Rep. Henry Waxman (D-CA) said the executives spent $200,000 for rooms, $150,000 for meals and $23,000 for the spa.
"They were getting their manicures, their pedicures, massages, their facials while the American people were paying their bills," stated Rep. Elijah Cummings (D-Md.).
The only word to describe revelations about AIG top executives on display at Henry Waxman's House oversight committee hearing on October 7 is "obscene." We got hit with even more proof of just how venal top players in our latest greedfest really are on the same day that Americans who depend on IRA's and 401k's for their retirement watched the Dow fall over 500 points.
Of course, you and I will NOT get a "golden parachute" to ease our financial pain as we leave the workforce. If we are counting on our IRA or 401k for retirement soon, we're out of luck, but the big boys always make sure they are taken care of, no matter how incompetent they are.
The House committee also uncovered information showing that as AIG's risky investments began to implode, the company altered its executive "pay plan" to guarantee the top dogs their bonuses, in spite of mounting losses.
AIG lost over $5 billion in the last quarter of 2007, Waxman said. Yet, in March 2008 when the company's compensation committee met to award bonuses, CEO Martin Sullivan urged the committee to ignore those losses, which normally would should have slashed bonuses to him and his cronies. The lackeys on the board agreed.
Sullivan got a cash bonus of over $5 million, just months before the company was begging for a government handout. The board also approved a new compensation contract for Sullivan that gave him a golden parachute of $15 million. (Sullivan did his "golden jump" from AIG in June.)
Joseph Cassano, the executive in charge of the company's ridiculously inept financial products division, received more than $280 million over the last eight years, Waxman said. Cassano's division played in the financial cesspool of insuring sub-prime mortgages through "credit default swaps," putting AIG on the hook for bad mortgages.
Now, guess who is on the hook? Yep, you and me, the new "owners" of 80 percent of the company.
Even after Cassano was terminated in February 2008 as his bad business practices continued to cause horrendous losses, the company allowed him to keep $34 million in unvested bonuses and put him on a $1 million-a-month retainer. He continues to receive $1 million a month, according to Rep. Waxman.
Remember, folks, Cassano is the guy who lost the company $11 billion. So, they feel some bizarre need to keep him around? Can we taxpayers - the new, unwilling investors in AIG - fire the guy? I doubt that.
The hearing also revealed that CEO Sullivan - the guy with the solid-gold parachute - may have deliberately misled investors. On Dec. 5, 2007, Sullivan told AIG investors the company was in great shape. Just a week before that, AIG auditor PricewaterhouseCoopers had warned Sullivan the company was in danger from risky financial investments and lack of ability to assess those risks. If there is any justice left, Sullivan should be shopping for a good lawyer because of that one.
All of this sounds like a repeat of Enron, the 1990s tech bubble, etc., for a good reason. Any time you take a bunch of greedy people who consider themselves "masters of the universe," put them in charge of vast sums of money that don't belong to them, and take away all oversight and regulation, you get this result. When will we ever learn?