They said American International Group was too big to fail, necessitating last month’s $85 billion loan from the federal government. But at what point does AIG become too fiscally irresponsible to save? First came news that just days after that bailout, AIG’s main U.S. life insurance subsidiary spent $440,000 on a California spa and golf retreat for insurance agents – an event that White House press secretary Dana Perino rightly called “pretty despicable” Wednesday and that prompted Barack Obama to say during Tuesday’s debate that “the Treasury should demand that money back and those executives should be fired.” Then this week the Federal Reserve agreed to loan AIG up to $37.8 billion, on top of the $61 billion it had tapped as of Sept. 30 from the other bailout. Enough already.
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74 Comments
For once Obama are in complete agreement. The top layer should be stripped and put out in the dark of night. No longer should the same people who ran it into the ground be calling the shots. And on the way out they should be stripped of those big bonuses they got and also given a bill for their share of the latest junket.
At what point does the Gov’t and know-it-alls like us get to micromanage a company?
Their sales people get 60% commissions, they should only get 50% – this is an outrage!
Their SG&A is 25%, it should only be 15% – this is an outrage!
Their retention bonuses were 10%, they should only be 5% – this is an outrage!
If someone lends you money to help you through a tough time, do they get to manage how you live your life? Do they get to tell you not to go out to dinner and a movie, that it is too expensive so you have to eat at home?
The bailed out companies need to be put on an austerity program. Just like when the world bank loans money to basket case third world countries.
In a country the size of America, the idea that only a handful of people in the country are capable of running a corporation is absurd, their compensation needs to be regulated, or they need to be replaced.
“How many times have you gotta get hit in the head before you notice who’s hitting you?”
– Harry S Truman
We may get to find out how much bailing out it takes to keep an anvil afloat. A corporate austerity program? Hell, the only reason this corporation was founded was so these jokers wouldn’t have to be austere!
I say they take a major hit in their salaries to 0 for the big guys that got us here.
Worker bees who are still generating income should be paid well but not that well.
Yes Brian I say give them some orders about how to live their lives until they pay us back.
I fail to understand why this is an issue. If AIG is to pay back the loans, it must be competitive with other companies. This means that, since they use the independent agent model (which is best for both the agents and their clients… I was an insurance agent in a previous life), they have to provide incentives for agents to do business with them.
400k seems reasonable for such an event these days. I think if AIG were to release the amount of premium the agents involved brought in, it might make more sense to more people.
okob – agreed. It’s time for the Welfare Kings to tighten their belts and/or be eliminated. And, I owuld also guess, a few perp walks might be in order.
“Phantom
Posted October 9, 2008 at 1:05 pm | Permalink
…their compensation needs to be regulated, or they need to be replaced.”
Regulation of compensation in a ‘free market’ economy? That is not very capitalistic is it?
Unless the business is governement controlled. Government taking control of business does not sound very American does it? More like a communist or socialist country.
I fail to understand why this is an issue.
Mr. C, I think it was the “spa and golf retreat” part. Most people–especially independent contractors–can’t normally count on that kind of largesse in a grim economy. Do insurance agents really require that degree of backscratching?
A great deal of the public is working basically as wage slaves these days, doing more work for less pay and fewer benefits.
“mrcontroversy” offers –
“… they have to provide incentives for agents to do business with them.
400k seems reasonable….”
I wonder how anyone would respond to a $400,000 golf and spa weekend for 50 or so government employees.
For better or for worse, taxpayers are now in the insurance business. If the existing “independent” insurance agents are now employees of the American taxpayer, maybe they should sell it in hopes of a Salesman of the Year plaque or even a brand new Cadillac awarded on the basis of performance. After the fact, y’know?
Second prize: a set of steak knives.
If the capitalistic system collapses, another system will be formed to take its place, or some hybrid thereof.
Unless the business is governement controlled. Government taking control of business does not sound very American does it? More like a communist or socialist country.
If $100 billion in tax dollars are going to AIG, it’s not particularly out of line for the taxpayers to have a say in its management, whatever labels you want to apply.
If $100 billion in tax dollars are going to AIG, it’s not particularly out of line for the taxpayers to have a say in its management, whatever labels you want to apply.
Yea, and Congress manages things so well. Not.
“Rage
Posted October 9, 2008 at 1:26 pm | Permalink
If $100 billion in tax dollars are going to AIG, it’s not particularly out of line for the taxpayers to have a say in its management, whatever labels you want to apply.”
I want to call it socomcapitalism.
And I want a seat on the board.
Littlejohn I am a capitalist through and through but I think we are in a position we have never been in before. This calls for drastic measures.
I worked in insurance for 10 years and there are several problems there. For instance many insurance companies are not-for-profit. This means they pay no federal taxes. In most there is an administrative layer that makes obsense salaries.
This is ridiculous. Now that I am paying their salaries I want a say in what they make and who gets to stay.
Phant,
“If the capitalistic system collapses, another system will be formed to take its place, or some hybrid thereof.”
Quite true, but things like that don’t get set up overnight; it can take decades or more of hard work to make it function properly or see it fall on it’s ass. The interim may be pretty bleak for everyone.
Yea, and Congress manages things so well. Not.
And your alternative? It’s not like Congress could do any worse.
And we’re not talking about a research grant or something, where a hands-off approach would be appropriate.
Honestly, this attitude that government can’t do anything and shouldn’t try gets tiresome. There are plenty of examples of government incompetence and as many examples of corporate incompetence.
It’s not impossible for government to get it right, whether one speaks of Social Security, the CDC, DARPA, FAA, pre-Brownie FEMA, etc. Certainly, there are horror stories too (e.g. the INS). But it’s really just a matter of the right people with the right knowledge and the right judgments giving the right degree of attention to the right problems. A tall order, but not impossible.
And I see that I actually agree with Ok for a change.
Forgive
Us
Crooks
Knifing
Major
Economies
#
brian_nuevo
Posted October 9, 2008 at 1:47 pm | Permalink
And I want a seat on the board.
I want stock.
Com’on Rhonda,
This event was planned well before the bailout. No executive staff were in attendance – this party was designed to reward well-performing salespeople. Paul F. Rossell, may have even been there.
Nothing to see here, move on sheeple…
Listen to the audio file.
http://www.npr.org/templates/story/story.php?storyId=95557348
I haven’t been able to find any sources that state how many agents were in attendance, so all of this is just speculation, but ssuming that traditional standards (accounting for inflation) were used to determine who attended, there were probably 120-150 agents in attendance.
Each of them was probably accountable for about $4 million in business each, on average.
That means they brought in about 5.7 million dollars in premium total.
And for every agent who qualified, there were probably another 4-6 who did at least half that in an attempt to qualify. That would be another 11.5 million in premium at the very least.
Spending $400K to bring in $17 million.
Okay, business types, what do you think?
DOW dipping down below 9000, down about 5000 points since last yr. on this day.
Another buying op.!
I think they would’ve brought it in regardless, to collect their commissions.
20 bil. in losses in 3 qtrs., what’s not to celebrate?
“…but ssuming that traditional standards (accounting for inflation) were used to determine who attended, there were probably 120-150 agents in attendance.”
Most nights they used well over 300 rooms.
MrC there is something basically wrong with this company. They can’t pay their bills. Business plans are only good plans if your company can independedly maintain its bonus’s and compensation packages and still have a healthy reserve to preserve your existing business.
AIG failed so I would say no matter the number it isn’t a good plan. If the salespeople can make more somewhere else they will leave. Probably no-compete clauses will protect the company for a while.
The gov can’t continue to write cks while the fatcats play. If the salespeople can’t look at the economic picture and see what is happening then cut them loose and get some that are more realistic.
And Mr C these salespeople had already been compensated for the business they brought in. The junket was sauce. A stupid ill planned trip. They need to look at the picture through the eyes of the taxpayers who are hurting while bailing them out.
I doubt seriously they will do it again. But watch, their sales will dip badly and they will need more money from us.
Let us not forget that the AIG bailout was done by the Secretary of the Treasury prior to Congress taking any action on the notorious bailout/rescue law. I recall the government (on behalf of the taxpayers) received over 70% ownership of the stock in the holding company as collateral(?) for the loan(s).
AIG’s insurance subsidiaries are in sound financial condition (according to the regulators); it was the holding company which was involved in some way in the exotic derivative market that became insolvent. IIRC, a pre-federal government intervention step was the authorization by the Insurance Commissioner of the State of New York for the regulated insurance sub to make a $20 Billion loan to the parent corporation. I’m not sure whether that in fact happened.
Hey! I want the spa treatment; some scantily clothed women in bikinis, hot tubs and some of those fruity drinks with the umbrellas!
DOW’s at 8800 and dropping. Fire sale!
World
Economies
Roped
For
Unilateral
Control
Kills
Every-one’s
Drive
What reggie, you don’t insist that those women in bikinis remain fully clothed at all times?
#
Jed
Posted October 9, 2008 at 2:42 pm | Permalink
What reggie, you don’t insist that those women in bikinis remain fully clothed at all times?
—————————–
What for?
naked
barefoot
you know the rest…
(chortles)
Mxyzptlk,
“DOW’s at 8800 and dropping. Fire sale!”
Hey, party’s over. Last one in the market gets stuck with the check.
I have to agree with Ok observer…what happened to leaders of companies leading by example? It’s the idea of the little guys paying for everything while the fat cats keep spending thats got everyone’s panties in a wad. It’s time for the model of ‘good business planning’ to suck it up as well. walk the walk and all that.
Rage writes-
“But it’s really just a matter of the right people with the right knowledge and the right judgments giving the right degree of attention to the right problems. A tall order, but not impossible.”
Yeah, and all subject to the political whim of the masters of the moment and the soundbite. No thank you.
Oh and by the way, COngress exempts itself from many of the laws they force other employees to follow. So, if the congress is in charge of the businesses they “acquire” ….
I think that for every company that needs bailed out their should be a justice department investigation. And AIG should repay the 400,000 dollar party and its execs should be fired if not for that then for having to be bailed out in the first place, and Brian if we were friends and I loan you money for groceries or to help out your kids and the next day you invite me to a kegger that would certainly cause some friction
“we were friends and I loan you money for groceries or to help out your kids and the next day you invite me to a kegger that would certainly cause some friction”
Had that happen once. Pissed me off.
LJ me too
Damn them. I didn’t get to take my yearly jog to Colorado this year. And we stock a couple of coolers with lunchmeat!
I want treason charges dammit. Now.
If that doesn’t happen, then this whole fuched up country (or at least the fuched up people mindlessly wandering around in it) can go to Hell.
And I mean that with as much venom as I can muster.
At every turn, I find a new distaste for my “fellow countrymen”.
How about some real news reporting? Name the names of the AIG people involved in the frolic so I can demand my congressman go after them legally. They need to go to JAIL.
Any of you who see no problem with this need flayed. And I mean it needs to be PAINFUL.
Or maybe a bit of slow slicing. Because you’re all traitors.
If AIG doesnt want government input on the management of its company or assets, then it shouldnt go to the government asking for a handout, bailout, or whatever “out” they are wanting from the taxpayers.
Is there something complicated about that? Dont want the government telling you how to run your business? Fine.Then dont ask the government for a handout.
Oh, and Reg?
“Hey! I want the spa treatment; some scantily clothed women in bikinis, hot tubs and some of those fruity drinks with the umbrellas!”
Heheheh. Me too, dude, me too.
But can we have Makers Mark instead of unbrella drinks?
“Is there something complicated about that? Dont want the government telling you how to run your business? Fine.Then dont ask the government for a handout.”
I agree. They shouldn’t be asking the government for a handout. And they shouldn;t get one.
If my compnay were to be bankrolled by someone I would figure on him calling at least some of the shots. That is just the way things (used to) work in business.
KFG!!!!!!
Maker’s Mark is my sweet ambrosia! I’ll settle for Bulleit though.
Man, if I wasn’t so crazy and you weren’t so lesbian (I think) we could hit it off.
“Man, if I wasn’t so crazy and you weren’t so lesbian (I think) we could hit it off.”
Heheheh.
Well, I’m crazy too. So now, if you could just see your way to being a lesbian…
Maker’s Mark is my sweet ambrosia! I’ll settle for Bulleit though.
The best bourbon whiskey on the face of the planet. But not recommended if you’re on a fitness kick. ;-)
Rage
Posted October 9, 2008 at 6:28 pm | Permalink
Maker’s Mark is my sweet ambrosia! I’ll settle for Bulleit though.
The best bourbon whiskey on the face of the planet. But not recommended if you’re on a fitness kick. ;-)
—
Booker’s (and it ain’t even close).
Hoky label, and it comes in an even hokier box, and it’s almost as expensive as single malt whisy, but Booker Noe knew whiskey, and it shows — big time. Makes for mighty fine sippin’ come a warm Saturday afternoon on the porch!
I wonder if there was a clause in the contract with the resort that prohibited them from cancelling in a certain time period without forfeiting their money?
Also, Rebel Yell is a mighty fine and cheaper alternative.
But Booker’s, that’s top of the line imo.
And the airline tickets too?
#
ksfarmgrrl
Posted October 9, 2008 at 5:23 pm | Permalink
Oh, and Reg?
“Hey! I want the spa treatment; some scantily clothed women in bikinis, hot tubs and some of those fruity drinks with the umbrellas!”
Heheheh. Me too, dude, me too.
But can we have Makers Mark instead of unbrella drinks?
——————–
hmmm, Irish whisky…
okay!
(puts kilt on and tucks a clover leaf behind his ear)
I’m thinkin’ Cabo San Lucas, Baja Mexico, kicking back in a cabana, after catching a 44 lb Dorado, with a really hot Chiquita, while sipping on Suntory Hibiki
30 year old blended. No fruity little umbrella totin’ girly drink for this guy!!!
This is the way that all of the insurance companies do too….you pay for this- one way or another- someone else’s extravagance. Its ridiculous when people are hurting.
And you defend it as business. By golly I’d hate to see these people actually have to WORK for a living. This seems to be the entitlement society- that they have the right to live like this on the backs of others. Not the poor asking for crumbs from the govt.
The “Crisis” was caused by the DemoRats.
And the Bailout was demanded by the Socialists.
And now, The Eagle acts surprised that corporations hold up their tin cups more frequently then JR?
It’s very clear that Government is trying to take over private business in Amerika.
God love the Marxists, but their approach is a proven failure, time after time.
MaxGrobnik
Posted October 9, 2008 at 7:55 pm | Permalink
The “Crisis” was caused by the DemoRats.
And the Bailout was demanded by the Socialists.
—
First of all, this crisis was enhanced by all the deregulation passed by the Republicans when they were in total power. LIke Obama said, there is enough blame to go around.
Second, I didn’t know George W. Bush was a Socialist – it was Bush’s plan that was first proposed, wasn’t it? Of course, that bailout plan did not pass and House Republicans blocked the passage until they got THEIR added pork projects, right?
First, the Democrats fought AGAINST more regulation of FNMA & FHLMC. That fact you might ignore or lie about, but you cannot change that fact.
Second, Bush sucks and yes he did support Socialism.
And the Reason why Democrats fought against more regulation of FNMA & FHLMC is that Obama & Co, received $$$$$$$$$$$$$ from FNMA & FHLMC.
And, don’t forget, BARNEY FRANKS BOYFRIEND, worked for FNMA!!!!!
America gets screwed by Barney Frank. Yick!
I agree with okobserver.
I’ll cut my wrists now
The crisis was caused by greed. It is the Republican party defends that.
Know why the market tanked today and GM stock is selling for less than any time since the 50’s?
The ban on short selling expired yesterday.
SO today, greed was turned loose to FURTHER destroy the economy.
They should just ban short selling, or require much higher margins. I think the markets could work quite well without the hedge funds trying to profit off misery.
Ban derivatives all together.
I am a lesbian, trapped in a man’s body.
This was stupid, public relations wise.
However — it appears that the event was scheduled, contracted for and partially paid for long ago, BEFORE the bail out.
Also, this is an insurance subsidiary.
How many of you, reading this right now, understand what that means?
Simply put, by LAW the portions of the AIG that were in trouble were NOT attached to the insurance company subsidiary.
By LAW, the ONLY thing that AIG, the parent company, can receive from the insurance subsidiary is stock dividends, from owning the stock of the subsidiary company.
The insurance companies were NOT bailed out by the government, only the parent company.
If you damage the ability of the insurance companies to make money, to attract workers and do business? You HURT the ability of the parent company to receive dividends to help pay the bills.
Technically, the parent company could go bankrupt and the insurance company would be just fine. They are seperate for all accounting purposes accept for the profits from the insurance company belong to the parent.
$440,000 is, roughly, the value of two sub-prime mortgages.
Congress forced far more waste, by demanding these affirmative action, politically correct mortgages onto all of us.