US Government bailing out Wall Street fat cat.

AIG execs splurge on pricey retreat after US$85b loan

08 October 2008 0942 hrs (SST)

WASHINGTON: AIG executives escaped to a pricey California beach resort to unwind just days after the insurance giant was rescued by an unprecedented US$85-billion US government loan, lawmakers said Tuesday.

"Less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation," Democratic Congressman Henry Waxman told the House Committee on Oversight and Government Reform.

The US Federal Reserve stepped in to save American International Group from imminent collapse on September 16, with a loan that gave the US government a stake of 79.9 per cent in the insurance behemoth in the deal.

"Less than one week later, AIG held a week-long retreat for company executives at the exclusive St. Regis resort in Monarch Beach, California," Waxman said.

Invoices showed that AIG paid the Pacific Ocean getaway resort more than US$440,000, Waxman told the committee on its second day of hearings on the Wall Street economic crisis.

The charges included close to US$200,000 for rooms - which cost between US$425 and US$1,200 per night - over US$150,000 for meals and US$23,000 in spa charges, he said. "Well, average Americans are suffering economically.

They're losing their jobs, their homes and their health insurance," Waxman said, "We'll ask whether any of this makes sense." Without the government loan, analysts had argued that an AIG collapse, fuelled by problems with complex derivatives known as credit default swaps, could trigger a wave of failures in the global financial system and deepen the credit crunch.

"AIG spent - listen to this one – US$23,000 at the hotel spa and another US$1,400 at the salon," said Democratic Congressman Elijah Cummings of Maryland.

"They were getting their manicures, their facials, their pedicures and their massages while the American people were footing the bill."

Cummings pointed out that AIG spend US$7,000 in green fees at the golf course and US$10,000 on bar tabs as he turned his questions on former AIG chief executive officers Robert Willumstad and Martin Sullivan.

"I do find it interesting that Mr. Willumstad knows nothing about it, but this came just a week after - after you left. Did you know that, Mr. Willumstad?" Cummings asked.

Willumstad answered: "I heard you say that, but I was totally unaware that there was any plan for any conference."

"And, Mr. Sullivan, I'm curious, what were your views on this?" Cummings asked.

"You know, obviously, I left the company many months earlier prior to Mr. Willumstad. But if I'd have seen bills like that, I can assure you, as the CEO, I would have been asking questions," Sullivan said.

Waxman noted that longtime former CEO of AIG, Maurice "Hank" Greenberg, "told the committee he is too ill to appear today to answer questions."

"Mr. Greenberg blames Mr. Sullivan and Mr. Willumstad for the downfall of AIG," Waxman noted.

"Many others think it is Mr. Greenberg who sowed the seeds that led to AIG's failure." Cummings later told CNN that revelations of the resort spree "upset my constituents, many of whom are losing their houses and losing money in the 401(k)s (retirement savings plans). They are upset and rightfully so."

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