Oversight Committee to Paulson: U.S. taxpayers are paying for AIG's profligate spending

October 7, 2008
Blog Post
During today's Oversight Committee hearing to examine the regulatory mistakes and financial excesses that led to the bailout of AIG the committee learned, among other things, that a week after the government spent $85 billion dollars bailing out AIG, executives went on a retreat at a luxury resort spending $443,343.71. Chairman Waxman asked at the hearing that a letter to Secretary Paulson about these expenditures be inserted into the record. Below is the letter:

October 7, 2008

The Honorable Henry M. Paulson, Jr.

Secretary

U.S. Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, DC 20220

Dear Mr. Secretary:

Today the Oversight Committee held a hearing examining the $85 billion government bailout of AIG. The hearing showed that even after the bailout, AIG has spent freely on executive compensation and perquisites. U.S. taxpayers are paying for AIG's profligate spending.

Today's hearing revealed that shortly after the bailout was signed, executives from AIG's major U.S. life insurance subsidiary, AIG American General, held a week-long conference at an exclusive resort in California. The company spent nearly half a million dollars in a single week at this resort, including thousands of dollars on catered banquets, golf outings, and visits to the resort's spa and salon.

The hearing also revealed that AIG continues to pay one million dollars a month to an official who helped bring about the company's downfall. This official, Joseph Cassano, is the former president of AIG's Financial Products division, the unit that sold the credit default swaps that caused billions in losses for AIG. Mr. Cassano resigned from his position in March 2008. Yet AIG has inexplicably decided to pay Mr. Cassano up to $34 million in unvested bonuses. Even today, it is continuing to employ him as a "consultant" for one million dollars a month.

Secretary Paulson, this situation is unfair to taxpayers. AIG received $85 billion in taxpayer money, yet it continues to lavish its executives with undeserved payments and perquisites. We urge you to protect the taxpayers' money and end this profligate spending.

Sincerely,

Henry A. Waxman

Chairman

Elijah E. Cummings

Member of Congress

Bruce Braley

Member of Congress

Jackie Speier

Member of Congress