AIG cancels Half Moon Bay retreat

October 9, 2008 6:23:46 PM PDT
After being blasted for a lavish get-away shortly after getting billions in bailout money, AIG is now being forced to cancel another scheduled for Half Moon Bay this weekend.

Canceled -- that's the word from AIG of a conference that was supposed to be held at the Ritz-Carlton in Half Moon Bay. The cost each room is $400 a night. The event was intended to motivate and educate 150 agents.

David Landis is a public relations specialist.

"The PR person and the PR team should be talking with the events people and the CEO about every single action the company takes, so that public perception is preserved in a positive way," said Landis.

On Tuesday, AIG came under fire after a Congressional committee revealed the company had spent $440,000 on a spa retreat at the St. Regis resort in Southern California. The event happened less than a week after taxpayers bailed them out.

"The taxpayers of this country are the owners of AIG and we should be calling the shots," said Rep. Jackie Speier (D) San Mateo.

David Callaway of Marketwatch says that's just not realistic.

"You could fire them all and bring in other people, maybe that's what they are talking about, but at the moment you have to have the business running. The policies need to be serviced and trading contracts need to be honored business need to run," said Callaway.

On Wednesday, AIG went back to the Federal Reserve to ask for more money -- nearly $39 billion.

In September, AIG suffered a liquidity crisis after its credit rating was downgraded. The company had continued to lose money on mortgage-backed securities.

And the man responsible for much of these losses is Joseph Cassano, head of the financial products division.

"Over the course of eight years he actually earned more than the CEOs," said Rep. Speier.

According to Speier, Cassano received more than $280 million over those eight years and before he was fired received a $34 million bonus.

He was re-hired as a consultant for AIG making a $1 million a month until Wednesday when the Treasury Secretary Henry Paulson terminated his contract.

"Why they kept them around? I can only speculate but my guess is he knows where the bodies are buried. He knows where all these contracts are, what they may be valued at who did them, it's a very unregulated market," said Callaway.

Cassano worked out of the London office. There were 377 people working under him. According to AIG files, on average each person in his unit made more than $1 million a year.


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