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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Wed Oct 15, 2008 8:52 pm Post subject: AIG lobbying to relax oversight rules: report |
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http://news.yahoo.com/s/nm/20081016/bs_nm/us_aig_1
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(Reuters) - Insurance giant American International Group Inc (AIG.N) is spending money to lobby states to soften new controls on the mortgage industry, the Wall Street Journal said.
When the U.S. government took control of failing mortgage titans Fannie Mae and Freddie Mac, it prohibited them from lobbying. But it hasn't banned the practice at AIG, a huge insurer that is still 20 percent-owned by public shareholders, the Journal said.
State regulators said AIG is working to ease some provisions in a new federal law, passed in July as part of a sweeping housing-industry rescue package, which establishes strict oversight of mortgage originators, the paper said.
The law requires originators to be licensed by states and to supply comprehensive information so that state regulators can track their activities, the Journal reported.
The new rules aim at holding originators accountable if they engage in improper or fraudulent lending of the kind that ultimately contributed to AIG's downfall, the paper said.
Calls to AIG seeking comment were not immediately returned.
The company, once the world's largest insurer, was bailed out by the U.S. central bank with an $85 billion cash lifeline last month after being crippled by losses on bad mortgage bets. The Federal Reserve has since expanded its assistance in a manner that could bring the total aid up to around $120 billion. |
This doesn't seem like a reasonable thing to ask for. |
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brento1138
Joined: 17 Nov 2004
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| Posted: Wed Oct 15, 2008 9:16 pm Post subject: Re: AIG lobbying to relax oversight rules: report |
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| Coming from the company that thinks spending aid money on a 400,000 dollar "retreat" is an OK thing to do! |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 15, 2008 9:24 pm Post subject: |
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| Companies have internal cultures that influence how they interact with customers, competitors and government/regulatory institutions (or so my strategy texts said). I think we are seeing that AIG has a destructive hubris deeply rooted in management. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 15, 2008 9:57 pm Post subject: |
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This is interesting:
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Cuomo Asks Recovery of Bonuses at A.I.G.
New York�s attorney general demanded on Wednesday that the American International Group recover bonuses and other payments from its former executives, lest he take formal action against the insurer.
�A.I.G.�s belief is that they had the party, and the taxpayers will have the hangover,� Andrew Cuomo, the attorney general, said.
Recently bailed out by the federal government, A.I.G. is afloat only because of billions of dollars in government loans. With more and more taxpayer money committed, Congress and others have expressed outrage over high pay in general at financial firms and in particular at some of the perks that have come to light at A.I.G.
The attorney general, Andrew M. Cuomo, made his demand in a letter to A.I.G.�s board, citing �unwarranted and outrageous expenditures� by the company as contrary to New York law. The letter, which described a lavish golf outing and an overseas hunting trip that cost nearly $100,000, follows other recent disclosures of excess by corporate America.
The threat against A.I.G., which Mr. Cuomo announced at a news conference on the street just a block away from the New York Stock Exchange and his office, seeks to recover multimillion-dollar payments to Martin Sullivan, A.I.G.�s former chief executive, and Joseph J. Cassano, who ran the unit blamed for the losses that pushed the company to the brink of collapse.
�A.I.G.�s belief is that they had the party, and the taxpayers will have the hangover,� Mr. Cuomo said, addressing a sidewalk throng of reporters, camera crews and tourists. He added that his office could bring civil charges if A.I.G. did not work to recover big bonuses paid to executives.
His actions are reminiscent of the sweeping attacks on Wall Street by Eliot Spitzer, who was the attorney general before his brief term as governor, which ended in scandal.
Public anger has grown the last few weeks over executive compensation. Lawmakers in Washington last week criticized the $442,000 that an A.I.G. subsidiary spent on a weeklong resort retreat for top sales staff, within days of receiving government aid. The Treasury Department, in the midst of engineering a multibillion-dollar bailout of the financial industry, has announced that it will limit compensation to top executives whose companies took advantage of federal aid.
�People are outraged that these large businesses have shafted the shareholders, that�s why were seeing this,� said Kenneth N. Klee, a law professor at the University of California, Los Angeles. �And rightly so.�
In his letter, Mr. Cuomo pointed to payments made even as A.I.G.�s losses were mounting.
�The board awarded its chief executive officer a cash bonus of over $5 million and a golden parachute worth $15 million,� Mr. Cuomo wrote. �Similarly, in February 2008, a top-ranking executive who was largely responsible for A.I.G.�s collapse was terminated, but still permitted by the board to keep $34 million in bonuses. This same individual apparently continued to receive $1 million a month from the company until recently.�
Mr. Cuomo was apparently referring to Mr. Sullivan, the former chief executive at A.I.G., and to Mr. Cassano, who ran A.I.G. Financial Products, the company unit that was heavily involved in the complex financial transactions that led to billions of dollars in losses.
An A.I.G. spokesman, Nick Ashooh, said the company had received Mr. Cuomo�s letter and �will of course fully cooperate with the attorney general�s office, and it will get the immediate attention of the board.�
Two weeks ago, long before Mr. Cuomo�s letter was sent, the company began reviewing all expenses and activities, Mr. Ashooh added.
Lawyers for Mr. Sullivan, who was ousted in June, and Mr. Cassano, who resigned in February, did not return calls on Wednesday. In his letter, Mr. Cuomo went on to cite golf and hunting trips that executives at A.I.G. took after the government extended an $85 billion line of credit to the insurance company, which has since obtained additional financing from the Federal Reserve Bank of New York.
A handful of A.I.G. officials flew to England on a private jet for a partridge hunt that reportedly cost about $90,000. The use of the plane cost about $17,000, according to a person familiar with Mr. Cuomo�s investigation.
Mr. Cuomo�s demand rests on a provision of New York law that allows creditors to challenge any payment by a company if the company did not get adequate value in exchange. In this case, the argument would be that the executives took millions of dollars in compensation and severance but did not provide service worth the money.
�Obviously, it�s a question of proof,� said Jim Cohen, a law professor at Fordham University. Lawyers for the attorney general, in the name of creditors of A.I.G. � say, the people of New York to whom the company may owe taxes � would try to convince a judge of how little executives� services were worth.
�It�s a difficult situation, because you�re going to have to get into what the market was,� Professor Klee said. He added that if Mr. Cuomo�s tactic worked, creditors might try to use it in other contexts to pursue highly paid executives, like those who worked at Lehman Brothers, now in bankruptcy proceedings.
�It�s not going to be easy litigation,� he said, �but it certainly could be brought.� |
http://www.nytimes.com/2008/10/16/business/16pay.html?_r=1&ref=business&oref=slogin
Should this be successful, former bankers from Lehman, Bear and current bankers at any firm touched by the bailout will be crapping in their pants.
I believe in capitalism, markets and liberalism. But if the American taxpayer is to be on the hook for several trillion in bailouts etc then these bonuses should be appropriated by the state and applied to total. I know one female trader from an American bank who received a Christmas bonus of 33 months salary. This was not her performance bonus, but the Christmas bonus. She earned low 6 figures at 28-27. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Wed Oct 15, 2008 10:06 pm Post subject: |
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| I'm not for a War on Wall Street, but the idea that officials of companies that get bailouts bearing some financial responsibility has the ring of justice. So, GO ANDREW CUOMO! |
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Jandar
Joined: 11 Jun 2008
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| Posted: Wed Oct 15, 2008 10:49 pm Post subject: |
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I say tar and feather ain't good enough for 'em.
Every executive at AIG should be brought before the people.
Can you imagine accepting an $85B bailout while sipping Margarita's poolside at a fancy California Resort.
The nerve. |
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Jandar
Joined: 11 Jun 2008
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 16, 2008 8:18 am Post subject: |
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AIG executives are incredible.
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AIG executives spent thousands during hunting trip
Oct 15th, 2008 | CHARLOTTE, N.C. -- A handful of top executives from American International Group Inc. spent thousands of dollars during a recent English hunting trip, even as the New York-based insurer asked for an additional $37.8 billion loan from the Federal Reserve.
The news comes as New York Attorney General Andrew Cuomo on Wednesday told the insurance giant to do away with golden parachutes for executives, golf outings and parties while taking government money to stay afloat.
Cuomo said he has the power under state business law to review and possibly rescind any inappropriate AIG spending as long as the Federal Reserve is propping up the huge insurer with almost $123 billion in loans announced since Sept. 16.
"This was an annual event for customers of the AIG property casualty insurance companies in the U.K. and Europe, and planned months before the Federal Reserve Bank of New York's loan to AIG," company spokesman Peter Tulupman said Wednesday morning.
In a prepared statement later in the day, the company said, "We will continue to take all measures necessary to ensure that these activities cease immediately. AIG's priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business."
AIG officials declined to say which AIG executives attended the trip, which reports have said racked up an $86,000 tab. News of the hunting trip surfaced just days after AIG received an additional $37.8 billion loan from the Federal Reserve, on top of a previous $85 billion emergency loan granted last month.
The company said last week it would stop "all non-essential conferences, meetings and activities that do not clearly maximize value and service given the current conditions."
Last month, and just days after the U.S. government stepped in to save AIG with a $85 billion taxpayer-funded loan, the company picked up a $440,000 tab for a week-long retreat at a posh California resort for top-performing insurance agents.
Lawmakers investigating AIG's meltdown said they were enraged that executives of AIG's main U.S. life insurance subsidiary spent a lavish amount on the retreat, complete with spa treatments, banquets and golf outings. Last week, White House Press Secretary Dana Perino called the event "despicable."
At that time, AIG issued a statement saying that the "business event" was planned months before the Sept. 16 bailout and that it was held for top-producing independent life insurance agents, not AIG employees. Of the 100 attendees, only 10 worked for the AIG unit hosting the event, it said.
The insurer said Chief Executive Edward Liddy sent a letter to Treasury Secretary Henry Paulson "clarifying the circumstances" of the event. In the letter, Liddy assured Paulson that AIG is "reevaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating."
The insurer then said it canceled a future California retreat that was to be held later this month.
Regarding the recent hunting trip, "We regret that this event was not canceled," Tulupman said Wednesday.
Shares of AIG fell 37 cents, or 13.2 percent, to $2.43 in trading Wednesday. |
I'm sounding more and more like a socialist these days, but zee government needs to step in a remove this entirety of the upper management. I'm thinking along the lines of Warren Buffet's shakedown of Solomon. |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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| Posted: Thu Oct 16, 2008 9:23 am Post subject: |
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Our tax dollars that were given to AIG are now being spent by AIG to lobby Congress... the money that wasn't spent on pedicures, anyway.  The only way I want my tax dollars spent on an AIG executive hunting trip is if Dick "Head" Cheney is hunting with them. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Thu Oct 16, 2008 1:25 pm Post subject: |
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This is eerily like Marie Antoinette's diamond necklace/cake stuff from the 18th Century. It just reeks of a sense of entitlement and a callous, arrogant disregard of the people who pay the bills. It is more than just biting the hand that feeds you, it's sticking a thumb in their eye.
Neither Joe Six-Pack nor Joe the Plumber is going to be happy when he hears stuff like that on the 6 o'clock news. It just fuels the anti-Wall Street sentiment and will have consequences. It doesn't matter if it is only one company doing it because of the impression it gives. |
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Jandar
Joined: 11 Jun 2008
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| Posted: Thu Oct 16, 2008 8:14 pm Post subject: |
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| Ya-ta Boy wrote: |
This is eerily like Marie Antoinette's diamond necklace/cake stuff from the 18th Century. It just reeks of a sense of entitlement and a callous, arrogant disregard of the people who pay the bills. It is more than just biting the hand that feeds you, it's sticking a thumb in their eye.
Neither Joe Six-Pack nor Joe the Plumber is going to be happy when he hears stuff like that on the 6 o'clock news. It just fuels the anti-Wall Street sentiment and will have consequences. It doesn't matter if it is only one company doing it because of the impression it gives. |
I kinda like your analogy.
I wouldn't mind putting Joe the Plumber and Joe SixPack in a room with some of those AIG executives for a couple of minutes. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 16, 2008 8:21 pm Post subject: |
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Joe the plumber isn't 1) named Joe 2) a plumber 3) earning more than 250k or 4) up on his taxes.
Just another piece of bullshit. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Thu Oct 16, 2008 8:28 pm Post subject: |
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| mises wrote: |
Joe the plumber isn't 1) named Joe 2) a plumber 3) earning more than 250k or 4) up on his taxes.
Just another piece of bullshit. |
1. It is his middle name
2. Yes he is
3. No one said he was. It was a hypothetical given by McCain.
4. True. He owes nearly $1,200 in local taxes |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Oct 16, 2008 8:30 pm Post subject: |
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| He goes by his middle name? Jim-Joe from Ohhaaaaiiiooo? He isn't a plumber. That is a reference to a professional certification. Like I can't just walk around lecturing people and call myself a professor or cutting people open and call myself a surgeon. It was not said but implied that he earned more than 250k. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Thu Oct 16, 2008 8:32 pm Post subject: |
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Yeah, guess you're right. Just read an article posted on another thread he isn't a licensed plumber. Good job McCain.  |
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