Fed Grants AIG Additional $37B Loan

Insurance Giant Got $85B Bailout Last Month; White House Calls Firm's Near Half-Million Dollar Executive Retreat "Despicable"

(CBS/ AP)  The Federal Reserve has agreed to provide insurance giant American International Group with a loan of up to $37.8 billion, on top of one made to the troubled company last month.

Under the new program, the Federal Reserve Bank of New York will borrow up to $37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.

Last month, the Fed provided an $85 billion loan to the company, which was on the brink of bankruptcy.

The White House said on Wednesday it was "despicable" that AIG executives spent hundreds of thousands of dollars on a posh California retreat just days after getting the $85 billion bailout.

Lawmakers investigating the meltdown of AIG said the retreat didn't include anyone from the financial products division that nearly drove the company under, but they were still enraged that executives of AIG's main U.S. life insurance subsidiary spent $440,000 on the retreat, complete with spa treatments, banquets and golf outings.

"It's pretty despicable," White House press secretary Dana Perino said.

AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government that it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.

"The president did not want to move forward on this rescue package to help anybody in the top positions on Wall Street," Perino said. "He was concerned about everyday people like you and me. ... He didn't do that to help top executives and certainly not to help executives go to a spa."

The hearing also revealed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released Tuesday by the panel examining the chain of events that forced the government to bail out the conglomerate.

AIG's problems did not come from its traditional insurance subsidiaries, which remain healthy, but instead from its financial services operations, primarily its insurance of mortgage-backed securities and other risky debt against default. Government officials feared a panic might occur if AIG couldn't make good on its promise to cover losses on the securities; investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.

AIG suffered huge losses when its credit rating was cut, thanks largely to complex financial transactions known as "credit default swaps." AIG was a major seller of the swaps, which are a form of insurance, though they are not regulated that way.

The swap contracts promise payment to investors in mortgage bonds in the event of a default. AIG has been forced to raise billions of dollars in collateral to back up those guarantees.

[msay3]

(CBS/ AP) The White House said on Wednesday it was "despicable" that American International Group Inc. executives spent hundreds of thousands of dollars on a posh California retreat just days after getting a federal bailout.
~~~~~~~~~~~~~~~~~~~~~~
BE CAREFUL WHAT YOU ASK FOR, YOU JUST MIGHT GET IT!!

[kever58]

Wow! I guess there are some people who just can''t keep their hands out of the cookie jar. This sense of "entitlement" goes way beyond the greed factor. Those executives should be fired. Real, hard-working Main Street people are struggling or does anyone care????????????

[Keypinitreel1]

Lets recoup some pay and bonuses.

Lets tie executive compensation to a fraction of a percentage of the companies profit. No Profit...NO MONEY. NO MONEY =NO MASSAGES ...

NO MASSAGES=NO HAPPY ENDINGS

No happy ending for the customers...no happy endings for the rich and greedy.

[antoniof123]

Send these people to gitmo and practice on them. Make all other exec''s watch and show them what will happen. Then tell them if they are guilty of such things they will be sent there. Give them a chance to pay back there mess or send them to gitmo. Let''s make an admendent to the constitution to make it legal.

[chadb19]

This proves that the greedy pigs on wall street and in big corps dont give a hoot about that average taxpayer. I would put them all in JAIL!! Shame on them and we wonder why the rest of the worls hates us....

[brianbwb-2009]

"The president did not want to move forward on this rescue package to help anybody in the top positions on Wall Street," Perino said. "He was concerned about everyday people like you and me. ... He didn''t do that to help top executives and certainly not to help executives go to a spa."

Bush is a proven idiot, which means Perino is a trumpet of the idiot.

Give $85 billion without oversight and controls, and act surprised when the same thievery that caused the problem continues.

[edthelight]

Sticks and stones may break my bones (but words will never hurt me).

[notopennshut]

Not just fire the whole gang, DEMAND they repay the money!! This shows the arrogance of these executives of these companies. They do not care for anyone but their own pockets. Not a dime of our hard-earned money should go to any executive of any company. These people should not continue to live on our sweat and blood. As Obama said last night, the rescue should focus on us, and should NOT include people like himself and McSame. The tragedy of the last eight years is that it has only helped the rich and richer and pushed us everyday folks lower and lower.

[chadb19]

We here things like this yet we Americans do nothing other than complain....is anybody actually held accountable for anything anymore in this country...I think not...American have become so complacent its ridiculous!!!

[inventagod2]

Tip of the iceberg, I am sure...

[beto330]

It makes me sick! My tax dollars is supporting the already rich folks. I am busting my balls making it day to day working for one rich man and now I have to support his friends too! This is BS!

I think its time to get the pitch forks!

[truthspeake2]

These folks should be fired....period! And anybody that has insurance with AIG should be looking to move it elsewhere then just maybe, they''ll finally get the message.

[dinkydog1]

"Bush White House Assails AIG spending spree"
or
" Pot calls Kettle Black"

[walkshe]

Nothing''s going to change unless the government does. Do we really think the government''s going to change? Yup, it''s complacency with a capital "C".

[bobnjersey]

[... executives of AIG''s main U.S. life insurance subsidiary spent $440,000 on the retreat, complete with spa treatments, banquets and golf outings. ]

i''m sure they were just trying to stimulate the ''corporate retreat'' sector of the economy ... the market should be free ... free to spend ''other peoples money''!

[fharlass]

***. I hope with time that these slimey sleezy AIG scumbags endup with their counterparts of Enron, Tyco, etc. Absolutely amazing that the working people of this country footed the bill for this. Fuld and the AIG CEO are truely the scum of the earth.

[ironwing74]

What a grand waste of time. If these bozos broke the law, seek indictments. If not, what''s the point of "assailing" them? This is political grandstanding at its worst: what''s the objective...to add fuel to the already smoldering ire of the American people? I think sometimes that these politicians just want to hear themselves talk...and say nothing. Just recall the tobacco hearings and the oil company hearings. In spite of the politicians, in spite of a morbid and franzied media, we''ll get out of this mess.

[docadams3]

Sounds like a Neil Bush party, especially if the hookers were free too.

[lost4words]

Well it goes to show you that AIG found the First LOOP Hole in the 700B dollar bail out.

Stay tuned More Loop Holes and Luxury Get aways to Come.

Well said, colt. Well said. These execs simply never learn. Fire their behinds and force ''em to pay back the money !

[generey]

White House Assails AIG Spending Spree.

Now THIS is a "prime" (good anology word huh) example of propaganda at its best, as well as business as usual, and just who do ya think the suckers are!?!? ROFLMAO! 1-800 wah-waah wal street!

[ici2i]

What a grand waste of time. If these bozos broke the law, seek indictments. If not, what''''s the point of "assailing" them?

Posted by ironwing74

Are you kidding me?? The largest private sector bailout of all time with our tax dollars and we shouldn''t assail or report about a luxurious, 1/2 million dollar company funded retreat? Many of us are holding our collective breaths about whether we''ll even have a job tomorrow or enough money to pay for heat this winter and you throw stones about uncovering an elaborate ruse by teh rich and famous. You''re one of them you arrogant snob!!!

[ici2i]

So NOW the Bush/Cheney regime objects, after 8 years of the most massive transfer of wealth to the wealthy in the world''''s history?

Posted by geronimo888

The irony is lost in the politics or so they wish

[jetlizhan]

what evil, greedy b@stards!!!!!!!!!

[bobnjersey]

[This is political grandstanding at its worst: what''''s the objective...to add fuel to the already smoldering ire of the American people? In spite of the politicians, in spite of a morbid and franzied media, we''''ll get out of this mess.]
[Posted by ironwing74 at 02:47 PM : Oct 08, 2008]

yes ... more fuel is needed ... because until everyone realizes that the whole system has been ''manipulated'' by those that control ... nothing at all will change ... and all the violators will return to ''bau'' (business as usual) when the attention has been redirected to something else.

only when enough people actually feel the pain of these abuses will any real movement be made to correct their underlying causes.

[mellie1957]

We are a foolish nation if we continue to vote for incumbents, even at the local levels.

[brianp55]

Old habits die hard. I spent that same weekend cleaning out my garage. Hope the boys from AIG at least got one of those Asian "happy-ending" massages where the gal oils up and slides along...well, you know.

[jumkey]

Mr. Bush is shocked, shocked that his political contributors and cronies would be involved in such activities.

Republicans are CROOKS - it''s not what they "do", it''s what they "are".

[soldoutbelie]

So basically the government through our tax dollars helped a bunch of dirty underhanded rich business men...

[easeup-2009]

Old habits die hard. I spent that same weekend cleaning out my garage. Hope the boys from AIG at least got one of those Asian "happy-ending" massages where the gal oils up and slides along...well, you know.

Posted by brianp55 at 03:13 PM : Oct 08, 2008

Imagine the $23,000 happy ending!

[creeper00]

yes ... more fuel is needed ... because until everyone realizes that the whole system has been ''''manipulated'''' by those that control ... nothing at all will change ... and all the violators will return to ''''bau'''' (business as usual) when the attention has been redirected to something else.

Posted by bobnjersey at 03:06 PM : Oct 08, 2008

Right on.

Burn, baby, burn.

[sicily48]

MAKE THEM PAY BACK THE MONEY, PUT THEIR NAMES AND FACES ON THE INTERNET AND FIRE ALL OF THEM.
JUST ANOTHER CASE OF THE AVERAGE PERSON GETTING DUMPED ON. NO WONDER THE WORLD LAUGHS AT US.

[brianp55]

Now come on...let''s not be too hard on the guys from AIG...they''ve been through a lot. Losing billions of dollars of other people''s money would be rough on anybody.

[robaldrich]

geronimo888 says: So NOW the Bush/Cheney regime objects, after 8 years of the most massive transfer of wealth to the wealthy in the world''''''''s history?
------------------

WOW!
1. Any proof?
2. Are you talking about dollars or percentage of country''s wealth?
3. What about all of Russia''s wealth transferred to a few when communists took over?

And I thought welfare, and the like, constituted the greatest transfer of wealth -- from the working class to the unproductive. Certainly not a Bush priority.

[hologram5]

These guys need to be shot on national tv, that would make us, the people feel a little better...

[hologram5]

May I ask a favor? can the Obama fighters and McCain fighters stop fighting for just one moment?

Thank you.

Bear in mind that both candidates DID for for the $700 billion bailout ripoff. Under these circumstances, how could either candidate approach these people at AIG for taking the money of US taxpayers and squandering it on a spa?

I am, admittedly, not impresed with either Obama or McCain. I have repeatedly lit them both up here for voting for the bailout. But because one of them WILL be our next president, I''''d like to get a response from their soldiers here...

My vote is still up in the air. Why should I vote for either of them and what will your candidate do to keep these corporate theives from doing it again?

This is a genuine question... no BS.

Thanks for your time and thoughts.


--------------------------------------------------------------------------------

Posted by sincityq at 03:26 PM : Oct 08, 2008
------------------------------------------------
Neither one of these clowns deserve your vote. Choose for yourself, go to youtube, look up Ron Paul and the economy and you will get a surprise.

[emmer94]

To all those democrats that point the finger at this administration. Read the article in the NY Times from 1999 where Clinton started this mess. When Bush tried to control it, the Dems wouldn''t let him. My own senator got money from all these companies that got bailed out. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260

Also http://www.snopes.com/politics/business/easescredit.asp

The Dems don''t want you to know that THEY are to blame.

[redangel74]

Just another example of rewarding all those who don''t play by the rules. Hard work and morality is dead in this country and it''s not going to come back any time soon. I am so sorry for all the people out there who have young children.

[tmittelstaed]

"...But because one of them WILL be our next president, I''''d like to get a response from their soldiers here...

My vote is still up in the air. Why should I vote for either of them and what will your candidate do to keep these corporate theives from doing it again?..."

Boy, your thick.

Obama voted for the bailout, as did the rest of the Democrats, because if he hadn''t then the Republicans would have just blamed the stock market crash and coming depression on the Democrats - claiming that when Obama was given a chance to stop the depression, he didn''t. There''s enough stupid people out there that would have believed it so that the Republicans would have won.

But if you think for one minute that once the Democrats get into power that they are going to just let a Republican-designed 700 billion boondoggle just slide right through you are even stupider than your double-posting indicates.

Go to the Obama website and READ what he is planning to do to fix the economy, use your brains for a change instead of sitting on them.

[mellie1957]

sincityq

I was raised by a die-hard Democrat. At 51 I''m just now realizing my Dad was right. Bush has made a believer out of me. My portfolio looked a lot better when Clinton was in office (even though he had the morals of a humpin rabbit). I''m taking a chance on Obama, even with the Muslim affiliation. We don''t need another 4 years with a Republican leader. Bush should go down as the worst president this nation has ever had.

[cricketmk3]

We all own this company now and I demand these executives get their arses back and get to work!

[missy6000]

so is anyone going to do anything about this spending spree? Someone should be locked up and pay it back with interest. BIG interest.

[rudy654-2009]

But how despicable was it when we learned of Halliburton''s total "questioned" and "unsupported" costs exceeding $1.4 billion? How many spending sprees did Halliburton execs enjoy?

[emmer94]

New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
Published: September 11, 2003
"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."

"Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry."


"The administration''s proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies'' exemptions from taxes and antifraud provisions of federal securities laws."

But it didn''t pass! And according to this, it sounds like they didn''t pay taxes. (I figured I better put in those quotes or I''d be just like Biden)

[louiville2]

Since we own 80% of AIG dosn''t this make it a federal felony in missues of government funds?

[easeup-2009]

My portfolio looked a lot better when Clinton was in office

Posted by mellie1957 at 03:39 PM : Oct 08, 2008

You obviously weren''t investing in the NASDAQ...

[mellie1957]

sincityq

yes - 1957 - brought up in a hard working family. Parents lived thru the great depression. It''s amazing how much smarter my parents got as I aged. I suspect history will repeat itself - we''ll be recycling aluminum foil in our kitchens, we''ll be hanging clothes on a clothes line to dry. I can do it because I''ve seen my mom do it. But our children are in for a culture shock when cable TV & cell phones get cut off. Happy 51st sincityq

Congress and the White House are having issues with the AIG bigwigs going on holiday after being on Capitol Hill??? Please this is akin to Jack the Ripper admonishing Ted Bundy!! America wake up and get a grip. The bailout benefits those that caused the market to topple in the first place.

Congress and the White House are having issues with the AIG bigwigs going on holiday after being on Capitol Hill??? Please this is akin to Jack the Ripper admonishing Ted Bundy!! America wake up and get a grip. The bailout benefits those that caused the market to topple in the first place.

[easeup-2009]

I can see them sitting in the board room......

"Well I''ve got news for you they''re going to get us anyway......so we might as well have a good time!

TOGA!! TOGA!! TOGA!! TOGA!!"

[fsmith72]

I think this is awful!! I have mortgage insurance through AIG. It''s tacked onto my mortgage payment every month, and is supposed to be default protection, but it''s so expensive it makes default more likely! I can''t believe these guys!!