AIG after-bailout party
 

http://abcnews.go.com/Blotter/story?id=5973452&page=1

Excerpts from much longer story posted ^:

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.

Two AIG CEOs testify to Congress about their use of taxpayer bailout money."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 . . . 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.

"They're 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."


Hmmm, a Republican and a couple of Democrats -- all three expressing some form of outrage or at least aggravation. Oh, that's right; they're House members, so presumably all up for (re-)election.

Hmmmm....
ex BF is CEO of one of their divisions. Need to give him a call.

that is f---'d up.

I was just about to post this article. It really is sickening and wrong.
Weren't there any kind of provisions to the bailout to prevent this behavior?

$440K isn't even really a drop in the bucket, but I do get the moral outrage part. This will go down as one of history's biggest P.R. blunders.

After the bailout, yes, but this was just before (nit picking, yes, but I'm sure that's how these idiots justify it).

They weren't the only ones either.. Lehman didn't get bailed out, but this is under investigation:

Congress heard that less than a week before Lehman became the United States' largest ever bankruptcy, the company was still funnelling millions to departing executives as "golden handshakes".

The bonuses were being paid out at the same time the company was pleading for the US Treasury to give it a taxpayer-funded lifeline.

I'd post a link, but it's in every major paper IN THE WORLD! The first hit that came up was an Australian news site. The second was from the UK.

i need to sell another bucket

DS - did you get the $ for the other bucket you sold?

Yeah, agreed - it's stupid and shows how out of touch executives can be, but it's a rounding error at the end of the day. Let's hope the PR/outrage helps prevent future mistakes, but I don't really have much faith in that.

The only one who's in an even remotely competitive race is Souder (and will almost certainly win -- an incumbent in a heavily Republican district). Waxman is an institution and Cummings won by something like 98% in 2006.

I'm the first to call Congresscritters on their bullshit -- but this financial crisis is the first time I've ever seen anything approximating real human emotion in these hallowed halls.

I'll agree to that. It's a scary time and they all know they're being watched.

I think the "PR blunder" is absolutely despicable, just goes to show that not only Congress is out of touch. Obviously, the high muckety-mucks just don't get how angry and upset us little folk are. I mean come on - manacures, pedicures and facials to the tune of tens of THOUSANDS of dollars. Basically, WE, the taxpayers paid for their wonderful weekend of relaxation and pampering... UGGGGH!!:(

In other news, while violence is never the answer, on some level, this seems like a little bit of justice:

http://consumerist.com/5060063/lehma...ed-in-the-face

Lehman Brothers CEO Got Punched In The Face


Dick "It Wasn't My Fault" Fuld, the CEO of bankrupt investment bank Lehman Brothers, (seen here being heckled after testifying on Capitol Hill) was apparently punched in the face while working out in Lehman gym on the Sunday following the bankruptcy, according to CNBC's Vicki Ward.

While I'm not a proponent of violence, reading that story gave me immense satisfaction!!;)

These guys should be pariahs - publicly shunned by all!!!

Part of the blame certainly lies with the CEOs, but they are being blamed more than they should. A big part of the problem was systemic risk in the way mortgage-backed securities were being handled. The part of the blame that does lie on the CEOs is because of the structure of the compensation in the financial industry. Annual bonuses were based on short term gains which are most easily acheived by taking on long term risk. But short term gains excite people and that's why the bonuses were being awarded for it, just they were getting those short term gains without looking to the long-term and cyclical markets, like what effect a housing downturn (which was obviously coming at some point, just a matter of time) would have if they hadn't moved mortgage-backed securities out of the portfolio before it came.

Crackerbarrel, that's exactly what happened at Enron too, and trust me, Jeff Skilling is now not only a pariah, he's also in prison. It's unfortunate for his family, they are great, but he steered the ship straight into the rocks with the - front end bonuses paid for risky ventures scheme, which caused all the traders to leap before they looked!!! It is a corporate mentality that comes as edicts from the top - produce and get bonuses, doesn't matter if the end product is junk, just make the deal...

I remember sitting with his wife at a ball game during the fiasco, and she was assuring me that it was just a situation of a "rush on the bank", that if people had maintained confidence, everything would have been fine. In reality, it was a "house of cards" just waiting to collapse. Same problems with the risky investments now.

I know it's not very mature, but OH, how that made me LOL. That guy deserves a good pounding.

Well, to be fair, Skilling and Lay took active steps to approve bookkeeping, accounting and stock actions that ranged from specious (mark to market) to blatantly fraudulent (dumping shares just before the collapse). While the iBanking douche bag CEOs certainly made a killing, the corporate accountability issue is more that they're getting paid for failure, rather than getting paid for fraud.

I guess the comparison is valid to the extent that both Enron and iBanking wanted to show short-term gains without regard for the long-term consequences of their actions, but I think the comparison kind of ends there - it seems like the matter of degree is wildly different. Enron knew (or should have known) that its (non-existent) balance sheets were full of crap (after all, it had no assets), whereas the majority of the investment community thought that mortgage-backed securities were a worthwhile leveraged investment strategy.

You can't connect the dots from the Lehman CEO directly to the current problem - this was endemic and institutional failure. Enron's top executives were complicit and drove the fraud themselves.

That's true, but I will tell you that to this day, Jeff Skilling and his family think that he was innocent of the charges brought against him. He and his family strongly feel that the deals and dealings that drove Enron off the cliff were legal and that he will one day be exonerated.

Here's an interesting quote from a book written about this:

And:
Sound familiar??

AIG asks for more money
 

CNN article

That's fair - and again, I'll agree with the limited comparison (as sort of noted in your last excerpt). That said, I'd be stunned if his insider trading count is ever reversed - I mean, seriously, it was quite bad.

Don't a lot of those who are charged with a crime (and their family members) profess that they're innocent and they "will one day be exonerated"?

He's not ever going to get it reversed! He is delusional and stubborn. I do feel sorry for his family though, they really are nice people (especially the kids and his exwife Sue), but of course, they will defend him until his dying day. What else would one expect?

My point is, that I bet if they dig into the books of many of these investment houses and banks that are either failing or getting bailed out, there will be some malfeasance, of the indictable kind. That is what I was trying to get across with the excerpt.

What usually follows this type of "deal making" is compromised ethics and arrogance regarding the rules of accounting and laws of this country. Much of the mortgage crises stems from unscrupulous lending practices and bending of the rules. The lenders just thought the bubble would never burst, just as the Enron folks thought they could keep juggling the books.

In the end it bit investors in the butt back in 2001 and it's happening again to us now! The question is, will we (and the investment class) ever learn from the mistakes that have occurred time and time again?

I think the article is distorted. It makes it sound like AIG took the bailout money and had a big party. According to another article I read, the trip was planned in advance for independent insurance agents that met performance based quotas.

It doesn't look good but I don't have a problem with it.

AIG - Madison Square Garden luxury, assorted other planned events

Sure, the actual dollar amount is still puny compared to the bailout totals so far, but the PR consequences are a different matter.

It's instructive, though, to be reminded of the perks and goodies that exist out there for some people.

http://abcnews.go.com/Blotter/WallSt...6052261&page=1

I'm stunned that rich, smart people who are viewed (rightly or wrongly) as successful would be given perks that others don't enjoy. Holy crap, thanks for expanding my mind.