AIG Gets More Government Bailout Cash
Only one day after it was revealed that AIG had sprung for a $440,000 spa vacation shortly after getting an $84 billion government-loan bailout comes this report: The government is loaning AIG another $38 billion.
AIG, the world's largest insurer, said it has already drawn down $61 billion on its $84 billion line of credit from the government. AIG's financial products division got into the mortgage-backed securities market and incurred billions in losses, sending the entire company teetering toward bankruptcy. The $84 billion loan was meant to help prop up AIG.
The New York branch of the Fed Reserve will borrow $37.8 billion in investment-grade securities from AIG in exchange for the cash.
During a hearing before the House Oversight committee on Tuesday, it was revealed that just last week, about 70 of the company's top performers were rewarded with a week-long stay at the luxury St. Regis Resort in Monarch Beach, Calif., where they ran up a tab of $440,000, The Post's Peter Whoriskey reported today.
Oversight committee Henry Waxman (D-Calif.) showed a photograph of the resort, which overlooks the Pacific Ocean, and reported expenses for AIG personnel including $200,000 for rooms, $150,000 for meals and $23,000 for the spa, Whoriskey wrote.
Today, AIG chief executive Edward Liddy defended the vacation by pouring gasoline on the fire.
Such trips "are standard practice in our industry," Liddy said, no doubt thrilling every other major insurance company.
In a letter to Treasury Secretary Hank Paulson, obtained by ABC News, Liddy said the vacationers were largely independent insurance agents who had sold well for AIG.
"Let me assure you that we are re-evaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating," Liddy wrote. "We understand that our company is now facing very different challenges -- and that we owe our employees and the American public new standards and approaches."
-- Frank Ahrens