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AIG,
Congress and the Taxpayers November 14, 2008 What is up with AIG? The
taxpayers, by way of the government and without being asked, have given
AIG more than $122 Billion in funds (the amount is actually said to be
more like $152 Billion) to keep the failing insurance giant afloat, and
yet AIG cannot seem to tighten its belt.
American Insurance Group, a company originally founded in China,
has been caught spending hundreds of thousands of dollars in perks for
executive, top producers and independent advisor retreats since its
taxpayer bailout. Taxpayers may be aware of the lavish resort visits, but are
they being given a choice on whether or not they want to continue funding
the irresponsible AIG? The tab for the first extravagant get-a-way was $440,000.
Of that, the expenditures were reported to be $200,000 for rooms,
$150,000 for meals $23,000 for spa treatments and $7,000 in Greens fees.
So, lets get this straight, they spent all that money to stay in a
resort, all that money for food, all that money for spa treatments, and
yet there is still $60,000 unaccounted for.
Maybe they spent it in tips!
Since we are being forced to “help” AIG, I think it only right
that we know what happened to the remaining $60,000!
And…I am quite sure that with the stress taxpayers are under with
regards to our collapsing economy, our losing our homes, our lack of funds
to purchase food, we might like a nice get away ourselves, but we cannot
afford one. AIG tried to keep the next big outing secret, even staff
members of the resort at which the new outing took place were told not to
mention AIG by name. There
were no AIG logos or signs to be seen.
However, an ABC affiliate caught them on tape.
This time, they spent $343,000. AIG Company spokesperson Nick Ashoon maintains that these
“meetings” are essential to their business and success.
It is customary, according to Ashoon, to treat top producers and
independent producers to retreats. Even
AIG CEO Edward Liddy stated that gatherings such as these were “standard
practice” in their industry. However,
Maryland Representative Elijah Cummings is asking questions, and demanding
answers. Cummings suggested, “if AIG truly wants to become as it
claims ‘an ethical steward of the public’s investment,’ AIG must
change its business practices…and it must…show it is truly willing to
be transparent to the public that has saved it.”
Cummings states that the first step in that endeavor is to provide
him with answers to his requests and for AIG to accept the resignation of
newly appointed CEO Liddy. Liddy, a former Goldman Sachs Director, took over AIG on
September 18, 2008 at the appointment of another Goldman Sachs employee,
former CEO and now Secretary of Treasury Henry Paulson. Add to this that Neel Kashkari, in charge of dispersing the
$700 Billion aid, was also a former Goldman Sachs employee and one must
wonder if there is some serious hanky panky going on! New York State Attorney General Andrew Cuomo has taken a
hard-line stance in his approach to AIG.
In a letter to Liddy, Cuomo makes it his position clear; there
should be no funds paid to AIG executives until the taxpayers are repaid,
in full, with interest. He
also states that “rebuilding trust in our capital markets requires
executive compensation packages that are rational, fair and based on bona
fide performance measures…” He
goes on to state that these packages should “no longer create improper
incentives for executives to over leverage their companies and manipulate
the books for their own short-term financial benefit.” In a letter from Representative Henry Waxman to Liddy, Waxman
points out that there were a couple of other “such events.”
In light of the fact that AIG is clearly mishandling funds at this
point, I must ask again, have the taxpayers been given a chance to say
“no” to the bailouts? Have
they even been given the opportunity to say to which companies the bailout
money should go? As part of the stipulations for considering approval of the
bailout, the White House was supposed to appoint a special inspector
general and Congress was supposed to choose an independent oversight
panel, all of which has yet to be done, now more than six weeks after the
bail out was passed. The
purpose of these positions was to avert government waste and corruption.
Congress is upset that the White House has not yet appointed the
special inspector general, but Congress has failed to appoint the
independent committee. Perhaps
Senator Charles Schumer said it best when he stated that, “Considering
how taxpayers’ money around Washington isn’t respected, a day
shouldn’t go by without having an inspector general checking on it…” To top all of this off, now it appears that the $700 Billion
will not be used for the purposes for which it was passed.
That’s right. Paulson has decided that a change in direction should be
taken. According to a
November 12, 2008 New York Times article, Paulson and the Department of
Treasury has “abandoned
the original strategy behind its $700 billion effort to rescue the
financial system” in favor of a lending program run by the Federal Reserve.
Now, if that isn’t a scary thought!
In addition, Paulson, after demanding that the entire $700 Billion
be available at once, has said he may leave half the money for President
Elect Obama’s Administration to dole out as they see fit.
Paulson, the former CEO, is exhibiting sure signs of a politician
as he sold Congress on the bailout using one logic and has now scrapped
part of it and is moving in a different direction.
The taxpayers should be up in arms about the disregard with
which government, as well as the businesses government has chosen for the
taxpayers to “bail out,” has conducted itself.
Sure, there are key people in government trying to get things done
“properly,” but wouldn’t “properly” have been to let the mis-managed
businesses fail and to let other similar businesses pick up the slack?
After all, if small businesses, you know the mom and pop businesses
that fulfilled the American Dream, fail the government does not run to
their aid. If we, as
individual citizens fail, we cannot petition government to bail us out.
How is it right that big, mis-managed business gets preferential
treatment and We-the-People get the shaft?
Aren’t We-the People the government?
Then again, maybe that is a delusion… Endnotes: Another AIG Resort "Junket": Top Execs
Caught on Tape 11/10/08 AIG Fights Back on $440,000 Resort Trip; Says No
Corporate Executives Attended 10/08/08 $85 Billion Loan to save AIG from Bankruptcy Fed
Reserve NY Agreement signed 09/23/08 After Bailout, AIG Execs Head to California
Resort 10/07/08 AIG's Federal Bailout funds Now Total $152.5
Billion 11/10/08 Wall Street CEO's Total compensation for 2007 Letter from Cuomo to Liddy about AIG
Compensations Letter from Henry Waxman to Liddy Liddy's Forbes Profile...Goldman Sachs... Clayton Dubilier & Rice Edward M
Liddy Cummings letter to Liddy Bailout lacks Oversight Despite Billions Pledged U.S. Shifts Focus in Credit Bailout to the Consumer Hill sources: Treasury won't use full bailout
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