It's difficult to fathom the abundance of greed and the depth of hubris at AIG. There's an article in the New York Times outlining the spending habits of American International Group, which has come to light now that we taxpayers have been so kind as to bail out the company.
It's a frightening, maddening story.
AFTER AIG got an $85 billion bailout in taxpayer money, its insurance subsidiary spent $442,000 treating its sales agents to a week at an exclusive resort in Monarch Beach, California. That includes $24,000 in spa charges.
Also:
the former A.I.G. executive who led the London-based division whose implosion is largely blamed for the insurance giant’s downfall, Joseph J. Cassano, continues to receive $1 million a month from the company, on top of the $280 million he received in the last eight years.
There's no sense of fair play that says executives should decrease their outrageous pay even as they drive the company toward bankruptcy:
And even after A.I.G. reported $5 billion in losses in the final quarter of 2007, its chief executive at the time, Martin J. Sullivan, argued before a compensation committee that executives should receive performance bonuses. He received $5 million.
Meanwhile, the company was hiding its problems from its own auditors.
An accountant, Joseph St. Denis, who had been hired by A.I.G. to address accounting problems, was not given access to the very unit whose losses ... led to the bailout ... Mr. Cassano told Mr. St. Denis, according to testimony, that he had been “deliberately excluded” from the evaluation of AIG Financial Products, to avoid “polluting the process.” Mr. St. Denis resigned in protest.
What executives today don't get is how pissed off Americans are over outrageously excessive executive salaries and inability to accept responsibility for their actions. I remember when Intel CEO Andy Grove said in the late 1980s that he was embarrassed over his salary of $300,000 and groused that other firms paid their executives even more.
There is absolutely no way that any executive in the world is worth 10s of millions of dollars in annual compensation. I've met many of them. They aren't that good. It's easy to find qualified replacements if they care to look. Sergey and Larry make $1 apiece. they already made their fortunes off the IPO.
But big corporations feel they have to go for big names to run their companies, and that means big salaries.
Today's executives have become so lost in their own greed, they think they live in another world. America has become a caste society in which corporate executives see themselves as an elite, immune from the standards that apply to the rest of us.
I mean, sure, expensive retreats are common for top salespeople. But don't these executives have the sense to cancel the deal this one time, after driving the company to the brink of bankruptcy and getting a taxpayer bailout? Do they really think we serfs see them as kings, the ruling elite? Or is it gods?
And now, executives and Republicans across the country are going to cry about government regulations that are going to strangle them like a barbed wire noose.
They have nobody to blame but themselves. They have proved that unregulated markets do not correct themselves. Completely unregulated markets brought us the novels of Charles Dickens. Now we will probably swing the regulatory pendulum too far in the opposite direction, and that's good.
It's the only way to restore some sanity to business.
Recent Comments