SeizeTheDay: Again, what I said was, we have a general populace that has a complete lack of financial education ... So I think there is plenty of blame to be put on consumers who helped cause our negative savings rate and overly mortgaged real estate ... I'll just address this one issue. Economics 101.Actually, I'd put just as much blame on 'Economics 101' itself. It's clear now that the dominant consensus in economics over the past 25 years has had about the same predictive value and ratio of reality : ideology as Mao's Little Red Book. You sound like an Old Guard Communist, looking at the crowds baying for commissar blood and complaining that the only reason they're unhappy is that they haven't read Das Capital closely enough.
"The post-bailout getaway for American International Group execs is just one of a series of jaw-dropping revelations to emerge this week about the behavior of some of the companies involved in the financial crisis.posted by ericb at 7:51 AM on October 8, 2008
Among other things we now know:
* AIG tried to hide negative information about its condition from auditors before the bailout plan took shape, according to documents obtained by Rep. Henry Waxman (D-Beverly Hills), who heads the House Oversight and Government Reform Committee.
* As early as March, regulators sent a letter to AIG warning the company about its lack of transparency and ability to oversee financial products.
* Just days before Lehman Bros. Holding Inc. filed for bankruptcy protection last month, the company altered its executive pay plan to give senior managers multimillion-dollar bonuses regardless of recent losses.
* Joseph Cassano, the Lehman exec in charge of the company's financial products division, received more than $280 million over the last eight years, according to Waxman. Even after he was shown the door in February, Cassano was placed on a $1 million-a-month consulting retainer.
'This is the new Enron,' said Gonzalo Freixes, a professor at UCLA's Anderson School of Management who specializes in business ethics. "A lot of people probably thought we were past this kind of thing."
We aren't, as is becoming increasingly clear with each new peek under Wall Street's hood. AIG's St. Regis wing-ding is a classic example of the financial industry's misplaced priorities."
"'I was totally unaware that there was any plan for any conference,' AIG's ex-CEO, Robert B. Willumstad, said today during his testimony before the House Oversight and Government Reform Committee. 'Had I been aware of it I would have prevented it from happening.'"*posted by ericb at 7:54 AM on October 8, 2008
“The Tuscan-style luxury resort sits atop a bluff overlooking the Pacific Ocean and features a private beach club with ‘surf butlers,’ three swimming pools and a championship golf course, according to its Web site.posted by ericb at 7:58 AM on October 8, 2008
Most of the attendees at the convention between Sept. 22 and Sept. 30 stayed in premium ‘pool view’ rooms at the 400-room hotel, with 47-inch LCD TVs and marble bathrooms furnished with a ‘Deep Roman’ bath and shower. The rate: $375 per night.
The group also booked 17 ‘ocean view’ rooms, at $425 each, and one ‘presidential suite,’ discounted from its usual $3,200 a night to $1,600.
Another $9,982 was spent on food and drinks at the StoneHill Tavern, the Monarch Bayclub, in-room dining and the lobby lounge; $6,939 on golf; $1,488 at the Vogue Salon; and $1,450 on no-show and cancellation fees.
An invoice dated Oct. 3 said AIG still owed the resort $40,543 in charges after a $402,701 deposit.
The itemized bill does not show what executives specifically ordered at the spa and salon, but a look at the hotel's spa menu (PDF) shows 75-minute ‘intuitive massages’ at $215 a pop (most of the executives spent $210 each for a spa treatment on Sept. 25) and men's and women's haircuts and styles starting at $50 and $75, respectively.
Executives also spent $147,302 on banquets at the hotel and $23,380 at the Spa Gaucin, which features three-story waterfalls and a ‘Well of Desires, where symbolically all your cares will be left behind.’
It's unclear whether any of the AIG executives tossed a spare coin in the well.”
"Appearance, though, is powerful.BTW -- there are other expenses incurred by the 110 attendees: travel, etc. So, the grand total for this event is much higher.
'When people hear things like this, it makes it difficult to sell people on a bailout plan,' said Tara Setmayer, communications director for Congressman Dana Rohrabacher, who opposes a bailout. 'Of course the events are planned in advance, but from a PR perspective, it doesn’t go over well.'
Like every congressional office, Rohrabacher’s was inundated with outraged calls and emails opposing a bailout. 'No one is bailing us out!' Average Joes were saying. 'Why should we bail out those Wall Street fat cats?'
(Suggestion to those crafting the next bailout - er, 'rescue' - bill: Consider a cap on expenses as well as executive compensation?)"
QlbHom: What do you expect from people who think they are smarter, more talented and wiser than everyone else?A community weblog?
"But let's go back to the St. Regis. No publicity is bad publicity, remember, which is why the resort is booked solid for the next two weekends, according to the Los Angeles Times. And those seeking a room at the next hot spot on the disaster tourism circuit would do well to immediately call Reservations at the Ritz-Carlton Half Moon Bay further up the coast. It's yet another elegant monument to decadence that sits on yet another bluff overlooking yet another gorgeous strip of the Pacific. And next week, the Ritz-Carlton will also have something else in common with the St. Regis: dozens of AIG executives huddling together in style, whooping it up on another junket of dubious necessity in a time of crisis."*How do you say "tone deaf?"
"White House spokeswoman Dana Perino yesterday called 'despicable' expenses from the first gathering, a weeklong conference last month at the St. Regis Resort in Monarch Beach. Those costs included $23,000 for spa services, according to Representative Henry Waxman, chairman of the Oversight and Government Reform Committee.Damn right, "new standards and approaches" are in order. How about teleconferences/video conferences to save money? You can "motivate and educate" your employees and independent agents in very cost efficient ways these days. When you're in a crisis (damn, you almost imploded and went "belly-up"), you need to do things differently. Sacrifice is in order. Thnigs won't be like they used to be. Maybe never again. You should be thankful that tax payers have saved your friggin' asses and jobs. Now, perform in the most cost effective ways possible. Screw bonuses and incentive trips for management until the "ship is righted" and you have consistently exceeded forecasts and economists, auditors and all others agree that your financial foundation is solid. Do your job. Tighten the goddamn belt. And, by all means, don't complain. There are a lot of people without jobs these days who'd be happy to step in, get a salary and benefits. These unemployed workers have families who are suffering, sacrificing and scared. They're willing to do an honest days work without all the frills and bling. Buckle up my friends (not said in the voice of John McCain), you're in for a bumpy ride!
AIG considered buying advertisements to explain its position, only to be told by public relations consultant George Sard that it would be 'a really bad idea.'
'To spend the taxpayer's money on an expensive ad campaign to apologize for how you used taxpayer money leaves you open to further attacks,' Sard wrote in an e-mail to Ashooh. Sard, chief executive officer of New York-based Sard Verbinnen & Co., declined further comment.
President Bush didn't push for the bailout 'to help top executives go to a spa,' Perino said at the daily White House briefing. Hours later, the Federal Reserve agreed to loan AIG an additional $37.8 billion on top of the initial $85 billion.
AIG chief executive Edward Liddy, who replaced former CEO Robert Willumstad as a condition of the federal loan, told Treasury Secretary Henry Paulson yesterday that the company intends to reevaluate expenses. 'We owe our employees and the American public new standards and approaches," he wrote in a letter to Paulson.'
“Four top AIG executives flipped U.S. taxpayers the bird by spending $86,000 on a partridge hunt at an English country manor as the feds gave their struggling firm billions to stay afloat.posted by ericb at 2:48 PM on October 15, 2008 [1 favorite]
The heedless hunters and their guests traipsed through the fields in tweed knickers, firing at defenseless birds and later washing down pigeon breasts and halibut with ‘the finest wines taxpayers' money can buy,’ the London-based News of the World newspaper reported.
There were at least three New Yorkers in the group - Jeffrey Malkovsky, a senior director at AIG's Manhattan office, Hilary James, the general manager of the luxurious Bristol Plaza Hotel, and her pal, John Roberts, who also advises AIG, sources said.
In interviews with undercover reporters, the AIG honchos said they were aware that the markets were crashing back in New York - but were more interested in bagging birds.
‘The recession will go on until about 2011 - but the shooting was great today and we are relaxing fine,’ AIG honcho Sebastian Preil was quoted as saying.
Preil wasn't the least bit embarrassed that AIG, which got its first $85 billion bailout from the feds last month, needed taxpayer money to stay in business. The hunting trip came the week AIG got a second loan of $37.5 billion.
‘We should be on an even keel in two years,’ he reportedly said.
Another AIG executive, Alvaro Mengotti, ‘slurped fine wine’ while dispensing advice on surviving the financial crisis. ‘Invest your money in gold,’ he reportedly said.
The AIG hunting party stayed at Plumber Manor, a 17th century country house in scenic Dorset, southwest of London. In four days, they racked up a $17,500 bill for food and rooms.
Priel and a German businessman identified by the paper as Stefan Nill flew in from Frankfurt by private jet costing another $17,500, the paper reported.
Mengotti flew in from Spain and was driven to the hotel in one of the fleet of limos that cost $8,750, the paper said. Also with them was a client of Preil's identified by the paper as ‘Herr W. Underburg.’
AIG spokesman Joe Norton confirmed Tuesday the hunt happened. He said ‘it was planned months (ago),’ though he admitted it should have been cancelled.
‘AIG's priority is to continue to focus on maximizing the value of the business so we can repay the Federal Reserve loan.’
AIG got spanked last month after it was revealed that top executives spent $500,000 at a swanky California resort after the failing insurer got its first infusion of bailout bucks.
Last week, AIG cancelled another junket to another expensive California resort for AIG agents after word leaked out.”
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