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What can you say? Our elected representatives overwhelmingly approved a bailout that clearly the voters overwhelmingly rejected.
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@mike: Hard to choose when both President-elect Obama and whathisname-Republican-candidate-who-lost were in favor of the bailout.
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So how long do we let this go on before we lynch them?
@jasonof2000: Before you start tossing out the word \"lynch\" I strongly suggest that you spend a little time learning about it. Using the word \"lynch\" is sort of like saying \"let's send them to a concentration camp\". It has implications much beyond the act of hanging.
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Break up the company. Sell the assets to pay us taxpayers back.
(like that would ever happen....)
For a lot of business this is the cost of doing business. AIG has done some bad things, but this isn't one of them. The old saying that it takes money to make money is very true. If a company has to spend $1000 to make $2000 then so be it. It's no different than purchasing ad time on TV.
@ckaught78: They are claiming that it's a necessary incentive for their top performing employees...I have a better incentive idea: Do your fothermucking job or hit the road w/ no pay.
We don't give our pilots a bonus for not crash-landing....that's what their paycheck is for.
Fire 1 or 2 people as an example and the others will get the message. Dear god!
@ckaught78: But nobody really knows if it's actually making $2,000 back...they were hiding it...My guess is it's not really a required event. This is something they could have done at their office or at the office of another \"corporate sponsor\" for a 1/10th the cost.
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These people are affluence junkies. The media exposure took away their coke, so now they're smoking crack out of lightbulbs in the ladies bathroom.
@shorty63136: A tip of the hat to Fear and Loathing for the lighbulb. The ladies bathroom is from personal experience.
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If they were open and up-front about needing this, then maybe I could accept it, although the AIG execs only need to be in nice hotel conference rooms for impressing the \"independent advisers\"... let them stay at a nearby budget motel the rest of the day.
I want to see congress raise the stakes with proposed jail time for further behavior like this. If I tried to bilk $300k from the government, I don't think I'd be let off with a \"try better next time\".
I think from now on that ALL AIG seminars or any other trip paid in part or whole by the company needs a government accountant present to ensure proper use of the money. Fraud prevention should be job one against free spending AIG.
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@moeman1024: You realize that with the latest round of legislation about gifts from lobbyists things like this happened at a recent party in a hotel:
It was not called a party, instead an education seminar.
The educational talk was under one minute in length.
A full meal was not allowed, they weaseled out of it by not having tables and chairs. Instead food (like steak and lobster) was served by waiters with platter and the representatives ate standing-up.
Alcohol was limited by fl oz, so sweet strong wine and hard alcohol was served instead.
Depending on how many people there were this seems to be an okay amount to spend.
If the number is between 100 and 300 people that work out to between 1000 to 3400 a person.A hotel room at a confrence center is about $100-300 a night a 5 night stay will be around $500 to $1500 a person. Add in 20-40 per meal per person so 60-120 aday for 5 days is $300-600.
Not counting anything else just food and lodging you are already at $800-2100 a person.
Factor in the cost of renting a hall along with transportation and it may not be bad. Thatis ofcourse al ong as it isn't 60 people
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They should have done a teleconference for a fraction of the cost. The trips now are waste of [taxpayer] money.
You know how my company rewards their top salespeople? A paycheck. I'm sure there are plenty of people, either just out of college, or recently layed off, that can do the job just as well, and sure as hell would do it without the \"incentives\".
@mdoublej: lol what is your company called? i've never ever heard of a sales person working for a straight salary, well unless they were incredibly lazy and didn't sell anything... it's always a salary plus commission or a bonus depending on the exact role. frankly i can't image that your company's sales people are very good at what they do, because anyone who is good at what they do as a sales or marketing professional would want to get paid on performance.
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@mdoublej: You've obviously never worked a high end sales job in the insurance inudstry if you think that anyone can do it. It's a very demanding job that requires massive attention to personality, speech, detail, personal grooming, etc. You have to be just the right amount of pushy and friendly. You have to sell hard but not too hard. You have to befriend the clients. This isn't some Circuit City pimply faced teen whose main responsibility is to explain benefits. These people have to SELL. Most of these guys could sell ice to eskimos.
And yes, they can get paid for it and they do. But trips like this are outlined in their contracts that they sign most of the time, that if they're within a certain percentage of the top sellers, they get these trips.
Cutting these trips and having these top salesemen go work elsewhere is not going to help AIG get any better financially.
That being said...check JustThatGuy3's post above mine; this isn't for the independent salesmen, this is for possibly more important people.
@ohenry:
As long as I, a taxpayer, am footing the bill...I have this to say:
If there's some other non-AIG company that they can go work for, let them! The other company is obviously well enough managed that they can afford not to go a trillion in the hole. Survival of the fittest.
@mdoublej:
These aren't salespeople - they're independent businesses, and, in essence, AIG's customers. The investors who invest with these advisors are pretty much customers of the _advisors_, not AIG. If the advisor isn't happy with AIG, and isn't feeling the love, he can easily switch to another platform, and take the vast vast vast bulk of clients with him, since they really won't notice a difference beyond maybe having to fill out one form and seeing a different logo on their monthly statements.
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@mdoublej:
Precisely. Keep your junkets an give me cold, hard, cash.
People should be happy they farking have jobs at all. I can think of a few people I know of, with some math skills, that would happily take their jobs right now.
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This is why you don't give money without getting something in return, like shareholder status or accountancy oversight. Or just fucking nationalize AIG and call it a day. Stupid fence-sitter bureaucrats.
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The AIG spokesman said the meeting in Phoenix was for independent financial advisors and \"was the kind of thing we have to do to run our business.\"
And that's absolutely true.
Keep in mind that financial advisors with substantial client books typically have their firms by the balls. Those that interface directly with HNW and UHNW clients and maintain that book of business get tons of goodies - because if they didn't, they'll leaven and take their clients (the company's revenue base!) with them.
Taxpayers should know that the loss of revenue at AIG by losing these advisors and their business hurts them far more than pricey seminars. That's just the reality on the ground, folks - love them or hate them, advisors with big clients hold all the cards. Keep them happy or your business disappears.
@ADismalScience:
The AIG spokesman said the meeting in Phoenix was for independent financial advisors and \"was the kind of thing we have to do to run our business.\"
Once you start feeding at the public trough, you have an obligation to find other, less expensive ways to \"run your business\". The fact that your spending my money now makes it MY business.
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@ADismalScience: While I understand this business model, and even agree with it, it should not be beyond the common man (whos dollars these massive institutions NEEDED to survive) to request a little extra oversight. Or in other words, when my roommate borrows money from me for rent, then spends a chunk of it to take his parents (that bankroll him) out to dinner, I have a right to be upset about that. Perhaps he should have used that money to get out from under that financial thumb altogether. Perhaps rather than giving him that money I should have kicked him out and found a roommate that doesn't need his parents help at all.
@ADismalScience:
Oh come on now, that kind of logical thinking and understanding just isn't tolerated around here. AIG spent $300k and they should burn at the stake for it. Who cares if they need to maintain or, god forbid, try to expand their business. No, they took in money from the taxpayers and now they aren't allowed to spend any of it on anything that isn't 100% necessary to maintain the status quo. If those advisors would leave and take their revenue with them, well then they are just unamerican.
The only people that are outraged at this kind of behavior are those who simply don't understand what is necessary to run that kind of business. You need top talent (top advisors) to generate money. You don't get or retain that kind of talent at no cost. As one poster put it above, these costs seem pretty reasonable given the cost of a hotel room and food for a few days. I'm a \"Tax payer\" too and I would be more upset if AIG wasn't out trying to stir up/keep business in order to payback the loans they have taken. Remember, the tax payer is only screwed if AIG doesn't pay this stuff back. The money they got wasn't a grant, it was a loan. If they can't get their business going again, which involves retaining the people they were wining and dining at this event, they won't pay back the loans and the tax payer loses. Stop balking at the big dollar figures and start to realize that, as stated above, it does indeed take money to make money. The other way is very, very shortsighted.
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@Pylon83: They handle money so well that they don't need our money, right?? Wrong! The reason why they are fucked up is because of the same business model they keep running. They'll be asking for another bailout if they keep it up.
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@Pylon83: They can spend money to make money... but they need to be audited and account for every dollar. We the People are the ones who paid for it, after all.
Or we could take it out of the hands of private enterprise that has already shown itself to be irresponsible, but that's just crazy talk.
@Red_Flag:
Or the government could not balk at normal business expenses and not waste even more money on unnecessary oversight. This kind of spending, to the naked eye (or at least the naked idea with any business sense), is not suspect. Had they all brought their families, or had this been some sort of \"Executive\" retreat that was to reward AIG employees rather than generate business, that would be another story. But in this case, it's clearly a business generation/maintenance thing. Why should AIG have to spend more of the \"tax payer money\" to propose and justify this kind of conduct?
@Pylon83: Those execs sure loved the pool while the seminars were going on. Give me a break. They kept it a secret because they knew it was wrong.
@Pylon83: Why?
Because they've already shown that \"business generation/maintenance\" aren't all they're spending this money on. Have you already forgotten the hunting trip?
Let's not forget, to quote Atty. Gen. Cuomo: \"For example, in March 2008, ignoring the massive losses AIG was experiencing, the Board awarded its Chief Executive Officer a cash bonus of over $5 million and a golden parachute worth $15 million. Similarly, in February 2008, a top-ranking executive who was largely responsible for AIG'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.\"
CEO golden parachutes? Hunting trips? That's far above and beyond \"business generation/maintenance\".
@Red_Flag:
The CEO Bonus and Golden Parachute could easily be argued as business maintenance. If you can't see the argument that top talent costs money, than I'm not sure there is much point in continuing this argument. Granted, they may not have been the best decisions, but I don't think you can wholly take them out of the business maintenance category.
@Pylon83: It's good business to reward an executive with a golden parachute for failure? For losses? For all but destroying a company?
So many CEO's walk away from running a company into the ground, safely toting their millions that are contractually guaranteed whether they do well by the shareholders or not. That isn't business maintenance.
Top talent would be able to earn their bonuses, having them tied to the positive effect they've had on the value of the company's stock. These jokers haven't earned their keep.
@Red_Flag:
Top talent would be able to earn their bonuses, having them tied to the positive effect they've had on the value of the company's stock. These jokers haven't earned their keep.
That's another awesome press trick, by the way. Those bonuses are always stated as the potential value of options. Don't confuse them for cash payments - those dollar figures are very rarely what is actually received. You need a lot more information beyond the top-level figures to be so judgemental; look at a guy like Jimmy Cayne, who lost hundreds of millions when Bear tanked because most of his compensation was in the form of stocks and options. Oh, but he got a (worthless!) parachute made of worthless options!
@ADismalScience:
Well put. People also fail to consider that AIG wasn't necessarily driven into the ground solely by bad management, but at least to some extent has been a victim of an unexpectedly large influx of insurance payouts, a crumbling stock market and a frozen credit market. Don't take that as saying there is no blame at all for management, but I don't believe it can be put squarely and entirely upon their shoulders. There are plenty of well-managed companies out there right now that are struggling because of the economy that is falling down around them.
@ADismalScience: So... CEO 1 runs company into ground. His stock options are worthless. CEO 2 fixes the company, makes it profitable. So, his stock options are worth millions. Therefore... wouldn't CEO 1 still be rewarded for his successor's work if he's still holding the options, right? Or am I missing some sort of punishment that was doled out?
Not that the compensation is entirely stock options, though. According to ABC, the recently exited CEO of AIG, Martin Sullivan, received $10,200,000 in cash salary, $5,647,439 in stock/other for 2007. Not a bad haul.
@Red_Flag:
In the scenario you describe, the answer is \"it depends.\" Largely on the terms of the execute of the options, like their strike price and other aspects of the contract. Every comp package is different, and I agree that several of them have been extravagant.
Marty Sullivan did receive a large comp for 2007, largely based on a contract he signed that was approved by the board based on his previous successes selling the company into credit default swap Hell. As a consequence of the federal takeover he lost a 19M \"golden parachute\":
@ADismalScience: And I think the agreement Cuomo hammered out with AIG, cutting one of those parachute strings until taxpayers were repaid is exactly the right response. I'll take it a step further and say that should be one of the basic conditions for any firm accepting bailout money (and the list of executives affected should be acceptably broad).
@Pylon83: Uh, would this be the same top talent that got AIG to the position of needing massive infusions of tax payer money to survive? Or is there some other top talent that we don't know about?
@Red_Flag: As an addendum to \"why?\"... because they're spending OUR money, not theirs. Or would you mind lending me your life savings and let me spend it as I see fit, with only a verbal agreement that theoretically I should be using it to build a profitable business?
@Red_Flag: Public enterprise is no better by definition. Each individual case and group should be examined to see which pairings are the most beneficial. Frequently public holdings are just mired in argument, indecision, and petty power plays. Just like private holdings.
So much for the \"independence\" of financial advisers accepting this freeby.
This is a similar conflict of interest we see in medicine with physicians and other providers accepting junkets and benefits from suppliers (pharmaceutical companies, etc).
Dear US Treasury, I am a Nigerian price in need of help. My father has... bla bla bla. Seriously, isn't this almost the same scam? Let's just give AIG more money. At this point don't tax payers own enough of AIG that we can claim them a government entity like the post office? The government should shut it down, sell off all their business for value and get the money back.
Wait I get it. They are trying to enter into the World Records as the biggest waster of money.
@narq:
This $343,000 was an investment in potential revenue for AIG. You're not going to make any bailout money back if you don't let the business operate. AIG can substantiate the value of these seminars in attracting advisors and generating revenue.
Unfortunately, that argument will be completely lost in this populist din about the \"waste.\"
So... when do you think we can expect AIG to start paying back the bailout money then?
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@ADismalScience: I think you've got a point, but I think TMurphy upthread has a point too--it's really advantageous for them to be prominently economizing on their own conditions even as they provide the usual outlay on hospitality for clients.
It is a little tough--if they're looking ragged on the client front, they'll lose business, but if they're looking like business as usual across the board, it's going to kill them in public profile terms--but it's hardly undoable, and it hasn't looked like they're trying.
@ADismalScience: If they're going to be so secretive about it, I think they deserve to be hounded over this, justified or not. If it is a real business need, then say so and move on. The government's track record on this bailout doesn't indicate they'd deny this cost given the need. If they aren't transparent about this, what else will they be hiding?
Why aren't we just letting them implode already? Giving them money to prop up our economy seems to me like an incredibly bad idea, since they're going to waste it all anyway. My momma always taught me, if you don't have money, don't buy it. Apparently this lesson was lost on AIG.
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...well poop.
@crazyasianman: my sentiments exactly. Arguing is pointless, because some some will defend every AIG expenditure, even if it means funneling an infinite amount of money from those who can barely afford to feed their families.
That's a good populist like that just doesn't hold water. The top 50% of wage earners pay upwards of 95% of America's income taxes, and if the top 50% of wage earners can't feed their families it's because of poor decision-making. America is not a country where relatively large amounts of people starve, or even so much as go hungry. It simply isn't, recession be damned.
You can't reasonably draw a straight line from a tax contribution to failing banks and populist suffering.
@ADismalScience: Uh... yeah, right. Lichtenstein ruing any bells? How about KMG? Ever hear of \"blips\". How about that long list of F-500 companies that haven't paid any taxes in years?
Of all the lame elitist corporate talking points, that's probably the lamest.
And why is the survival of AIG in the same form that had them standing there with their hands out in the first place supposed to be some kind of antional priority?
Let them run their business any way they want... just let them do it with their own money. That's all anybody is saying here.
Well at least my tax dollars aren't paying for it.
/Wait, they are?
A good analogy for these types of seminars - catalogues. Catalogue mailings are an up-front expense used to draw retail business. Not every catalogue produces sales, but substantially enough of them do to provoke continuing mailings.
These seminars are essentially the same thing. They're catalogue mailings for advisors with well-heeled, revenue-generating clients. Sure, not all of the advisors sign up with the firm, but substantially enough of them do to justify the expense. There may be an argument that the up-front expenses would be lower if the seminar was less opulent, but the bottom line is that the sales pitch to these advisors to \"join the fold\" is a lot easier when \"the fold\" gives you a long spa retreat.
@ADismalScience: Good analogy.
@Red_Flag: They probably did, just not to the gov't. If you are suggesting that they should need to, try writing a proposal for your next paperclip or staple. That's about the same funding:cost ratio.
@valarmorghulis: The office manager submits expense reports for all the paperclips and staples that need to be purchased for the operating time. Expenses have to be approved, yes even for staples.
AIG is too busy to say, \"We will hold X events as part of our business operations, they will cost $Y for reasons {Z}\"? Or are you saying they should be accountable to no one?
@Red_Flag:
They should be - and are - accountable to shareholders, which include the Federal Government at this point. We can argue about how effectively boards have controlled risk or cost, and you'd probably win that debate, but that's how it's supposed to work.
But you don't want every \"paperclip,\" as you put it, going through the public opinion echo chamber. That's why they tried to keep it secret. This is a cost of doing business in the financial sector that your average taxpayer would have trouble understanding - they'd feel ripped off. It's all big numbers and opulence and aren't those MY TAX DOLLARS!!! being SET ON FIRE!!! by those GREEDY THUGS!!! When in reality \"setting those dollars on fire\" to bring in new business is AIG's only way out from under that pile of bad paper.
@ADismalScience: This is a cost of doing business in the financial sector that your average taxpayer would have trouble understanding
See, to me this is translated as, \"oh noes! we have to make sure they are able to provide steak dinners and strippers so we can keep the economy afloat.\" Because clearly figureheads (\"talent??\") of new and current business lack the ability to do without all the extras, not unlike how businesspeople are portrayed as animals on those old Kids in the Hall skits.
@cf27: Why should they have to \"submit proposals\" (and who should they be submitted to)? They are an independent company.
Independent? Like, as in the ability to survive without my tax dollars?
@richcreamerybutter: \"Independent? Like, as in the ability to survive without my tax dollars?\"
My nomination for quote of the day, there.
See, to me this is translated as, \"oh noes! we have to make sure they are able to provide steak dinners and strippers so we can keep the economy afloat.\" Because clearly figureheads (\"talent??\") of new and current business lack the ability to do without all the extras, not unlike how businesspeople are portrayed as animals on those old Kids in the Hall skits.
Ah! Maybe I can correct that fundamental problem. This seminar's target was not existing employees or executives - this was for \"independent\" financial advisors. It was an effort intended to impress upon those advisor's AIG's attractive aspects as a backoffice and sales support structure, an attempt to convince those advisors to bring themselves and their client bases to the firm. This is an exercise intended to increase revenue to help pay back the loan taxpayers have given AIG, not some charnel pit for your funds.
@ADismalScience: I want to argue, but you make a very fair and rational point. I'd still feel better if -someone- was overseeing the whole mess, but I do see where you're coming from.
/tips hat
(I'd expect the Feds to be fully treated like a shareholder and get all the expense reports and other documentation that the others get.)
As far as, say, golden parachutes go -- now that is a wholly different matter. But this... well, I guess I can pull that voodoo doll out of the fireplace.
@Red_Flag: We have no reason to believe AIG intends to hide this expense from its auditors or the government, just from reactionary media stories that wouldn't give them a fair shake on what this actually is.
As a taxpayer, I expect AIG to be moving towards selling its assets at the highest possible price to help to repay the loan.
In turn, I expect AIG to continue to make all efforts to attract new business from independent advisors and insurance agents. There is nothing wrong with spending $300,000 to reward or to attract an independent advisor who could bring tens of millions of profits to an AIG subsidiary.
We need to look at the big picture. If we prevent AIG from attracting business, we are reducing the value of their assets and hurting our chances, as taxpayers, of being paid back in full.
@mentir: Fair enough. Just so long as those expenditures are disclosed and audited in a reasonable timeframe.
@ADismalScience: Looked like those execs were doing some serious business at the pool while the seminars were going on.
@papahoth:
It's a seminar at a spa. Yes, some of the targeted advisors on going to be caught on camera by the pool. That's kind of the point of having it at a place with a pool. You can probably also find cases of them receiving massages, or eating dinner! They also probably skipped out to use the restroom or call their wives - it's a junket. AIG is marketing itself to advisors with big books of business, and the goal is to bring a few to the company.
To understand this, you need to get over the dollar figure and understand the business a little better. I can get why people get mad at this, but it's largely because it's inadequately or lazily explained. Financials spend this money on these events to make money.
@ADismalScience: How on Earth do you \"adequately\" explain this concept to a laid-off construction worker or home health care worker whose tax dollars are funding these seminars? Are they supposed to be understanding of spa massages while clipping every last coupon in the Sunday paper supplement?
I don't care what a private company does in order to woo new business or keep existing accounts, as long as they use their own money. In this case, if they DID receive public funding, they owe the rest of us a long look at their books.
AIG's expenses are fully disclosed in quarterly statements as required by law. But like I said, subjecting every last cost/benefit decision to the court of public opinion is an easy way to destroy any residual value in AIG's assets. Cutting off your nose to spite your face seems like the most accurate description of such an activity.
As to explaining that to \"taxpayers\" like you mention, you can't! That's why populism is so very dangerous. I understand that everyone is very angry right now given all the fear and suffering in this economy, but there's actually nothing wrong with this. I'd be angrier if they weren't trying to earn anything on my tax investments.
@ADismalScience: And they can't submit proposals on these things justifying it? If they felt it was so justified, they wouldn't try to hide who was shelling out for it.
@Red_Flag:
Because they aren't expecting a fair shake from the media or opportunist politicians. Bottom line.
@ADismalScience: Then somebody stupid is writing their bottom line, and that's going to suggest that they're a problematic investment. Sure, some of what happened wasn't their management's fault, but some of it was, and they've made some foolish calls since then, and this is one of them. Not the hosting of the usual clients, but the notion that what they've learned from the kerfuffle over previous junkets is that the problem was that people found out.
The difference between a problematic expenditure and an acceptable one isn't whether or not the public knows about it. They need to be prepared at this point for their every move to be reported, and to decide how to get control of the story rather than playing defense or, worse, pretending they're not doing stuff.
They're not still stupid for hosting a seminar, they're still stupid for handling it in a way that suggests they're still permeated with cluelessness.
@Red_Flag: They're hiding it because if they didn't they would get hammered, regardless of how much business sense it makes.
Why should they have to \"submit proposals\" (and who should they be submitted to)? They are an independent company. If the US government doesn't want AIG to do certain things with the money, then the US government has the power to condition its money on AIG not doing those things. Loan agreement always have a laundry list of covenants in it.
This is an excellent example of why nationalizing companies is a horrible idea -- the people who are best equipped to make decisions about what's good for the business are inside the business, not Congress or the press. Sure, AIG's involvement in CDSs was a huge error, which has resulted in over $100B of debt. But the Government's track record is far worse: over $6T in debt.
@cf27: I am of the opinion that a private company is no longer a private company when it accepts a bailout. Adam Smith would dictate these companies die a natural death. By giving them public money, they should be saddled with restrictions on what they can and cannot use the money for, and I, for one, am extremely disappointed (though not surprised) that no restrictions were instituted in the first place.
@Red_Flag: They were never a private company. They were a public company something management in this country has forgotten means shareholder owned.
@Red_Flag: They already got bad press for doing basically the same thing a few months ago. So it doesn't surprise me that they're trying to hide it this time around.
@bonzombiekitty: Just bad publicity? So why did they kowtow to Cuomo? Publicity, or thinking that they were about to get nipped for something they didn't have the right to do?
What bothers me the most is the fact that, according to the article, AIG was trying to hide the event from the public/gov't/MIB. Is it so much to ask for some basic level of accountability? I dunno, maybe an audit or something?
@Red_Flag: They weren't trying to hide it from the government so much as the idiots who make up the press.
When the press found out, they would hopelessly distort this for the same reason AIG is holding it, to make money.
The reason the press in not a bastion of fair play and rationality is because they know that the average American is an idiot who would rather watch some sensationalist crap about evil corporations throughout away taxpayer money, than hear that a company held a perfectly regular junket designed to attract clients and generate revenue for the aforementioned company.
This is just another part of a normal business routine. Something the average American is not going to understand. Thats why they tried to keep the lid on it.
Just remember, the people you are calling idiots are the one's who are getting your money, so who's really got who by the balls ?
@310Drew:
Exactly. The reason they \"hid\" it was probably because Joe the Plumber doesn't understand how their business works, and AIG doesn't want to take a ton of heat in the media and subsequently from the uninformed public for conducting their business.
@Pylon83: well if that is true, then they are too god damn stupid to continue in their positions. Any moron should know it would not stay a secret and then look much worse. All you AIG apologists sicken me. These people are clowns that ran the shareholder's company into a garbage pile, took big salaries to do it and still show that they are morons and why they should be removed with extreme prejudice.
@Pylon83:
Most people just know to show up from 9-5 and want a paycheck on Friday. The understanding of how a business actually runs ends there.
@310Drew: Yah, all business are really run on the idea of corporate welfare, why can't Joe the Plumber understand that his taxes need to be hiked so we can save private enterprise from their own mistakes! What does he think this is, a free market?
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Hey relax guys, they said that they are taking their commitment to aggressively manage meeting costs VERY SERIOUSLY.
Good enough for me.
/not really
Apparently they can't have these meeting on conference phones like the rest of us. Seriously, Eff these guys. Let AIG fail, I'm sick of reading these stories.
Can you say webinar!!!!!
I agree with business expenses as required. However, as many notice and say, don't try to keep it a frikkin secret!! Man, there is corporate BS, which got them where they are, then there's plain out manure. It smells the same, but manure has a purpose. The problem is with so much S#!T going around, you can't tell the difference anymore. However, nobody would notice had the corporate a$$#@!e flushed the toilet the right way. Now the government plumbers are helping AIG figure out it's head from it's a$$.
These insurance pigs are really p*ssing me off.
The next time you want to meet with your advisors, porkers, try holding the meeting in Newark!
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Um, we have given them billions of dollars, and people here think 300K matters?
@FatLynn: I think it's the principle of accountability that's sticking in everybody's craw.
Specifically, they're using taxpayer money (at least in part) to run these seminars, and are apparently trying to disguise the fact that they're doing so. Moreover, a lack of accountability is a large part of what got them into this situation in the first place. Many people are extremely frustrated to see their tax dollars going towards letting executives play the same old song and dance that got them into trouble, without any real oversight.
I understand that the insurance companies have to keep their advisors happy so they will continue to sell their portfolio, but why do they have to keep having these retreats? When I worked in sales, the thing that made me want to push products was what the commission rate is and who gave me the best deal.
Here's and idea.....slash the salaries of the AIG managers who are getting paid like some government run pyramid scheme and roll that money into the commision at risk pot. Up the ante for sales and generate volume from your advisors being incented to sale for something tangible......extra zeroes on your commission check.
Sure a day spa trip is nice, but I'd rather keep my lights on at home.
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@TristanPolecat: I have to believe that MOST people would agree, in this economy. I am grateful to have a job at all.
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I also read that banks can use part of their payouts from the bailout to pay dividends to their shareholders (50%?) instead of using it to free up loans.
AIG...STOP SPENDING MY FREAKING MONEY
If you guys and the media won't allow them to do regular business, we should have just shut them down in the first place and not wasted taxpayer money.
Forcing them to change their way of business is going to hurt everyone more than not. You can't just tell them not to spend any money in the function of a normal business!
@tazzy531: \"Business as usual\" put them at risk for bankrupcy. I agree they need to do business, but they need to step up to the plate and do business to the next level, not as usual. As usual failed once before and we will bankroll another failure if they don't LEARN to do business right in today's world.
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The business as usual that put them at risk wasn't running seminars for salespeople who sell their product. It was underwriting debt swaps without an understanding of the likelihood of them failing and having to pay out.
From what I understand from the last conference, the part of AIG that underwrote the debt swaps and the part that sells insurance/investments and holds these seminars are two completely different groups, and the second one is quite profitable - so it sounds like they are doing something right.
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I've been to a few big conventions and trade shows. Sometimes millions get spent on a single luncheon for 600 people -- $40 goodie bag, glad handing celebs, and all. I'll bite that it's the cost of doing business.
But why don't we see some headlines that go the other way with it as well? \"Execs turn in company leased Mercedes and drive Ford Focuses instead\", or \"AIG reduces its number of corporate owned apartments and condos by 2/3\", or \"Board of directors crack open cans of Spam and packages of Wonder Bread for Proxy luncheon.\" You get the idea.
People are ticked off because we don't see them going to great measures to economize when it was them and their cronies who helped to get the world into this economic mess.
Question - If we bail out GM & Ford will they still be allowed their huge marketing spend? Will taxpayers balk at a Superbowl brought to you by the New GM?
I see a lot of disdain for those of us who didn't attend business school, and how supposedly \"ignorant\" we are in terms of how corporations operate. I actually get the impression some of you see them as a protected class, and despite the fact we ARE paying for their bailout, we should not question the excesses involved in their day-to-day operations.
We're not talking about brain surgeons, firefighters, or police. They are not saving lives. I think some of you have lost perspective on the actual value of an occupation.
AIG will not wither and die if they have to conduct meetings via teleconferencing, and insist upon well liquor for the open bar.
@richcreamerybutter: Basically, ADS is saying this particular conference/seminar is an investment. I (reluctantly) agree on that point, so long as there is adequate general oversight to make sure that these and any future shindigs are actually valid investments and not meaningless wastes of capital.
@Red_Flag: I've always seen a company's accounting department handling oversight quite well. I've never seen a company that didn't have bean counters ruining the party so I would just doubt they're getting by with blowing money on trips to Disneyworld at this point. None of them are going to want to be on the receiving end of that shit storm.
@Red_Flag: Investing is essentially gambling. There is no guarantee these tax dollars will result in any profit that would eventually trickle down and benefit them years from now. Not only that, but some believe they should not be subject to even qualified third party supervision.
When a dollar that can be used to feed your family is used for fancy wooing of hopeful clients, their outrage is completely understandable. You want to see a concrete return on your investment, or at the very least have a say in the process. Nebulous explanations claiming it's \"perspective producers of AIG revenue, that need to be convinced to join the firm,\" (along with other \"business as usual\" reasoning) are not very reassuring to those collecting an unemployment check barely covering their rent.
I may not have attended Stern, but I do know that investors (in this case, taxpayers) do indeed like to see a thorough business plan. That's not too much to ask in this case.
Not to be disdainful, but you seem to be ignoring perfectly reasonable descriptions that would alter some of the statements you make. For example:
AIG will not wither and die if they have to conduct meetings via teleconferencing, and insist upon well liquor for the open bar.
I'll say it until I'm blue in the face - this was not for AIG executives. This is for perspective producers of AIG revenue, that need to be convinced to join the firm. The expenditure of 343K on this seminar was intended to drum up business, not provide cushy perks.
I actually get the impression some of you see them as a protected class, and despite the fact we ARE paying for their bailout, we should not question the excesses involved in their day-to-day operations.
As for this - feel free to question! But listen when the answer may run counter with your pre-conclusion that this event was excessive or wrongheaded.
@ADismalScience: This is for perspective producers of AIG revenue, that need to be convinced to join the firm.
Also, this can be accomplished as expeditiously with Smirnoff as Grey Goose.
@ADismalScience: Again, I have no problem with charming the panties off of potential clients.
Let's say I maxed out my credit cards on really expensive equipment for my restaurant, yet failed to hire a competent chef or crew. Would you willingly give me money to wine and dine several new potential head chefs on lavish vacations if I wanted to resuscitate my business (hey, I have the potential to employ 100 people!)? Hell no.
If you did decide to risk it, you would want to see where every penny was going.
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Burn in hell AIG.
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Let them fail already!
My company is a direct competitor to AIG...and yes we've received some bailout money too. We do the same thing, have conferences for our top reps for all the reasons mentioned...because it makes good buiness sense. The difference is, we canceled the remaining ones for the year because of the economic climate and likely will cancel others next year. The reps understood why and aren't running out the door, they read the papers too.
We figure if they are going to bail out on us for something as petty as canceling a conference, they probably aren't worth the retention effort and expense anyway....let the be AIG's or someone else's headache.
Taxpayer money will not solve the credit problems in this country. More government over site is a waste of time and money, too. Why do the leaders of AIG continue to waste taxpayer money? Because nobody has the stones to stop them.
You know, I don't really give a shit about the \"cost of doing business\". You don't get to keep using the excuse of the normal way of doing business when your business is in the toilet and you're using my money. Let them fail.
@aftercancer: But here lies an important point. The part of AIG that held this meeting and the one a couple months ago, are very profitable. They are not the part of the company that bankrupted AIG (that was one part of the company). Business as usual for this is a good thing, as it has proven profitability. Changing tactics is actually a bigger risk.
Companies like AIG are very complex and made up of a bunch of wholly owned subsidiaries. If a subsidiary is very profitable, they're not going to want to risk the profitability of that subsidiary by drastically changing things around when there's financial problems.
My company is a fully owned subsidiary of a much larger company, we'll call Media Inc. My company is profitable. Let's say that Media Inc also owns the HSS channel. HSS does something horrible and loses Media billions of dollars to the point that the government lends Media Inc money to stay afloat. Media Inc is not going to want to change the way my company does business too much because we have proven profitability. The money my company makes Media Inc is going to go, in part to pay back the loan. If they had reason to think we may NOT be profitable, then they have good reason to change things around. But if they're getting $1.5 back for every $1 they give us, why should they bother changing things?
@aftercancer: AIG's \"cost of doing business\" is starting to sound suspiciously like Sarah Palin's wardrobe controversy. The problem with the traditional approach to doing business is that they fail to research equally appealing incentives that can cost much less.
For instance, how about renting a small organic neighborhood bistro for a small party as opposed to laying out $$$ on spas and steakhouses? In Palin's case, she could have easily acquired a gorgeous wardrobe from smaller designers (or even reasonable dept. stores) for a fraction of the cost.
It's out of pure laziness we can't come up with alternative \"incentives.\"
This is why AIG tried to keep this out of the news. The last thing financial companies is armchair \"taxpayer CEO's\" trying to tell them how to do this business. Yes, those same foolish executives underwrote all that debt. But that doesn't mean they don't know how to attract financial advisors to their firm, and Joe Taxpayer is in no position to make daily business decisions like that.
Sorry, you just aren't equipped to make this call - and no company can operate with that level of second guessing, be it McDonald's or Goldman Sachs. I understand everyone feels entitled to make those decisions now that they've contributed 50-100 dollars to AIG's balance sheet, but that doesn't mean you know how to run a Fortune 500 company better than the CEO of AIG.
I am aware that such a comment will arouse some of you given how much these supposed geniuses have lost in this market, but trusting these guys is a better option than polling the public on every single cost decision AIG makes. It's a bowl of shit, but it's a bowl you're going to have to eat.
And I'm really not trying to be disrespectful here or anything, but isn't it somewhat silly? What makes the average American think that he or she can run a Fortune 500 country as large and complex as AIG? I understand where the frustration and anger are coming from, I really do, but I don't understand how being frustrated and angry makes you more or less capable of running a financial firm.
That IS NOT meant to be snooty. It's just fact! I can't run one either, and I know this stuff more than the average layperson.
@ADismalScience: Sorry, you just aren't equipped to make this call - and no company can operate with that level of second guessing, be it McDonald's or Goldman Sachs.
So Josephine Taxpayer isn't qualified in determining whether it's essential to keep a potential client happy with a night at Smith & Wollensky (in my experience, overpriced for the product) as opposed to making do with a box of Omaha Steaks? What if she knows of a place that serves superior meat for a fraction of the price? Are you implying it's not the quality of the gift, but the status attached to the thought? (If so, we're in worse shape than I thought.)
As an unapologetic armchair taxpayer CEO, I respectfully disagree. Catering to the arbitrary, fickle whims of potential clients with taxpayer dollars is unpalatable to most people, for good reason. If your business is failing, perhaps you should throw in the towel and leave the service to more qualified companies.
And let's say they did take their business elsewhere...to a company that didn't run itself into the ground?
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$300,000? That's it? Seriously?
And why is the press holding these companies more accountable (if you'll pardon the pun) than they are our own government, who is spending trillions upon trillions of dollars every year?
Furthermore, why should we rescue these companies if we are going to prevent them from spending money in order to make it? AIG is in the SERVICE industry, after all.
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Please deduct those seminars from those reps pay! If a friggin seminar costs 300K, then it's VERY bad planning.
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I keep seeing people posting how this is needed and \"arm charm Ceo's\"
They should have never have been bailed out. There is no need to give these institutions money. I don't care what anybody here will say about what if's. Bottom line we are not socialists we are free market Capitalists. If your business fails the end. I don't care how many insured loans they held or how many banks felt the pressure of the subprime meltdown. Bottom line is they messed up, not me.
We have no way of paying for any of these companies yet we loaned them money.
Now AIG is \"swooning\" investors? listen, I know you got to spend money to make money, but spending a quarter of a million dollars is excessive in any company. I would be ok with 10k. A few executives a few nights of number crunching and swooning, but 343k? That's where we need to say, no.
And when our Tax dollars (granted theirs as well) go into this company, we all should have a say through voting. That's how these horrible socialist bail outs should have been formulated.
But instead we have no oversight and we hear of other companies begging to get their noses in the trough.
We need a serious overhaul and your Savoir Obama isn't it, he'll throw a few more band aids on our issues it'll look great for the next few years, but eventually somebody is going to have to stop the bleeding of tax payer and government money.
Why am I reminded of little children who sneak candy and then try to hide the wrappers?
Only difference is that you can spank the kids and they *might* learn a lesson.
gotomeeting.com FTW
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Isn't AIG supposed to be breaking itself up into little pieces and selling itself off to pay us back? Why aren't we hearing that this is happening? Instead, it's just shady, incompetent business as usual over at AIG.
@razremytuxbuddy: The shady and incompetent part was trying hide the junket. The junket is part of doing business, but when you hide it, it looks like you're doing something you aren't supposed to be doing.
They shouldn't have done that, but I can understand why they tried to.
@razremytuxbuddy: A guy at another forum I post at works for AIG, he said that's not going to be completed until next year and the part of AIG he works for is indeed in the early stages of being sold off.
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Why is AIG looking for new customers? And who are the idiots that are going to AIG for insurance?!
You know what, AIG? If you really think this event was valid, then why did you try to hide it? If you think you can justify it, then be open and above-board about it. If you feel you had to conceal your presence, you knew it wasn't right. You could have accomplished the same business at your offices, with out-of-town participants staying at a functional - not luxurious - hotel nearby. Not as posh and comfortable as a luxury resort, of course, but no need to slink around and hide signs with your company's name on them.
@clickable: They tried to hide it because they got a lot of flak from the public when the same thing happened a couple months ago. It's a valid expense, but it's hard to convince the general public of that.
I work too hard to understand why a failed company keeps spending our tax dollars at a spa.
@postnocomments: They're not spending it on themselves. They're spending it on people who will direct business towards them. It's a valid expense. Opulent? Yes. But that's how sales work at the level.
It's an investment. They're spending $300k+ on stuff like this because it will help keep (or add) much, much more than $300k worth of business.
Maybe we should have just let the market correct itself. It would have sucked for a few years (it probably is going to anyway after the bailout), but it sure would have made the remaining companies a bit leaner and tougher. Instead of what we have now...
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Dissolve the board of directors and sell them to the highest bidder
@ilovemom: You mean that literally, right? As in, use a highly corrosive acid to dissolve the board?