, in the Congressional Oversight Hearing where they got things totally wrong and things went on from there. They now know the real story, but it seems the public doesn't and doesn't care to. I do find the manner in which this story is being reported to be very disturbing because untruths are being spread.
If you want taxpayers money back from the gov't loan to AIG, then you're best bet is WITH American General LIFE which is going to be sold and soon. Lots of other companies (and ones, along with American General Life) that had NOTHING to do with the AIG mess will be sold. Regular people will lose their jobs and healthcare....by the thousands, yet no one on this post seems to care at all about that. It's bizarre.
Again, the company under AIG that caused the problems is AIG-FP with Casano in particular. Picking on American General...saying that the CA event used tax payers money is erroneous. American General Life is one of your tickets out of this mess, people! Try to get a grip and understand that. NONE OF YOUR MONEY WAS SPENT AT THIS EVENT.
at 21:32 on October 7th, 2008
Our goverment should look into this and fire the top heads who allowed for this
We have been taken advantage and this is so sad that we the people are hands are so tied
I am not for Obama but tonight in the debate he even said the people who allowed for this should be fired
at 01:35 on October 8th, 2008
what a freckin shame!!! I think all of us americans or tax payers are really pissed off at this. What is the GOV doing for the people who are about to lose there homes, nothing!I'm sure they aren't getting bailed out. the white collar worker f*(ks the rest of us over and they get bailed out. If the tables are turned I think they (GOV) would say tough shit. THANKS BUSH for 8 years for nothing you A-hole!!! you F*&Ked this country up MORON!!!!. BUSH IS A A-HOLE!!...
at 04:34 on October 8th, 2008
This is down right pathetic, There should have been a plan in place for these exec's if there out spending and doing illegal practices with American tax dollars. Lets stop calling these people Wall Street and AIG and so forth, lets start naming names of these key players and CEOs that are the root these problems were experiencing and remove them. We were FORCED to give 700 &85 billion dollars to bail out the same people who created this problem. Also we do not have enough parameters in place to put these illegal practices to a hault and punishment penalties for those caught doing it again. Thats like writing a check to the robber who just broke into your home and stole the food off your family's table the first time and saying thanks for screwing me again. Remember these same people that we call Wall street sit on boards with half of these politicans and probably make back door deals on the side. Washington as well as Wall street both need serious house cleaning.