Waxman to Paulson: AIG Is Still Being Irresponsible
The House Oversight and Government Reform Committee just spent a five-hour hearing detailing how American International Group gave millions in compensation to executives even as the world’s largest insurance company was posting huge losses.
AIG executives even spent $443,000 for a weeklong retreat at the St. Regis Resort at Monarch Beach, Calif. after the Treasury Dept. rescued the company with an $85-billion bailout.
As the hearing drew to a close, Rep. Henry A. Waxman (D-Calif.), the committee chairman, began circulating a letter to Treasury Sec. Henry Paulson:
Today’ s hearing revealed that shortly after the bailout was signed, executives from AIG’ s major U.S. life insurance subsidiary, AIG American General, held a weeklong conference at an exclusive resort in California. The company spent nearly half a million dollars in a single week at this resort, including thousands o f dollars on catered banquets, golf outings and visits to the resort’s spa and salon.
The hearing also revealed that AIG continues to pay one million dollars a month to an official who helped bring about the company’ s downfall. This official, Joseph Cassano, is the former president of AIG’s Financial Products division, the unit that sold the credit default swaps that caused billions in losses for AIG. Mr. Cassano resigned from his position in March 2008. Yet AIG has inexplicably decided to pay Mr. Cassano up to $34 million in unvested bonuses. Even today, it is continuing to employ him as a “consultant” for one million dollars a month.
Secretary Paulson, this situation is unfair to taxpayers. AIG received $85 billion in taxpayer money, yet it continues to lavish its executives with undeserved payments and perquisites. We urge you to protect the taxpayers’ money and end this profligate spending.
Several committee members quickly signed off on Waxman’s letter, including Rep. Chris Shays (R-Conn.), who has been informally leading the Republican side in the probe into the financial crisis. The unity is notable as Republicans again spent much of today– as they did at a hearing yesterday on Lehman Bros. — arguing that Fannie Mae and Freddie Mac are the primary reason for the crisis. But all committee members seemed appalled at the behavior of AIG’s executives.