Dear AIG: I’m Not Going To Be Able To Keep Criticizing “Occupy Wall Street” For Destructive Class Warfare If You Act Like This.

Pelican Hill...where wealthy insurance executives can spend taxpayer funds like it was Monopoly money!

American International Group Inc. (AIG), the huge insurer—too big to fail!— that is now majority-owned by the U.S. after a 2008 bailout of $85 billion, has resumed its arrogant, irresponsible habit of living like sultans on the money of taxpayers, many of whom are getting kicked out of their homes and who can’t find jobs.

Back in October 0f 2008, the House Oversight Committee nearly had a collective stroke when it discovered that, just one week after the federal government bailed out AIG because it was too vital a part of the shaky world financial markets to let go belly-up as it richly deserved, company executives went on a wildly-expensive retreat to a luxury resort. The executives “spent nearly $500,000 on manicures, facials, pedicures, and massages,” among other things.  Rep. Elijah Cummings (D-MD) was incredulous, and he wasn’t alone:

“Have you heard of anything more outrageous?… Let me describe for some of you the charges that the shareholders, taxpayers, had to pay. AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1,400 at the salon. They were getting manicures, facials, pedicures and massages while American people were footing the bill. And they spent another $10,000 dollars for I don’t know what this is, leisure dining. Bars?is hosting an event at a California facility that advertises ,the amenities of an ultra luxury hotel.’”

That was just the beginning. In 2009, AIG paid out billions in “retention bonuses,” causing the Senate and House to threaten legal action. Was AIG sorry? Contrite? Filled with shame? Determined to change? Did they understand that argument that “this is the cost of doing business” doesn’t resonate when you are doing it with the public’s money, having blown your own through bad management, greed, and recklessness?

Oh, no. The company was just laying low until the heat was off. This week, we learn that the company’s American General unit just assembled about 65 people who distribute its products—about the same number as the group that spend nearly a half-million at a similar resort in 2008—  for a two-and-a-half-day stay  at the Resort at Pelican Hill in Newport Beach, California. Nine AIG managers also went to the resort to make presentations. A spokeman wouldn’t say what the cost of the event was, but it’s fair to assume that at Pelican Hill, 16 dollar muffins would be slumming. As before, the company saw nothing wrong with going first class, indeed, emperor class,  all the way.

“It is important for these speakers, as well as the eight field representatives in attendance to spend quality, one-on-one time with our key distribution partners to ensure they understand our offerings,” AIG’s spokeman said, as if we are the ones who are out of touch. “It is standard practice in the financial-services industry to hold such business development, leadership meetings.”

“We are back to the business of being in business and we’re in the marketplace competing,”

Senator Max Baucus (D-Mont) called AIG’s party in 2008 an “insult to taxpayers.” What is the 2011 version, then? An insult to Congress? An insult to the nation? An insult to common sense? An insult to the concepts of fairness, accountability and shared sacrifice?

Yes…all of that, and more.

20 thoughts on “Dear AIG: I’m Not Going To Be Able To Keep Criticizing “Occupy Wall Street” For Destructive Class Warfare If You Act Like This.

  1. Americans are outraged. Clearly outraged. After all, WE’RE paying for these obscene excesses. Our government has seemingly done nothing to prevent these abuses from continuing. Who’s to blame? I think the answer is quite simple. The American people. As Americans, we are fortunate enough to live in a free society where we can elect those we choose to govern us. Many, if not most, of those we have chosen to govern us have, for the past decade, decided to make their decisions based on what their biggest donors (corporations) want and/or dictate, rather than what their constituents want and/or need. So vote them out. It’s really that simple. If they don’t represent us or advocate for us they shouldn’t hold power over us. When will the American public wake up, stop listening to right and/or left wing radicals and start using common sense?

    • This is from someone not living in the USA so take it for what that is worth but…. Americans don’t really appear to be all that outraged. At least not from here they don’t. We have the same problem. Outrage is hard to muster in Canada.

    • Vote them out,yes,but replace them with who? All candidates,Dem and GOP seem to represent change but once they’re in it’s a different tune their singing. Look how Obama has failed to keep his campaign promises. Case in point,bringing the troops home. Instead he involves us in more military skirmishes. Who do we trust?

      • A friend of mine,starting out in business,was told that she would never get anywhere by being honest and ethical. This made me wonder just how many wealthy businessmen lied,cheated and stole to get where they are. The majority? Patricia made an over generalization but many wealthy corporations are corrupt and have our government in their pocket.

  2. Frankly, this is why AIG should have been allowed to fail. That would have put an immediate end to all of this.

    I never bought into the “too big to fail” argument in the first place. That conjures up a ludicrous image of the whole company suddenly disappearing in a giant “POOF” of smoke. In actual practice, “failing” would have meant down-sizing to some extent rather than going completely out of business; and the market share lost (along with the jobs of laid-off employees) would have been picked up by competitors who manage their financials properly. This would make AIG less relevant and it’s better-managed competitors more relevant–a net gain for the industry and the economy in general.

    Instead, what we got was the modern-day equivalent of sympathy for the buggy-whip industry when it’s about to fail because of the advent of the automobile.

    Now what we are left with is the same old problem along with a new, arguably worse, problem: if AIG’s stock price starts dropping with the U.S. taxpayers holding the majority of the stock, then we have yet another stressor to our deficit (not that we have an actual budget or anything, but that’s a different discussion) and national debt.

    –Dwayne

    • If AIG had not been bailed out, they would have gone out of business. The government was not trying to save their employees, but rather their insurance policy holders (including many of the big banks). If AIG had failed, other banks would have gone the way of Lehman Bros. or would have had to be bailed out. Whether this would have been a good thing or a bad thing will probably be debated for decades.

  3. What company audits AIG? What responsibility do they have to document and “explain” these “necessary” expenditures? Why isn’t AIG also audited by the IRS? How do they get away with this?

    The IRS goes after individuals on all kinds of tiny but “questionable” deductions, and spend millions auditing the small individual 1040-filer, but just passes through any and all AIG expenditures? Is there some kind of collusion going on here?

    I think it’s just not enough to complain, or to descry the obscene behavior of this “too big to fail” giant. People should write to their Congressmen and Senators and ask for an investigation. (Republicans only, of course, because after all it was the Democrats who bailed AIG out.)

    AIG doesn’t give a sh– about what bloggers and we poor investors care about. The Wall Street sit-in/crap-in mob is ignorant, ineffectual, and purposeless. But interested and intelligent people should express their outrage through e-mails and letters to both the White House and their elected representatives.

    • In fairness, TARP was signed into law in 2008 by President Bush, and the bill passed with significant Republican support including (IIRC) Senator McCain.

      –Dwayne

  4. A company can allow any expenses they want. That being said, since they are now majority owned by the US government, we need to ask who is giving the go ahead to things like this? Why haven’t they been fired? The Wall Street culture is so entitled and so out of touch with the reality of the common Americans that it is almost beyond belief.

    The Occupy Wall Street group could have a lot of legitimate gripes, but they don’t seem to have anyone with half a brain in the group. Instead of hearing “I want them to take the money from rich people and give it to me” form a college aged girl wearing $500 worth of clothes or “I have gone to every protest I can find for the last 40 years” from the aging hippies, why not try one of the following angles:

    (1) Wall Street is just a group of tax farmers. The government has given them the right to tax stock trades (while giving almost nothing back in return) and this gives them a vast amount of unearned wealth (~5% of the GDP is consumed in stock commissions compared to 17% for the federal government). This is outdated and outrageous. The federal government should abolish their monopoly on the buying and selling of stocks, set up a website that takes care of it in exchange, collect the commissions as taxes, and solve the Social Security problem with the extra money. Tell Wall Street to make their money the old fashioned way, “earn it”.

    (2) Wall Street and the investment banks are destroying America through legal and illegal fraud. With their numeous “creative” investment schemes, many of which resemble betting on the Chiefs to win the Super Bowl, the American people have been defrauded. The investment community has marketed numerous investment devices as “investment grade” when in fact they had no more substance than Paris Hilton’s credentials as a neurosurgeon. Combine this with the overtly destructive practice of short selling that has destabilized Wall Street and the economy for the last 6 months and you can see how much misery is created in their unbridled pursuit of profits. Prosecute the fraudsters under RICO (seize Wyoming under imminent domain to house them all, if necessary), disallow all ‘creative investments’ outside of stocks, bonds, loans, and commodities.

    Drastic approaches like these will be necessary to change the AIG situation. The culture is too ingrained, they are too addicted to the easy money, and they have too much money to use ‘influencing’ our elected leaders (5% of the GDP, look at it. 5%!).

  5. I don’t know. What I do know is that I have some virtually worthless AIG stock while these libertines are basking in corporate profits. I wish AIG was like P&G and ANY stockholder could get a motion on the annual stockholder’s ballot. I know what mine would be.

  6. Pingback: Squeezing Blood from a Stone | The Pink Flamingo

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