Arrogance
This is one of the things people were worried about when they opposed the bailout bill. The taxpayers put up $85 billion, and the rich guys go party:
AIG sent its executives to the coastal St. Regis resort south of Los Angeles 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.
Don’t get me wrong, I love rich guys; Montana needs more of ‘em. Pigs at the trough in these times, though, make me sick.
Think any of that $700 billion will find its way into resort coffers?
UPDATE: Invoice here.
I’ll take the opposite position of this argument for discussion purposes.
The purpose of the bailouts is to prop up these companies to return to normal business processes and infuse their bailout cash back into the economy.
AIG, like many major companies, have offsite belly-button exercises for bonding purposes for their own executives, key partners (like independent insurance agents and brokers), and customers. There is nothing abnormal about this as there is a long pattern and practice for such events.
Relationship building is critical for most successful service businesses like insurance.
As repugnant as the event might seem, AIG is doing what is normal practice for them by infusing the bailout proceeds back into their standard business practices and into the economy where it is crucial to get the economic wheels turning again.
Here are a few other items in the EMERGENCY Senate bill.
SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR AMERICAN SAMOA.
SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.
SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE SAFETY EQUIPMENT.
SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.
SEC. 313. QUALIFIED ZONE ACADEMY BONDS.
(my favorite – this will clearly help the bailout)
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.
—Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly—
‘‘(i) measures 5⁄of an inch or less in diameter, and . . .
SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION WITH THE EXXON VALDEZ LITIGATION.
Subtitle B—Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
SEC. 601. SECURE RURAL SCHOOLS AND COMMUNITY SELF DETERMINATION PROGRAM.
TITLE VII—DISASTER RELIEF
Subtitle A—Heartland and Hurricane Ike Disaster Relief
AIG is saying that none of its corporate execs attented. See http://www.abcnews.go.com/images/Blotter/LET%20Liddy_paulson.pdf
October 8, 2008
Henry M. Paulson, Jr.
Secretary of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Secretary Paulson:
I am writing to clarify an issue that was discussed at a hearing held yesterday by the House Committee on Oversight and Government Reform. At the hearing, a recent business event held by an AIG subsidiary was mischaracterized as an “Executive Retreat” held right after receiving the $85 billion loan credit facility from the New York Fed.
The event in question was held by one of AIG’s insurance subsidiaries for independent life insurance agents – not for AIG employees – who were top business producers for the company. The vast majority of the attendees were independent business people and their guests, not AIG employees. Indeed, of the more than 100 attendees, only 10 were employees of one of our insurance subsidiaries who attended to represent their company. Not a single corporate executive rom AIG headquarters attended.
While this sort of gathering has been standard practice in our industry for many years and was planned many months before the Federal Reserve’s loan to AIG, we understand that our company is now facing very different challenges – and that we owe our employees and the American public new standards and approaches. Let me assure you that we are reevaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating.
Mr. Secretary, I want you to know that AIG is focused on doing what is necessary to address our capital structure, repay the Fed credit facility and emerge as a healthy global insurer. In the meantime, our insurance businesses continue to operate normally and satisfy the needs of our policy holders.
Sincerely,
Edward Liddy