If you were a corporate executive, what do you think you’d be doing immediately after you had gone before the government hat in hand begging for an $85 billion bailout to save the nation from the consequences of your own ineptitude?
For executives at failed insurance giant AIG, it turns out that the answer was “go on a luxury retreat on the company’s dime”:
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, California, 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.
That’s pretty appalling, even by the stunted moral standards of modern corporate America.
Showing their commitment to even-handedness, CNN managed to find one person willing to go on record and defend AIG (!):
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.
Let’s grant Mr. Dinallo his point that it might be worth pulling the execs together to figure out what comes next. But I’m pretty sure that could have been accomplished without flying all the way across the country (AIG’s headquarters are in New York) to play golf and get hot stone massages.
Pathetic.
UPDATE (Oct. 9): So what’s the punishment for blowing all that cash? An extra $38 billion:
The Federal Reserve Board said Wednesday that it would provide up to $37.8 billion to the embattled insurer the American International Group to help it deal with a rapidly dwindling supply of cash.
The additional assistance is on top of $85 billion in a bridge loan that the Federal Reserve extended to A.I.G. in September, but it will take a different form. A spokesman for A.I.G., Nicholas Ashooh, said the new assistance was intended to keep the company from having to draw down the Fed loan so quickly.
I had no idea the Federal government was so understanding about how you use the money they loan you! I totally should have added a few thousand dollars onto my student loans for hookers and blow.
UPDATE (Oct. 10): Wachovia execs take their turn at the trough.
Comments (2)
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Ok so now what is the government going to do about this continued abuse of spending that AIG did and is continuing to do? What will/can they do? Does anyone know?
Posted by Jean Roberts on October 8, 2008 at 3:08 PM
Posted on October 8, 2008 at 3:08 PM
“The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can't get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”
Posted by Open-mindedness on October 10, 2008 at 9:12 PM
Posted on October 10, 2008 at 9:12 PM