The media has uncovered yet another American International Group (AIG) frolic for executives at a resort — and efforts to conceal the event from the public (already outraged over past publicly financed parties for disgraced executives). AIG reportedly blocked any mention of its name on signs or even in conversations among resort employees.
The past controversy over AIG frolics did not prevent the company from holding $343,000 conference last week at the tony Pointe Hilton Squaw Peak resort in Arizona. AIG reportedly had any signs removed with its name to conceal the involvement and later insisted that sponsors picked up roughly 93% of the tab for the Nov. 5-7 conference. If you are wondering how executive could ruin a profitable company through bone-headed decisions, consider the steep learning curve for these executives in throwing events at resorts while they are begging for public money.
My favorite part of this story is the spin by our publicly sponsored spokesperson at AIG on why no signs were allowed to mention AIG: it was to “minimize signage costs.” Now, that is responsible business judgment. The $343,000 bill at the resort was modest because it did not include $5 worth of signs in the lobby. However, the company also appears to have saved on oral expressions. Like Lord Voldemort, employees were told not to even utter “AIG.” A hotel employee told the local ABC affiliate, “We can’t even say the word [AIG].”
A hotel employee told ABC15, “We can’t even say the word [AIG].”
The concealment efforts did not work. Media confronted the well feted executives at the airport, here.
For the full story, click here.
AIG is getting out of control.
Why on earth do they need to stay at fancy resorts for their “conferences” (if thats what they want to call them.)
What’s wrong with renting the big hall at the Holiday Inn and making employees share double bed rooms (not beds, just rooms)?
Now that would be cost effective. But for some reason AIG thinks it’s not good enough for them.
Shame on you JT. Welfare kings need relaxtion too!
Didn’t we just give additional billions to them within the last couple of days? This is a prime example why the government should not be involved in bailing out private concerns. There should be criminal charges filed against the management at AIG for fraud. They have accepted government bailout money with no intention of correcting their foolish practices.
Prison.
Soon.
Not a country club either.
General population.
For a long time.
This wasn’t a conference but a junket for independant agents to get them to sell AIG products. But that doesn’t alter the incredibly poor judgment of doing this at a time when they were being propped up by $150 billion of taxpayer money. It’s not like the agents were unaware of AIG’s existence, or needed to be taught about its products. This was the common industry practice of bribing/rewarding agents with junkets to get them to sell, sell, sell. The insurance biz has always been rife with paybacks to agents as a hidden commission.
Hank Greenberg would never have been so foolish as to play this game thinking that nobody would notice.
These executives do not believe in their own companies. How do they expect people to believe in them when they clearly do not? In a honorable business, executives put their own money and time on the line. They should be taking their hugh bonuses and plowing that money back into their companies. Instead they are content to run them into the ground while taking as much as they can, while they can get away with it. This is no way to run a business and it should offend even people from the WSJ editorial board.
Unless they put this money back into the company they should pay back every penny they have gotten from US taxpayers. Along with Buddha I think prison is warrented for fraud.
Maybe some intrepid people can make guerrilla signs to help save money at all their events: AIG-King of Fraud. AIG–bringing sleezy management to the World! etc.
Much more of this and I’m giving up Monday Night Football for an AK47 and some black pajamas.
What can’t or won’t the judicial and academic legal communities coalesce in an across-the-board condemnation of the unconscionable bailout fraud and malfeasance? There is more than hearsay evidence of financial abuse and misappropriation of public funds.
The first thought that comes to mind is that in large institutions and bureaucracies those who achieve leadership positions are often not the best available. The best politicians in these organizations generally become the leaders and in far too many instances they do not have the intelligence and foresight to provide proper management. This includes those CEO’s brought in from the outside, because at some point they also used their political skills to rise.
Given that large organizations reward political adeptness, with its concomitant necessary large egos, the organization is run as the CEO’s and/or Board Chairman’s kingdom. complete with royal perogatives and executive courtiers. The lifestyle becomes addictive and its excesses are rationalized as simply the way business is done. These leaders are clearly unable to see how some of their actions would be viewed from outside the organization and 30 years of faux conservative governance has only reinforced this tunnel vision. Hence AIG, vaguely sensed that they needed to be circumspect, but were unable to stifle their impulse to continue their “royal” lifestyle.
There is also a second salient parameter that has worked hand in hand with this notion of executive “royalty.” Those that responsibly run a business, or an organization are invested in the notion that their stewardship’s purpose is to continue the growth of the organization in a positive manner and to ensure that the organization will exist beyond their own tenure. When executives began to be primarily compensated by stock options, this sense of stewardship broke down and was replaced by naked greed. Reagan years anyone? The executive’s wealth began to be determined by the stock market price of their shares. If in the short run firng thousands of employees, thereby improving short term profits, caused the stock market to run up the share value these men became infinitely richer. That this might have a long-term deleterious effect on the organization became immaterial to these egomaniac’s because they were being vaulted into the upper echelons of the elite through the windfall of their stock options.
Clearly, as others have stated, AIG doesn’t have a clue. I can only assume that years of living within “royal” entitlement has blinded them to common sense business practice. To me this has played a major role in the decline of American business and our current fiscal crisis. I’m anything but an economist, but I regularly read Dean Baker, Paul Krugman, Robert Reich and Ravi Batra. They have been expressing like thoughts for years, my only small contribution to their impressive prescience is to try to round out the psychological basis.
Hank Paulson’s Bait n’ Switch Scheme….WSJ article:
Treasury Not Planning to Buy Bad Loans, Assets
http://online.wsj.com/article/SB122650321703420903.html#articleTabs%3Darticle
If nothing else, this is a cogent overview of the transformational “financial-rescue” package, or what I would prefer to call a financial ‘pig-in-a-poke’.
This whole thing stinks from the beginning. All of these people are BFF (by which I mean, best fucking friends). This deal started out as a way to privatize disaster to make more money for the BFFs, just as private contrators, oops, I mean, Global Stabilization Forces, have off Iraq and Katrina etc. Actually fixing the mess has never been part of the plan.
Mike, I thought you wrote a very good analysis of the “welfare kings” philosophy of entitlement. FFLEO, I don’t know why there isn’t more screaming, not to mention forthcoming indictments about this either!
AIG “financial-rescue”
U.S. and overseas banks are the windfall profiteers of the recent $150 billion bailout of AIG.
Now, U.S. banks are increasing their banking customers’ fees for the very taxpayers who are bailing them out! With more banking mergers likely, fees will further increase past these record levels.
Catch-22 financial “rescue”….
AIG reminds me of Prince Prospero and his buds in Poe’s classic, The Masque of the Red Death, sumptuously protecting themselves from the trouble outside the resort’s walls. The story opens:
“…But the Prince Prospero was happy and dauntless and sagacious. When his dominions were half depopulated, he summoned to his presence a thousand hale and light-hearted friends from among the knights and dames of his court, and with these retired to the deep seclusion of one of his castellated abbeys. This was an extensive and magnificent structure, the creation of the prince’s own eccentric yet august taste. A strong and lofty wall girdled it in. This wall had gates of iron. The courtiers, having entered, brought furnaces and massy hammers and welded the bolts. They resolved to leave means neither of ingress or egress to the sudden impulses of despair or of frenzy from within. The abbey was amply provisioned. With such precautions the courtiers might bid defiance to contagion. The external world could take care of itself. In the meantime it was folly to grieve, or to think. The prince had provided all the appliances of pleasure. There were buffoons, there were improvisatori, there were ballet-dancers, there were musicians, there was Beauty, there was wine. All these and security were within. Without was the “Red Death.”"
The story ends with the party-goers not as well protected from the danger as they thought and with Poe intoning: “And Darkness and Decay and the Red Death held illimitable dominion over all.”
There were buffoons indeed–then and now.
Troubled Asset Relief Program (TARP) or the $700 billion financial-rescue “plan”.
One commenter stated: “the very definition of a TARP is to cover something up!”
“But in a striking admission, Paulson said that buying up mortgage assets “is not the most effective way” to use government funding.
Purchasing these so-called “toxic” assets was once the cornerstone of the rescue plan for financial markets and was almost the entire focus of Congress when the package was being debated before its enactment.
But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock was a better use of the funds.”
Source: WSJ
FFLEO,
Loved the tarp! Cronyism on the way up. Cronyism on the way down.
Mespo,
Poe’s story is an apt characterization of the current financial scene. Whether Obama can break through the BS being laid down is still unknown. That is why the story fits so well. The only question is if the Prince and his minions are just the financial crew, or include those supposed to be governing. I get Obama’s urge to develop a consensus, but I’m not sure if in this situation indictments would better reflect justice and the needs of the people. FFLEO I wish you were on the case because a scam is definitely being run.
How bad have things become that Poe analogies track to the reality of how the government is (mal)functioning?
I’d say that’s pretty bad.
Look for Stephen King comparisons in days to come. I just can’t decide if it’s going to be “The Stand” or “‘Salem’s Lot”.
Buddah:
I vote “Needful Things.”
I vote, “Children of Men”.
These AIG guys are slow learners. Buddha was right that these guys need some time to themselves in some new striped uniforms.
Jill,
Not King, but good point. With the amount of synthetic hormones going into the water supply every day, it’s only a matter of time.
mespo,
Nice selection. Very apropos.
This interview with Gretchen Morgenson by Terry Gross is an excellent explanation of why AIG fell apart (as well as other companies). I think that any company that receives US taxpayer money should have to put up the sum total of 3 years past salary and total compensation (bonus, stock options etc. of the top 20 % of their executives into a fund, which they may not touch and will be put into TB to be returned to the taxpayers within 3 years. How they get that money, for example, suing current and past executives for malfeasance in office (certainly comes to mind!) is their business, but they have to get it. There’s a saying in the loan shark business: “break a turnip’s knees and it will bleed”.
http://www.npr.org/templates/story/story.php?storyId=96950757
Did someone say Bush’s Golden Parachute…
Buddha,
You guys are skipping over the master of American Horror between Poe and King. I think the current situation is well described as “Ultimate Chaos” ruled over by a “mad, blind, demon sultan.”
I always thought the idea of Azathoth was more chilling than that of Cthulu (and by extension IT).
Gynes,
But the real question to ask about the return of the Old Ones is, “Who will get eaten first?” Rove has always reminded me of the Deep Ones from “The Shadow Over Innsmouth”. Disgusting.
Forget Lovecraft? Nooo. Never, I just didn’t think anyone one here would have read him.
Never mind the 700 billion, it’s 2 trillion of our money going out to “entities” the govt. refuses to disclose. A FOIA claim has been made by Bloomberg news. If anyone understands the import of this please post. It sounds very bad.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aatlky_cH.tY&refer=home
Just heard this outrageous remark on Diame Rehm–”good news, now that the economy is tanking enlistment in the army is increasing” (quote not exact but close). The slime bucket who said this was either, 1. Tom
Gjelton of NPR or 2. Mike Hirsh of Newsweek. (I don’t have the transcript to know for certain.) Good to know the upper class is happy about new transcripts going over to die or be maimed in a false war because there’s no economic opportunity for them anywhere else.
This level of depravity is horrific.
Sorry,
I’m not certain where else to put this, but given the recent crap by cheneybush and the auto companies and the sleezy financial shenaigans by their BFFs I thought this might be of interest.
“Andrew Ross Sorkin, in his latest DealBook column, examines a mysterious $138 billion loan the Federal Reserve extended to Lehman Brothers shortly after the investment bank went under.
While that recently released documents on the Fed’s decision say the loan was made to help unwind Lehman in an orderly fashion, Mr. Sorkin notes that the argument made by the Fed and the Treasury for letting Lehman collapse was that they didn’t have the authority to lend any money to the bank.
So why, Mr. Sorkin asks, did the Fed agree to do after Lehman collapsed what it refused to do before Lehman went bankruptcy, sending shockwaves through the financial markets?”
I linked to this through the NYT and it’s quite sordid!