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November 12, 2008 2:53 PM

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This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.

Bingo.

Taxpayers aren't going to get anything in return for your investment in AIG if the business has to approve expense reports in the court of public opinion. That's why they kept it a secret. I would have liked to have seen their ROI research on this sort of conference to make the point stronger because I'm sure there are already 30 angry \"burn in hell\" replies to this already, but they've done enough.

9 replies

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November 12, 2008 3:37 PM

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@ADismalScience: I'm totally with ADismalScience here... I love comsumerist, but for a rational person, and not an overwrought internet mob, this particular event is a total non-issue.-----

And you're right; they definitely should have provided some ROI information. I work for an organization funded almost entirely by state taxes so every communication we send out to the public regarding a program or any expense seeks to justify the expense with detailed information about the ROI for that program.

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November 12, 2008 7:13 PM

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@AliyaBabasaur: Absolutely. AIG is probably trying to avoid publicity for any costs over $5, since everyone has a knee-jerk reaction to burn them to the ground at this point.

Not that AIG hasn't pulled some questionable shit, but you have to spend money to make money...

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richcreamerybutter

November 12, 2008 3:26 PM

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@ADismalScience: I just don't think it behooves them to be keeping any secrets at this point.

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November 12, 2008 3:35 PM

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You do realize that losses on credit default swaps have absolutely no relevance to the profitability or success of AIG's advisory sales business, correct? The people who are losing all that money likely have never even met the people in advisory.

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eXo

November 12, 2008 3:57 PM

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@ADismalScience: I find it interesting that often in your comments you are quick to criticize the article for taking what someone says at face value, yet you have taken AIG's statement for face value.

It is not clear how much was covered by sponsorships, so it is difficult to accept their statement that it was 'minimal' cost to them.

Also, you speak about them doing what needs to be done to get tax payers a return on their money. They obviously don't know what needs to be done, or they wouldn't have needed the tax payer money in the first place.

Now that they do have our money however, they have to conduct business differently. this means being open about their expenditures. There is no super secret to their business model that gives them an excuse to hold 'secret seminars'. It just goes to show they are fearful of the backlash of people finding out. it had NOTHING to do with business secrets and everything to do with public opinion.

The base point is they are a shady company with a shady record, and while your defense arguments might stand when applied to a totally private company with a good record, they do not stand in regards to a failing company who is ONLY in business because of tax payer money.

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November 12, 2008 4:07 PM

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343K is minimal cost even if they paid all of it. It only seems like a large number for somebody with no exposure to financial sales efforts. Do you have any idea how much money advisory services are making, even in this down market? It's the way out for this crisis - make enough money advising clients to pay for writedowns.

What do you suggest as an alternative? Sit around and hope that the credit default swaps start regaining value?

it had NOTHING to do with business secrets and everything to do with public opinion.

I agree with you. And I think that AIG was right to fear public opinion on this. Taxpayers won't understand, even though the reasons for this conference were obvious.

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eXo

November 12, 2008 7:19 PM

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@ADismalScience: What I suggest is transparency. The story isn't nearly as juicy if AIG comes out and says, \"look, we need to run a seminar\" compared to \"AIG holds secret seminar and tells their employees not to even say the words AIG!\".

Thats ridiculous business. My wife works for a huge advertising firm, and they have to wine and dine buyers and prospective clients all the time. If a buyer calls them and says, 'I want super bowl tickets' - well, guess what they get. One of those whores had the audacity to tell my wife she expected a $500 mp3 player for Christmas from her last year, with the assumption the company would cover it I suppose.

That same advertising company is now in bankruptcy, and she is looking for a new job. Had her company been 'bailed out' for some reason, I promise you it would not be ok for them to continue giving exorbant gifts to greedy buyers. I don't care how standard it is in the industry, tax payers aren't going to understand why their money is used to bribe buyers into becoming clients.

It also is not fair to gloss over the fact that AIG has a record since the bailout of over the top expenditures. Had they not set the precedent of mistrust, this sort of thing wouldn't be such a big deal. They shot themselves in the foot by having a giant company retreat within weeks of being bailed out.

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November 12, 2008 4:59 PM

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@ADismalScience: over a quarter a million for a party is expensive.

When you can provide any shred of evidence that this event wasn't fully paid for by AIG aka tax payer bail out money, then come back and talk. Them just saying they didn't pay for it all is crap and i don't believe a word that stealing lying company has to say.

They're in need of all this money because of their crappy investing and horrible businesses sense. last I looked this was America not communist Russia. I love how supposed Republicans or conservatives say how the Democrats are Socialists and how this is a free market. Or when Business people whatever their affiliation claim the same thing when ripping of the American public or when Exxon makes 40 billion in profits that it's all business free market. But when everything fails now we need to save them, OMG the sky is falling save them we need Tax payer money to subjugate the costs of business because we're so god damn important.

welcome to Russia people, looks like they won.

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richcreamerybutter

November 12, 2008 4:40 PM

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@ADismalScience: If taxpayers are so ignorant, then the bailout should have been collected voluntarily from of only those familiar with the way this kind of business model operates. Problem solved!

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brent_r

November 12, 2008 3:05 PM

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@ADismalScience: I'm sorry, but there is no excuse for these conferences taking place in such extravagant settings.

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November 12, 2008 4:30 PM

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@brent_r: They were planning on having it in the rec room of a local church, but then someone remembered that douchebags make the baby jesus cry. Pointe Hilton Squaw Peak Resort here we come.

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November 12, 2008 3:09 PM

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Extravagant?! It was a Hilton; I understand Hiltons aren't exactly Red Roof but they aren't Dubai either. And as the press release states, few of the costs were paid by AIG.

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Red_Flag

November 12, 2008 2:59 PM

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@ADismalScience: Would it have been so hard to say something along the same lines -before- the conference and not just hope that the media wouldn't find out?

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November 12, 2008 3:07 PM

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They did! The October 10th statement cited above included the strategy for expense management. But explaining your business model in town hall is somewhat bad for business, no?

They are trying to avoid media attention and scrutiny because taxpayers will not wait for the rational explanation for this. Read the other comments in response to this - can you rely on the public and media to understand this business model? The bottom line is that the mainstream media does a shitty job of explaining high finance - Consumerist included, which is why I rarely post here - and consumers don't even bother listening to the explanation.

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Red_Flag

November 12, 2008 3:20 PM

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@ADismalScience: It doesn't have to be a town hall for the public, but for Pete's sake, let someone other than people on the AIG payroll look at it. (As far as I can tell from the above, the Oct. 10 statement was an internal thing). I might be satisfied if it was at least run by the Treasury Sec. or the Fed, or someone who isn't getting their paycheck signed by Liddy.

(And I'm not saying each and every thing has to be cleared, just a general, \"we'll hold X meetings this year at a projected cost of Y for reasons blah, blah, blah).

I agree with you fully that the media (and the public) jumped the gun. It's not as nefarious as it seems at first glance.

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November 12, 2008 3:25 PM

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(And I'm not saying each and every thing has to be cleared, just a general, \"we'll hold X meetings this year at a projected cost of Y for reasons blah, blah, blah).

This has already happened - the firm knows it is under scrutiny and that its expenses are being carefully monitored. Isn't their attempt to conceal their involvement in this conference evidenciary of that?

Cuomo, however, isn't going to go public with relevant information like that. There's no political will to take the risk!

AIG should just come out and do the necessary. No more hiding. Taxpayers aren't going to get it and the media is only interested in playing gotcha games instead of providing a full and reasonable explanation for this activity.

It's insane, and infuriating. We're a nation of fucking Ellsworth Tooheys.

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brent_r

November 12, 2008 3:10 PM

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@ADismalScience:
You seem to miss the entire point.

This isn't about the fact that these conferences are held.
It's about the fact that these conferences were wasteful.

The fact that you can claim these conferences served a useful purpose is irrelevant.
And you've yet to present a \"rational explanation\" for the frivolous extravagance.

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November 12, 2008 3:20 PM

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Frivolous extravagance is throwing a conference at a Hilton funded primarily by the target audience and co-sponsoring firms?

Stop the presses.

343,000 dollars is absolutely zero in this business. It's less than a drop in the bucket. Finance is a world where some products have initial investment minimums in the 10's of millions. Criticizing a business for spending 343,000 - which, from the letter it seems they did not - to drum up business with 150 FA's who could each provide that much revenue in a single year with a single investment from a single client is, um, shortsighted.

A single sale from that conference to a client of one of those 150 advisors could pay for the cost of the seminar in full. It was a worthy investment, and you are unprepared to provide a fair and responsible critique.

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November 12, 2008 7:57 PM

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This is precisely the problem - \"343,000 dollars is absolutely zero in this business.\" The corporate classes don't live on the same planet as the rest of us and they don't mind spending other people's money to support their lifestyles. I have no doubt that the conference helped business, but $2,287 per person for a 3 day conference? Whether or not it is spent by AIG or the other corporate sponsors it is still using OPM to support a lavish lifestyle. Furthermore, the $343k didn't cover the ancillary expenses for the AIG executives who attended, such as the $400 dinner at McCormick and Schmick mentioned in the original report. Remember this dinner was paid for twice by the taxpayer - once by using bailout funds and once more because it was fully tax deductible as a \"business\" expense.

Until corporate America gives up its lavish lifestyle be it AIG, the sponsors, or the attendees, all of it subsidized by the taxpayer through the bailout or tax subsidies, we will continue down the road to ruin.

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November 12, 2008 11:20 PM

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@bearymore: \"I have no doubt that the conference helped business, but $2,287 per person for a 3 day conference? Whether or not it is spent by AIG or the other corporate sponsors it is still using OPM to support a lavish lifestyle.\"

You need to understand that the actual cost doesn't matter, but rather the ROI. For example, I recently worked on an AdWords campaign where certain keywords had a very high cost per click and cost me a lot of money. However, they converted at a MUCH higher rate than cheaper keywords and my ROI % was much higher, thus, it was more profitable for me to spend money on the more expensive ones because it had the bigger impact on my bottom line.

This \"lavish lifestyle\" is a cost of doing business. Period.

You clearly have no understanding of even basic business principles because all you see if them spending a large amount of taxpayer dollars and think \"hey, that would be a lot of money for me and they're just wasting it on a hotel!\"

Do yourself a favor and learn some basics about business before you make these sort of comments, otherwise you just appear uneducated and emotional.

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Grive

November 12, 2008 10:17 PM

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@bearymore: Your heart is in the wrong place.

You're severely misunderstanding the point.

343,000 is absolutely zero in this business because they're talking about millions, even billions, of dollars worth of contracts. The people who were at those conferences are in a position to impact AIG's numbers in a large proportion.

For an example on the level of perspective you're using: Do you mind paying $1.50 for the metro to go to work? or $2 of gas? Even if the money's tight and you're surviving on a loan, stopping to go to work to save $2-$3 daily on commuting costs isn't the best of ideas.

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November 12, 2008 6:22 PM

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@ADismalScience: I agree... Too much knee-jerk scrutiny with them and there's going to be a 'brain drain' of catastrophic proportions at that company and we'll be left holding an empty, expensive bag. The AIG folks are probably starting to say to themselves, \"I didn't sign up for a government job...\" and thinking about moving on.

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November 12, 2008 2:57 PM

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\"This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.\"

Questions :
1) Then why did you keep it secret if everything was totally aboveboard ?

2) Did this have to be in one of Arizona's finest (expensive) resorts ? Hardly seems consistent with cost cutting.

3) What is \"minimal\" cost? If you are taking my tax dollars,sir, I want to know how many of my children's children's dollars will be claimed to feed appetizers and liquor to a bunch of people that can afford it on their own.

No sale,asshole. Break up AIG and stop the teat sucking,NOW.

3 replies

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MadameX

November 12, 2008 4:46 PM

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@Snarkysnake: In all fairness, The Pointe isn't even CLOSE to one of the most expensive resorts in Phoenix. I used to work right across the street from it and I'm quite familiar with it.

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Valhawk

November 12, 2008 4:10 PM

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1. Because they knew the media would distort it because the media companies make more money from alarmist crap then from the truth, mainly because the average American is an idiot.

2. Wait, the Hilton is Arizona's finest resort? WTF.

3. Why aren't you calling for this much accountability from other entities that receive federal money ie universities, political groups, municipalities, medicare, medicaid, social security, s-chip, etc.

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richcreamerybutter

November 12, 2008 4:42 PM

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@Valhawk: Education, care of the poor and elderly, activism, etc. are important to many of us. In any case, why are you under the impression we aren't holding them accountable?

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November 12, 2008 2:58 PM

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What does \"independent financial planner\" mean? Commission salesmen who work primarily for AIG but are not technically \"employees\"? The same ruse that other companies use when they classify employees as \"independent contractors\"?

\"More than 90 percent of the costs were paid either by sponsors\". Who are these sponsors and why would they pay AIG's bills for these events?

3 replies

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Trick

November 12, 2008 4:30 PM

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The sponsors are the subsidiaries of AIG.

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Valhawk

November 12, 2008 4:13 PM

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@MrsLopsided: The people who manage rich peoples money and decide which funds, such as AIG, to put them in.

Essentially they act as aggregate clients. Rather that having many people putting their money in AIG individually, there tend to be these independent financial planners who take their large groups of rich clients and invest in funds.

So essentially AIG is wooing clients, and using this to illustrate why these people and their huge banks of rich clients should use AIG to manange the money.

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Ahoatam

November 12, 2008 3:47 PM

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@MrsLopsided: I work in this industry (no, not for AIG) and this is typical. Nothing shady here. Sponsors are usually mutual fund companies or broker software developers. I've been to similar events, and it's easy to see how the cost of a training and information event like this could be underwritten by other companies wanting to advertise.

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Red_Flag

November 12, 2008 2:58 PM

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Kudos to Liddy for coming out and saying this. I think most of the public would have little problem with the conference or things like it if there is a reasonable justification presented. They are, after all, part-owners.

AIG - whether you like it or not, the media is watching everything you do. Maybe it'd take the wind out of any backlash if you announced these things -beforehand- instead of trying to hide it and then play damage control once it gets out?

But as far as damage control goes, you responded very well to this particular conflagration.

/sets voodoo doll back in the cabinet

3 replies

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November 12, 2008 3:01 PM

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AIG - whether you like it or not, the media is watching everything you do. Maybe it'd take the wind out of any backlash if you announced these things -beforehand- instead of trying to hide it and then play damage control once it gets out?

That's too much to ask. AIG will not be competitive if every last sales meeting gets announced to the public. Not only will some of them get poached, but the public will consistently complain about the cost and insist they know how to run a financial firm's sales division.

AIG's advisory business is extraordinarily profitable. They're crippled because of credit default swaps, not because they don't know how to sell insurance products and derivatives to financial advisors. Not only does the public have no idea how to run this business, but AIG is doing a fine job of it without meddling.

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November 12, 2008 3:25 PM

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@ADismalScience: 24.5 million lost last quarter and they're borrowing even more money for the government now...\"fine job\" my eye.

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November 12, 2008 4:54 PM

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@randomizer9: The money was lost in the credit default swap market, that was one division/subsidiary of AIG. The other parts of AIG are highly profitable, it was just that one part that hit them and hit them really, really hard.

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Pylon83

November 12, 2008 3:10 PM

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@ADismalScience:
You're never going to get anywhere arguing with some of the people on here, Red_Flag included. The general public seems to think that they know how to run AIG better than AIG knows how to run itself. You're right that it's too much to ask of AIG to pre-announce and pre-clear any normal business activities it intends to conduct. Right or not, you will find much opposition from good 'ol Joe Six Pack and Joe the Plumber who have absolutely no idea what AIG even does, yet they have strong opinions on how it should be run since it's \"their\" tax dollars funding AIG. What they seem to forget is that while the government does own a huge equity stake in AIG, they still have to be allowed to do business if the taxpayers want to see a return on that investment. Putting up tons of red tape and hoops for them to jump through in order to do business certainly doesn't further the goal of getting a decent ROI for the US. But again, you'll never win any argument like that on here.

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Red_Flag

November 12, 2008 3:16 PM

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@Pylon83: Ah, I can just feel the love. We'll break out into strains of Kumbaya any minute now...

Oh, wait, we have completely different ideas on regulation, my particular standpoint being that a completely laissez-faire free market is going to to rise and fall and anyone who calls themselves a capitalist should have let companies with bad decisions, bad management and/or bad luck wither and die. That's how capitalism works.

You don't like regulations? You don't like gov't oversight? Don't like being told how to conduct your private business? Simple solution: don't accept public money.

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Pylon83

November 12, 2008 3:27 PM

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@Red_Flag:
See, I'm not entirely of the belief that the fact they took in public money should put them under any more scrutiny that had they taken in private funds. The government is simply a majority shareholder now, not the owner. As any responsible shareholder of that magnitude would do, there will be significant oversight. But at some point it's necessary to realize that they still have to go about their business in an efficient fashion. Having a department have to clear expenses through management, who then has to clear them with the government is inefficient. First, have you ever been to the post office? I assume so. You are thus aware of how \"efficient\" our government is. It could take a significant amount of time to get anything cleared by a government agent, slowing business, reducing revenue and resulting in a smaller, or negative, ROI for the US.

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geekfather

November 12, 2008 2:59 PM

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Taxpayers aren't going to get anything in return for your investment in AIG.

End of discussion.

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November 12, 2008 3:02 PM

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I'm probably in the minority here but what AIG said here makes sense to me. (disclosure: I have ZERO connection with AIG.)

An unfortunate reality in the biz is that you have to spend money to make money. I don't blame AIG for wanting to keep their name secret as it would have caused unwarranted attention.

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November 12, 2008 3:03 PM

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So around 10% of this was paid by tax payers.

That's still to much IMHO.

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November 12, 2008 3:04 PM

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Repay the taxpayer? Dead wrong. Any money the govt. gets back will be spent on some other crap. No way is \"The American Taxpayer\" going to get \"paid back\".

4 replies

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November 13, 2008 6:50 PM

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@BoomerFive: Well, ideally any gains made by the government would go to fund public programs or otherwise reduce the amount of taxes we have to pay. Maybe it will even start to pay down the national debt!

LOL

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November 12, 2008 5:01 PM

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@BoomerFive: Well that was the problem with the bill the whole time. They're printing money up now on the hopes of it returning when it doesn't they'll again print up more money devaluing it and raising taxes to offset the loan costs. You think you pay a lot now in taxes wait a few years. By the time we hit 2030 this country will be gone.

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November 12, 2008 10:22 PM

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@Skankingmike: I'm pretty sure that by 2030 the country will be the least of our problems.

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Rhayader

November 12, 2008 3:29 PM

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@BoomerFive: Well, not directly, no. Of course, the idea is that this \"investment\" will help turn the economy around, and people will eventually be better off financially because of it.

Not saying I agree with the whole mess, but that's the rationale behind calling it an investment.

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Saboth

November 12, 2008 3:04 PM

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My question would be: Apparently these conferences are to disseminate information to people? Are people only receptive to information at high dollar resorts?

3 replies

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Pylon83

November 12, 2008 3:13 PM

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@Saboth:
These conferences are also designed to wine and dine the people that bring $200 million a year in revenue into AIG. If AIG doesn't wine and dine them, some other company will. It's simply the reality of the business. If AIG said \"We're having our Financial Advisor retreat at the Red Roof Inn this year, you can bet the Advisors would say \"No thanks, we'll be attending XYZ's retreat at a fancy resort. Better luck next time!\"

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richcreamerybutter

November 12, 2008 3:34 PM

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@Pylon83: So, what's the harm in XYZ successfully wooing these clients from AIG by means of their own money? Otherwise we'll have to bail them out as well.

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Saboth

November 12, 2008 3:18 PM

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I suspected that is the case, but when they present the conference as \"It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG\"., they are pretty much covering up the fact it is just a reward package with thinly veiled \"business\" on top of it.

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November 12, 2008 3:07 PM

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So, I should be expecting my check from AIG, when, again?

Oh, that's right. NEVER.

2 replies

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Anonymous

November 13, 2008 11:07 PM

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Which check would that be? If you sent them a check cancel it. When they say \"your money\" they are talking about tax dollars. Tax dollars will be moved from X program to Y program. Then when Y program is fixed, they'll move it back to X program.

Quit acting like a victim.

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November 12, 2008 3:28 PM

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@William Mize: Agreed! When do I get my check?

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gggtur

November 12, 2008 3:09 PM

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Oh, thanks for the letter...I completely trust your judgment AIG...it's not like you've ever completely bundled financial decisions in the past or anything. You could replace the CEO with KoKo the Gorilla and the company wouldn't miss a beat. In fact, that way, AIG could pay the taxpayers faster since now the compensation for the CEO would be a boatload of bananas. Much cheaper than the millions he's currently making.

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3drage

November 12, 2008 3:12 PM

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Close friends are losing their jobs and are looking at a retirement without medical benefits, and these assholes are spending their welfare money like there's no tomorrow. People need to grow some balls and get rid of these jerks.

4 replies

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Blueskylaw

November 12, 2008 4:49 PM

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@3drage:
Proper english please.
Not their welfare money, OUR welfare money.

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November 12, 2008 3:36 PM

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Retirement benefits are overrated and obviously are killing this economy as well. For example GM is going bankrupt because of there Union and so many of their past retired workers are drawing benefits in larger numbers.

Basically we are refusing to fix Social Secruity and took away the negative aspects of a company killing our country and economy. We are becoming a nursing home to cater the baby boomers

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November 12, 2008 3:33 PM

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@3drage: @MrsLopsided:

Let me explain this too you. Ed Liddy used to be our CEO for Allstate. Basically it means all the agents are not really employees for AIG.

Basically all of them run there own buisness so AIG for example does not have to give them benefits and such.

For example Working for an Allstate Agent at his office doesn't mean you work for Allstate. It's literally like franchising a Mcdonalds or Burger King

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3drage

November 12, 2008 3:39 PM

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@Pious_Augustus: You'd have a better time explaining if you spelled words correctly.

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Ftp1423

November 12, 2008 3:15 PM

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OFF WITH THEIR HEADS!!!

We should listen to everything they say because they emailed it from public relations. Drink the Kool-Aid.

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November 12, 2008 3:16 PM

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Please! I work for a state funded program that works with handicapped babies. All of our travel and training has been cut due to the economy and we're making due with conference calls. That's how we're disseminating information.

2 replies

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3eyes

November 12, 2008 5:35 PM

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@aftercancer: In all due respect, is your program trying to make money?

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Vivelafat says Vive La Obama

November 13, 2008 12:36 AM

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@3eyes: No their trying to save lives. Money's much more important.

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Hooray4Zoidberg

November 12, 2008 3:16 PM

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Come on, these corporate sales seminars are and always have been excessive and unnecessary, they are a showing of wealth and power on the companies side to wow potential clients, clearly in the case of AIG it's just a smoke screen as any investor/client should know by now they're not in a good place.

If there is really such a dire need to keep people abreast of new products how about a Webinar? Pretty cheap to run, serves the same purpose, but then you can't show off your fancy powerpoint presentation while eating free egg rolls and drinking champagne.

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November 12, 2008 3:17 PM

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\"On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events.\"

So they were going to have 160+ expensive, nonessential conferences or meetings, unnecessary travel and excessive overhead events but since the U.S. citizens bitched about these events in the past we saved them lots of $ right? Thats how I read it.

2 replies

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richcreamerybutter

November 12, 2008 4:51 PM

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@LiquidGravity: I'm thinking that if firefighters, nurses, and police all suddenly required nonessential conferences, excessive overhead events, and incentives before dousing a fire, attaching an IV, or breaking up a disturbance that AIG supporters would not be happy campers.

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November 12, 2008 4:09 PM

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@LiquidGravity:
I'm surprised this has gotten no responses yet.

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halftank

November 12, 2008 3:20 PM

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Since AIG is government-owned, their travel needs to be under the same scrutiny as any government employee's travel would. Mr. Liddy needs to quit whining - if he doesn't like it, he can find his own damn bailout funding.

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Pylon83

November 12, 2008 3:22 PM

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@halftank:
AIG isn't \"government owned\". The government just owns a large stake of a still-private company. There is a significant difference. At this point, the government is just a large shareholder, no different than if a hedge fund or another large company had taken an 80% stake in AIG. Investment != full ownership.

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November 12, 2008 5:19 PM

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@Pylon83: @Pylon83: Ever heard of a controlling interest? I think a \"large stake\" of AIG is well over 50%.

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3eyes

November 12, 2008 5:38 PM

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@campredeye: The government is using their controlling interest. Their interest is getting the money back so they aren't going to nitpick about things that don't need to be nitpicked about.

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November 13, 2008 5:47 PM

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@3eyes: If I gave you $100 of my dollars so you could pay your rent, and you went out binge drinking, you're damn right I would nitpick.

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November 12, 2008 3:22 PM

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So, you couldn't have passed along this information by hosting the seminar at, say, a holiday Inn?

I mean that seemed to work fine for the Better Day Co-Op in The Wire. And they were only slightly more corrupt and criminally inclined than AIG.

For those of you who never watched The Wire, the Better Day Co-Op was an organization set up to allow drug dealers to work together and to invest their money in property they would then flip to developers.

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Rhayader

November 12, 2008 3:46 PM

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@incognit000: Oh, and also, the co-op wasn't formed expressly for the purpose of property investment. The point behind the initial agreement between Stringer and Prop Joe was to combine Stringer's good property and Joe's good dope to increase profits for everyone.

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November 12, 2008 11:33 PM

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@Rhayader: love seeing The Wire references anywhere... but on Consumerist it's extra special :-)

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Rhayader

November 12, 2008 3:44 PM

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@incognit000: Hah, nice Wire reference.

It was actually called the \"New Day Co-op\" (or, as Renaldo thought, the \"New Day Coop\"). Still though, +1 for being a Wire fan.

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November 12, 2008 3:23 PM

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\"It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG.\"
Translation: GEEZ We have never heard of a webinar before. You mean we don't have to fly these ppl and put them up in expensive hotels to tell them this.

\"The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of September 30th.\"
Subtext: But we still need to borrow $40B from the .gov

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November 12, 2008 3:26 PM

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Translation for the PR impared...

\" Recent news reports have grossly mischaracterized an American International Group seminar for 150 independent financial planners held in Phoenix last week.\"

...damn it, I thought we had this one hidden. Especially when we told the hotel employees that we were \"the company that shall not be named\" and all.

\" The financial planners are not AIG employees. In addition, the cost to AIG for this event was minimal. More than 90 percent of the costs were paid either by sponsors or by the independent financial planners themselves.\"

It's amazing what we can get other people to pay for, like our \"sponsors\" the US government.

\" It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG. The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of September 30th.\"

We have fun, and oh, by the way, we also spend one or two hours talking about how wonderful our funds are, and why it makes perfect sense to invest in our funds even though we needed ~$400 billion from taxpayers. Or is it $500 billion? I lose track after getting that much...

\" On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events. We conducted a top-to-bottom review of all expenses of the Phoenix meeting in advance and found that it was consistent with my October 10th directive.\"

We've cancelled all these \"expensive\" events, like employee appreciation lunches, so we can still give the executives massive bonuses.

\"This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.\"

We already had this booked, so we figured no one would be paying attention...

Seriously, I suspect that:
1) They had it booked and it would have cost more to cancel than it would to go ahead.
2) That is where they make most of their money - convincing \"independent\" advisors that AIG is wonderful, so they should convince their clients to invest in them.
3) I have to agree about the media coverage - that picture of the person coming out of the exercise room is just stupid, and has no relevance to the bigger issue.

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November 12, 2008 3:28 PM

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I found this statement completely hilarious:

...\"because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.\"

Riiiiight.

Although I do retract my previous statement of \"burn in hell AIG\" from yesterday, I still do not approve of the fact that it's costing me money in some shape or form.

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Valhawk

November 12, 2008 4:17 PM

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@KStrike155: Want to know what else is costing you money? How about the tons of frivilous medicaid claims filed by people who arn't really sick or are simply rug seeking. And thats money your not going to get back, not like this, since when AIG is making money again you'll by proxy be making money.

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November 12, 2008 3:38 PM

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Write your congressment demand we pull out of AIG!

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November 12, 2008 3:35 PM

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Since we are all about sharing here at Consumerist, I've been meaning to chat with you about *our* girlfriend...

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usul356

November 12, 2008 3:37 PM

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What really ticks me off about this stuff is that if they hadn't been spending so much on luxury things maybe they wouldn't have needed the bail out in the first place. Whether or not their competitors have the same types of expenses makes precious little difference considering their business can support itself.

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richcreamerybutter

November 12, 2008 3:52 PM

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Whether or not their competitors have the same types of expenses makes precious little difference considering their business can support itself.

Bingo. To reiterate, the general public doesn't care what you do to charm and retain clients on your own dollar. When others' cash is involved, there will be much scrutiny on how this is used. Creative solutions and a redefinition on how new business is acquired are never naive notions; many industries and workers have had to adapt under extreme conditions in the past 10 years, and the insurance industry needs to do the same.

Perhaps they ought to, I don't know, let the superiority of their services speak for itself instead of focusing on how many cases of Opus One they can secure for the meet & greet.

In my industry, we actually present pitches with documentation and portfolios. New clients are secured without the help of puff pastry.

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3drage

November 12, 2008 3:44 PM

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@usul356: Herein lies the problem. Prior to the socialist republic of America, when businesses spent wastefully, they folded thus removing themselves from the food chain. Now that our tax money is their welfare, they are free to spend wastefully as much as they want while the middle-class keeps them afloat. Eventually the money is going to run out, guess who will be left holding the bill?

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Red_Flag

November 12, 2008 4:01 PM

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@3drage: Just a slight correction. The definition of socialism would be a ruling proletariat (working class), which would \"struggle\" against the bourgeoisie (middle class to the low upper class). So, there is no Socialist Republic of America. If there were, there would (theoretically) be universal healthcare, elimination of private property, guaranteed employment, etc.

What we actually have is something that could be called \"corporate socialism,\" \"corporate welfare,\" or perhaps \"corporatism\", but it is not in any way actual socialism, as there is no direct benefit to the proletariat.

In essence, though you are right. In a \"free market\" these corporations would have gone bankrupt. Economic darwinism, if you will. But we continue to inject our steroid-like welfare into these monstrosities, resulting in stranger but aweing mutant hybrids...

... ok. Maybe that was too much coffee.

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richcreamerybutter

November 12, 2008 3:40 PM

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Incidentally, much of the outrage is coming from Josephine the Editor and Joe the Chief Adviser, not just the blue collar cast of characters mentioned several times in the past 2 AIG threads. If any issue is uniting people from diverse backgrounds and beliefs, it's the subject of wasteful spending.

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mdoublej

November 12, 2008 3:52 PM

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What would the AIG defenders on here say about a private citizen who bought a Mercedes he knew he wouldn't be able to keep up with the payments on, because he thought he needed it to impress potential clients?

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skipjack

November 12, 2008 3:59 PM

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As someone who has worked with insurance agents I can see AIG's point. Every insurance company I know of holds some type of seminar/sales pitch/meeting for insurance agents who are contracted not only with AIG, but any other company that they can sell for. A brokerage house we used to contract through spent a couple million dollars on trips and other things to reward those agents who were high producers.

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BeeBoo

November 12, 2008 3:59 PM

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It must suck to be AIG right now.

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Lnk64

November 12, 2008 4:04 PM

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It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG. The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of September 30th.

Funny, we, the taxpayers brought in about 1 trillion dollars in the span of about 1 1/2 month, as opposed to these supposed financial planners $200 million. Where's our seminar? I expect if AIG wants to keep afloat, they'll wine and dine us too or else WE may go elsewhere. I expect an invitation in my mailbox for the next event

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xkaluv

November 12, 2008 4:25 PM

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One question then, WHY WAS IT SECRET?

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November 12, 2008 5:02 PM

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@xkaluv: Because of what you see right now. People getting angry over something that is par for the course for this type of thing. That's just how sales are done in that type of business.

People also seem to not understand that the part of the company that are holding these seminars are very, very profitable so the seminars are being paid for by AIG via the revenue from the sales.

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mdoublej

November 12, 2008 5:13 PM

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@bonzombiekitty:

Then the profitable part of ther company should be bailing out the not profitable part, no?

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November 12, 2008 5:26 PM

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@mdoublej: The profitable part of the company doesn't make enough to do that. One section of AIG lost it more money than the other parts of the company can make up.

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November 12, 2008 5:35 PM

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what good is $200 million when you just got $150 BILLION from the government

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brent_r

November 12, 2008 5:49 PM

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@ADismalScience: \"343,000 dollars is absolutely zero in this business.\"

That's the sort of ignorant disillusionment and sense of entitlement which has caused so many similar problems.

That function could have been held easily for less than a tenth of that price.

$340,000 could payroll 10 middle class folks for a year.

You sir are pathetic, and deserve nothing more than a wet box in an alley. My sincere wishes you find yourself living in one soon.

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November 12, 2008 7:43 PM

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@brent_r: You CLEARLY have no experience in either the finance industry or meeting planning. Otherwise, you would know that what ADismalScience stated in terms of it being a \"drop in the bucket\" is dead-on.

It takes money to make money and if they had not had an event at this quality, it may not have been successful. While I agree there should be an added layer of transparency to their actions, I would hate to see them need to obtain approval from people such as yourself who don't have the basic knowledge of how this industry works or the orders of magnitude involved.

They clearly felt this meeting was profitable and therefore essential for them or else they would have trimmed it with the rest. Remember, corporations exist to make money and they would NOT , I repeat WOULD NOT be doing this if it were not profitable for them.

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Grive

November 12, 2008 6:45 PM

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@brent_r: No, it's absolutely corret.There are orders of magnitude, and it's important to keep perspective. It's evident you're thinking from the point of view of an individual, not a company.

This month my company bought over $500,000 in machinery. That would have payrolled almost 15 middle class folks for a year! Of course, the machine is a means of making money. We also spent nearly $50,000 on a similar endeavor for around 25-30 people - which is amount the same as these AIG folks, per person, and we're a MUCH smaller company.

Remember, \"cost\" is not important. Return on investment is. If the average sales performance of the attendees were to increase by, say, $4000 a year (which isn't much, in perspective), this conference would have paid itself and give almost a 100% ROI - In the first year!

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eXo

November 12, 2008 7:22 PM

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@Grive: And what was the return investment on the half million AIG corporate retreat?

This is not an innocent business we are talking about. It is one that went down in flames, and as soon as someone threw water on them, they lit up another cigarette.

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Grive

November 12, 2008 10:11 PM

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@exo: I do not know if there was any, if at all.

However, that is absolutely irrelevant, and you know it as well as anyone else. Just because they did something wrong, it doesn't mean that every single expenditure they make is wrong.

They paid between $200 and $2300 per attendant. Let's assume $2300. It's a mixture of training, sales pitch and employee relations. For a company as big as AIG, with the kind of people who attended, and with the potential increase in sales that such an event brings, it's a mere pittance.

These kinds of seminars can be very powerful tools for increased sales.

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November 12, 2008 6:28 PM

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From the news release: It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG.

From me: Send them an email to keep them abreast of investment products and services including those offered by AIG. If they don't have email, they don't need to be selling AIG products. And incidentally, why would you fund a lavish \"conference\" that keeps them abreast of investment products and services that aren't exclusive to AIG. I mean, the news release DOES say \"including those offered by AIG\". So one can't help but come away with the notion that at this AIG funded conference, they are also pushing their competition's \"investment products and services\". And if that's the case, no wonder they are broke.. that and of course funding expensive \"conferences\".

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November 12, 2008 6:33 PM

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@allstarecho: Keeping \"independent financial planners abreast of investment products and services\" is corporate speak for selling them something. In that type of environment, you don't jet send out e-mails to sell them stuff. You need to wine and dine them, which is what they are doing with this conference.

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November 12, 2008 6:37 PM

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While I agree in principal that these conferences are extravagant and that there are practical ways to disseminate the information, people forget about the human element of this. If you were an independent sales rep, who do you think you would more enthusiastically sell for? The company that sends out an email or a conference call? or the company that hosts a 'conference?' It's not only the dangling carrot of having these conferences to get to go to, but also it's presenting the 'image' of progress and steadiness. That's something the sales people need to see as well. I'm not in the business, I don't particularly care for AIG and what they've done, but stepping on these guys' necks too hard will cause a brain drain sending everyone away out of frustration and then we'll really have an expensive bailout.

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ras_d

November 12, 2008 7:52 PM

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My response:

\"Fuck you AIG - I hope your next junket is up a whale's ass\"

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acrobatic rabbit

November 12, 2008 8:30 PM

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he said a breast.

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kwsventures

November 12, 2008 9:39 PM

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Like I said 2 months ago, nobody should get a taxpayer funded bailout. Nobody. All the corporate creeps start doing whatever it takes to get the taxpayer money. Let them fail. I hear all these doomsday scenarios from the talking heads on TV if there are no bailouts. I don't believe them. The big con is on. You trust Barney Frank and those fools in congress? Not me.

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November 12, 2008 11:32 PM

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Is the MSM pulling the \"salacious\" card for the billionth time this decade? Most certainly, but at the end of the day: AIG should NO LONGER EXIST in the form which it destroyed itself.

AIG took a huge gamble that became exponentially more unstable as it did lucrative and in the end it destroyed their company. Like any other company in america they sold their assets along with their debts (unfortunately in this case the United States of America was the only entity that could afford them) and now the new parent company NEEDS to RESTRUCTURE AIG from the top down in a manner that provides the best opportunity to pay off those debts and make them profitable again.

Why ANY CEO would leave the same people in charge that caused them to fail in the first place is beyond me... and that's the part that REALLY grinds my gears ($1.00 to Peter Griffin) because no one in their right mind would give these people money considering that NOTHING HAS CHANGED!!! Show that you have taken REAL steps to fix this company and the others (looking at you Henry Paulson!) and the MSM will back off... hell they may even back you for once!

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November 13, 2008 1:24 AM

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\"On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events.\"

So in other words after you get back on your feet you will go back to wasting your investors money? I mean how can you have a nonessential conference or event? If its nonessential then why have it in the first place?

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MisterE

November 13, 2008 2:08 PM

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AIG: Assholes Ignoring Guilt

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Anonymous

November 13, 2008 7:02 PM

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They had to keep it \"secret\" because everyone freaked out about the incentive trip last month. Incentive trips are common to many industries, including the financial industries. They are part of people's compensation, they earned the trip.

These sales seminars are also common to the industry.

I'm going to confess that I'm a meeting planner, and if a fear of meetings gets too pervasive, my company will lay me off and I'll be out of a job.

But as someone who is in the business of planning meetings I want you to consider:

1) Why are you not asking what the cost was of canceling all 160 of those other meetings? Those booked meetings all had penalties for cancellation. If those were waived, that seems incredibly unfair to those of us who have to cancel meetings and pay up for doing it.

2) Of the $343,000, I'd bet that $150,000 of it was for coffee. That's the real outrage-- the price all hotels charge for coffee.

3) Believe it or not, the best way to build relationships and learn new things is still in a face-to-face situation. I made a lot of friends on-line, but my close friends are the ones that I eventually met face-to-face.

4) I know that you are just looking at the AIG financial side of things. But the people who will be hurt are the thousands of front-line service employees. And they are taxpayers who will be asked to cut their hours or will be laid off. And AIG will still suffer because reps won't sell their products.

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