Search This Blog

Loading...

Tuesday, November 11, 2008

AIG and its orgy on your money from the bailout

If they HAD to have a conference, they could've had it at a Best Western! This is from Arizona Republic online.


AIG hosts $343,000 conference

117 comments by Craig Harris - Nov. 11, 2008 12:00 AM
The Arizona Republic

Days before American International Group received its latest government bailout on Monday, the troubled insurer hosted a $343,000 conference for independent financial planners at the Pointe Hilton Squaw Peak resort in Phoenix.

The company said sponsors picked up roughly 93 percent of the tab for the Nov. 5-7 conference, but the spending still drew the ire of a member of Congress and raised questions about how AIG should be operating when it is under such intense scrutiny.

The Phoenix conference was at least the second time since September the company was involved in a six-figure event at a resort. A spokesman Monday said the company has canceled more than 160 meetings or conferences in the past month.

AIG said it decided to host nearly 150 financial planners at the Pointe Hilton Squaw Peak event because of the valuable training they received and the revenue they produce.

"Our success in enlisting product sponsors to pay for the vast majority of conference costs, while charging financial planners a registration fee and for their travel, has resulted in minimal cost to AIG," Larry Roth, AIG's chief executive, said in a statement issued by the company.

The company also canceled an appearance by NFL broadcaster Terry Bradshaw, saying it wasn't a necessary expense even though a sponsor was paying for the appearance.

AIG said its total cost at the Phoenix resort, which offers guests access to a spa, fitness center and golf club, was $23,000. On Monday, AIG received a record amount for a private company when the government announced a newly enlarged $150 billion financial-rescue package that included $40 billion for partial ownership. The funding modifies an $85 million government loan obtained in September.

U.S. Rep. Elijah Cummings, D-Md., a member of the House Oversight and Government Reform Committee, said he was "shocked and disappointed" when he learned about the Phoenix conference.

"AIG is coming to the government claiming to be in critical condition and asking to be placed under intensive care, but they are still going out and partying and acting as healthy as ever," Cummings said in a statement. "It is even harder to sympathize when this company's executives continue to wade by luxury pools while the everyday American whose taxpayer dollars are being used to save the company are hard at work."

Monday's bailout, announced by the Federal Reserve and the Treasury Department, was taken as it became increasingly clear that an original financial lifeline thrown to AIG in September would be insufficient to stabilize the teetering company. Fed officials expressed confidence that the money would be repaid to taxpayers.

The government is buying preferred shares of AIG stock, giving the government an ownership stake. In turn, restrictions will be placed on executive compensation at the firm.

Marianne Jennings, a professor of legal and ethical studies in business at Arizona State University, said AIG should know better than to be associated with an expensive conference.

"The reality is they have new shareholders, and those shareholders are taxpayers who are struggling ...," Jennings said. "They can talk until they are blue in the face. But this will not fly, not in this economy and not in this bailout, with everyone cutting back."

New York-based AIG on Monday also said it lost $24.47 billion, or $9.05 per share in the third quarter, after a profit of $3.09 billion, or $1.19 per share, a year ago.

Besides insurance offerings, AIG provides asset-management services and airplane leases. Its myriad businesses also are linked to mutual funds, annuities and other retirement products.

The Associated Press contributed to this article.

No comments: