by Deb Cupples | The Washington Post reports:
"A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group [AIG] may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing."
Yes, well, such musings certainly are warranted in light of the fact that about 10 days ago, AIG's CEO publicly said that the $120+ billion that we taxpayers had lent to AIG might not be enough to prevent bankruptcy. The Post continues:
"...Echoing some other experts, Ann Rutledge, a credit derivatives expert and founding principal of R&R Consulting, said she is not sure how badly the financial system would have been rocked if the government had let AIG file for bankruptcy protection. But she fears that the government is papering over the problem with a quick fix that was not well planned." (WaPo)
How nice it would have been had experts publicly shared such questions or criticisms in September, before we taxpayers started lending money to AIG.
And one is left wondering just where our tax dollars have gone, given how some of AIG's executives have re-distributed shareholder wealth to themselves.
We know from a congressional hearing, for example, that in 2007's final quarter, AIG had $5 billion in losses. This should have precluded bonuses for senior partners, but ex-CEO Martin Sullivan persuaded the Board to give out bonuses anyway: Mr. Sullivan got about $5 million in cash. I don't know what the other 69 (or so) execs got.
Another AIG executive "earned" $280 million during the eight years preceding AIG's need for a bailout -- an average of more than $30 million a year.
Just days after government officials decided to lend AIG the first $85 billion, AIG decided to fund a week at an expensive resort for executives. AIG's shareholders were billed for the "retreat." Here's Rep. Henry Waxman's description:
"Rooms at this resort can cost over $1,000 per night. Invoices provided to the Committee show that AIG paid the resort over $440,000, including nearly $200,000 for rooms, over $150,000 for meals, and $23,000 in spa charges."
Yes, $440,000 is small change, but the expenditures evince a super-careless attitude toward the shareholders who paid those executives' salaries.
It'll be interesting to see what happens to AIG.
Other Buck Naked Politics Posts
* Save Jobs by Cutting Executive Pay
* Are Bailout Funds Being Misused...?
* Lehman Execs Redistribute Shareholder Wealth (to Themselves)
* AIG Execs Redistribute Shareholder Wealth (to Themselves)
* Execs Made Millions While Driving Companies into Ditch
.
Comments