Last month we reported how insurance
giant AIG had to be bailed out by the US government for $85bn. It’s all part of
‘Socialism for the rich, capitalism for the poor.’ (See http://www.socialist.net/socialism-rich-capitalism-poor.htm
Less than a week after the bailout, the company held a week-long retreat for
its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running
up a bill of $440,000,
At the opening of a House committee hearing about the near-failure of the
insurance giant, Congressman Henry Waxman showed a photograph of the resort.
Waxman said the executives spent $200,000 for rooms, $150,000 for meals and
$23,000 for the spa.
"Less than a week after the taxpayers rescued AIG, company executives
could be found wining and dining at one of the most exclusive resorts in the
nation," Waxman said. "We will ask whether any of this makes
Elijah E. Cummings added, "They were getting their
manicures, their pedicures, massages, their facials while the American people
were paying their bills,"
The House committee, which took on executive compensation at bankrupt Wall
Street firm Lehman Brothers yesterday, has received "tens of
thousands" of pages of documents from AIG, Waxman said.
Those documents show that as the company’s risky investments began to
implode, the company altered its generous executive pay plan to pay out
regardless of such losses.AIG lost over $5 billion in the last quarter of 2007 due its risky financial
products division, Waxman said. Yet in March 2008, when the company’s
compensation committee met to award bonuses, Chief Executive Martin Sullivan
urged the committee to ignore those losses, which should have slashed bonuses.
Cassano, the executive in charge of the company’s troubled
financial products division, received more than $280 million over the last
eight years, Waxman said. Even after he was terminated in February as his
investments turned sour, the company allowed him to keep up to $34 million in
unvested bonuses and put him on a $1 million-a-month retainer. He continues to
receive $1 million a month, Waxman said.
Don’t let them tell you that capitalism gives incentives for success. These
are the rewards for failure.