US anger over AIG resort trip
Less than a week after the US government had to bail out American International Group (AIG), the insurance company sent executives on a £250,000 retreat to a posh California resort, politicians investigating the company's meltdown said.
The tab included £13,000 worth of spa treatments for AIG employees at the coastal St Regis resort south of Los Angeles even as the company tapped into an £49 billion loan from the government it needed to stave off bankruptcy.
The retreat didn't include anyone from the financial products division that nearly drove AIG under, but politicians were still enraged over thousands of dollars spent on catered banquets, golf outings and visits to the resort's spa and salon for executives of AIG's main US life insurance subsidiary.
"Average Americans are suffering economically. They're losing their jobs, their homes and their health insurance," Democratic House Oversight Committee chairman Henry Waxman scolded the company during a lengthy opening statement.
"Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."
The hearing also revealed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released on Tuesday by a congressional panel examining the chain of events that forced the government to bail out the conglomerate.
The panel sharply criticised AIG's former top executives, who cast blame on each other for the company's financial woes.
"You have cost my constituents and the taxpayers of this country £49 billion and run into the ground one of the most respected insurance companies in the history of our country," said Democratic Rep Carolyn Maloney. "You were just gambling billions, possibly trillions of dollars."
AIG, crippled by huge losses linked to mortgage defaults, was forced last month to accept the government loan that gives the US the right to an 80% stake in the company.
Mr Waxman unveiled documents showing AIG executives hid the full extent of the firm's risky financial products from auditors, both outside and inside the firm, as losses mounted.
The recent sub-prime crisis and subsequent collapse of the stock market has seen the economies of even the greatest countries fall, the worst hit being America, where the whole fiasco started. Once economic superpowers, with large companies/banks like Merrill Lynch, Lehman Brothers, AIG and Bear Stearns, the recent events have seen these companies filing for bankruptcy. Also, when it seemed that history was going to repeat itself like during the 1997 Asia Financial Crisis, the US government introduced a radical new way to save the economy, something like a desperate last resort attempt to save it's economy from total devastation. It would spend US$ 700 billion to boost the companies that were falling, to give them another chance. At first, when the bill was first presented to the Cabinet, it was shot down almost immediately by the ministers and the general populace, saying that they should not be the ones paying for the mistakes of the companies, and this money would be mostly coming out of the tax payer's pockets. Finally, after some persuasion by the president, Mr. George W. bush himself, the bill was finally passed, and many companies got their money, AIG inclusive. Everything seemed to be going fine after all.
Not quite. Just after 1 week of receiving their $85 billion loan from the government, it was revealed that AIG had spent about $370 000 on a private trip for it's executives to the posh St. Regis resort, where they spent nearly $200,000 for rooms, $150,000 for meals, and $23,000 in spa charges. The worst part? The average citizen was indirectly paying for the expenses of these "fat cats", the people who take more than $70 million in pay a year, the same people whose decisions lead to the dismal fate of the economy now. And the average people are not pleased.
They say money is the root of all evil. From this article we can see how this is true, from the way the executives from AIG, who were once helpless, now squandering their wealth once they got a chance to. If I was one of the general public, I too would feel angry at how they have acted, arrogantly showing off their wealth while the rest of the country suffers under the relentless plunging of the stock prices. The worst part, in my opinion, is that the money is not rightfully theirs, it has been kindly bestowed upon them by the government, and yet this is how they spend it for their personal benefit, instead of using it to improve the economy of the country, as they were supposed to in the first place. This incident also shows extreme lack of foresight on the part of the executives, they might be enjoying themselves now in the lap of luxury, but when the public gets the news, there will be negative repercussions for a long time to come.
Lastly, although we feel outraged at the irresponsible splurging of this money, we must remember that there is no use crying over spilt milk. After this incident blows over and the relevant people punished, there is still the big problem of saving the economy, something that we all must work together to. After all, helping others is helping yourself as well.
