Thread: Big Insurer’s Spending Habits Disclosed

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October 8, 2008
Big Insurer’s Spending Habits Disclosed
By SHARON OTTERMAN
A day after questioning the compensation and spending at the bankrupt Lehman Brothers, lawmakers exploring the causes of the credit crisis were treated on Tuesday to examples of the spending habits at another troubled financial firm.

A week after the insurance giant, the American International Group, received an $85 billion federal bailout, its life insurance subsidiary, AIG General, held a weeklong retreat for its top sales agents at the exclusive St. Regis Resort in Monarch Beach, Calif. Expenses for the week, lawmakers were told, totaled $442,000, including $200,000 for hotel rooms, $150,000 for food and $23,000 in spa charges.

In addition, the former A.I.G. executive who led the London-based division whose implosion is largely blamed for the insurance giant’s downfall, Joseph J. Cassano, continues to receive $1 million a month from the company, on top of the $280 million he received in the last eight years.

And even after A.I.G. reported $5 billion in losses in the final quarter of 2007, its chief executive at the time, Martin J. Sullivan, argued before a compensation committee that executives should receive performance bonuses. He received $5 million.

“This unbridled greed, this callous abuse of trust of hard-working Americans’ savings is just so disgusting it is hard to put into words, and the anger level in America is coming, as it often has, at Wall Street," Representative Mark Souder, Republican of Indiana, said.
The disclosures came during a second day of Congressional hearings into the causes of the financial crisis roiling global markets, which led to the $700 billion bailout plan signed into law by President Bush last week. In language that echoed Monday’s hearing into the downfall of Lehman Brothers, lawmakers portrayed A.I.G. as a company in which irresponsible executives continued to reward themselves as the company’s fortunes fell.

While Lehman was an investment bank, and A.I.G., at its core, an insurance company, their abuses were fundamentally the same, Representative Henry A. Waxman, the chairman of the House Oversight and Government Reform Committee, said in his opening statement.

“In each case, their executives grew rich by taking on excessive risk,â€

Doesn't your heart just ache for these poor people?

OUTRAGEOUS!!! STAY POed AMERICAN.....VOTE OUT THOSE WHO INSIST WHO WE GIVE THIEVES and CROOKS our money!!! I AM LIVID!!!

They are at the spa while Americans they steal from are losing their homes!!