AIG Spa Trip Fuels Fury on Hill
Wednesday, October 8, 2008
For some people at AIG, the insurance giant rescued last month with an $85 billion federal bailout, the good times keep rolling.
Joseph Cassano, the financial products manager whose complex investments led to American International Group's near collapse, is receiving $1 million a month in consulting fees.
Former chief executive Martin J. Sullivan, whose three-year tenure coincided with much of the company's ill-fated risk-taking, is receiving a $5 million performance bonus.
And just last week, about 70 of the company's top performers were rewarded with a week-long stay at the luxury St. Regis Resort in Monarch Beach, Calif., where they ran up a tab of $440,000.
At a House committee hearing yesterday, Rep. Henry A. Waxman (D-Calif.) showed a photograph of the resort, which overlooks the Pacific Ocean, and reported expenses for AIG personnel including $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 in kicking off an angry hearing of the House Committee on Oversight and Government Reform. "We will ask whether any of this makes sense."
"They were getting their manicures, their pedicures, massages, their facials while the American people were paying their bills," thundered Rep. Elijah E. Cummings (D-Md.).
The gathering was planned before the bailout as a reward for life insurance agents, a company spokesman said, and fewer than 10 AIG executives were present.
The hearing promised and delivered strident condemnations of the two AIG executives the committee had invited to testify. Sullivan served as chief executive from 2005 to 2008; Robert B. Willumstad served as chief executive from June until September, and before that was chairman of the board.
"Shame on you, Mr. Sullivan," said Rep. Jackie Speier (D-Calif.), noting that Sullivan was not giving up any of his $5 million performance bonus.
Over and over, the committee members vented outrage at having the federal government bail out the company, referring frequently to their angry constituents.
But neither Sullivan nor Willumstad acknowledged making any mistakes.