Time to reimburse the taxpayer?

[audtatious]

AIG's recent get together after our 85 billion bailout.....

[hannibal]

$442K?!? Thats just rediculous. WTF could they be celebrating?

I still haven't had time to read the bailout plan that passed Congress, but I just hope these wasteful displays are prohibited.

[HashiriyaS14]

In theory, the story is that this trip was an expense of the insurance business unit, NOT the financial services business unit.

The financial services business unit is the group that's doing poorly, Insurance is doing well.

That said, I still think it's total BS. The bailout funds didn't go to any particular business unit but to the ENTIRE FIRM, the parent company. If insurance is doing so well, they should divert some of those profits to financial services so that they don't have to borrow as much from the Government.

Obama said that he thinks they should have to give the government back $442k and the trip planners should be fired, which I agree with.

In general though, I still think that AIG was a good deal for the government. 12% preferred return is pretty juicy. We need to exercise our oversight and prevent these sorts of expenditures until all capital has been repaid, however. That's why we have oversight. If they can afford to pay $442k for a trip, they can afford to repay some of our preferred return.

[audtatious]

In general though, I still think that AIG was a good deal for the government. 12% preferred return is pretty juicy.

Yeah, but for whom? I'm sure that 12% return will probably not cover the administrative costs over the lifetime for us to monitor and manage the situation. If there is leftover then I'm sure it will be wasted elsewhere. End result will be 0 or a loss with the way Gov handles things.

Our Gov should not be in the business of making money for itself.

[HashiriyaS14]

Yeah, but for whom? I'm sure that 12% return will probably not cover the administrative costs over the lifetime for us to monitor and manage the situation. If there is leftover then I'm sure it will be wasted elsewhere. End result will be 0 or a loss with the way Gov handles things.

Our Gov should not be in the business of making money for itself.

Ok, I'm not sure what the administrative costs will be to oversee an insurance company, but I guaran-f**king-TEE you it ain't going to be $10.2 BILLION DOLLARS ANNUALLY.....because that's what we're earning on those funds.

The "lifetime" isn't much, it's a two-year loan, so we'll earn $20,400,000,000 in two years, or thereabouts (it's a floating rate). Not too shabby.

Saying that the profit is meaningless because it will "surely be wasted elsewhere" is ridiculous. The government should indeed NOT be in the business of loaning money with the pure intention of clearing a profit, but if it NEEDS to loan money for policy reasons (i.e. AIG or to another foreign power, like Mexico in 1995), we should obviously clear a profit if we can.

Sometimes, the US government DOES need to be in the business of propping up private companies or foreign government because it makes policy sense to do so. In 1995, we couldn't let Mexico go insolvent because a massive Mexican financial crisis would mean more illegals, more drugs, and more trouble.

Likewise, a failing AIG would mean a lot of trouble for the US economy and for millions of people with retirement accounts and pensions. These people didn't personally buy more house they can afford, they just had savings entrusted to fund managers who made bad decisions. If the government can help them out while clearing a KILLER PROFIT for the taxpayers, why wouldn't you want to do that? Ideology? Ideology is a shxtty reason to do or not do anything, IMO.

[AZhitman]

I'm an admitted econo-tard (at least on global econ issues)... but couldn't any "profits" be used to pay down the deficit?

[HashiriyaS14]

I'm an admitted econo-tard (at least on global econ issues)... but couldn't any "profits" be used to pay down the deficit?

Sure, they could be used for whatever we like.

Deficit reduction is a very good use indeed for any surplus available funds.

Additionally, at the current rate of spending, it could buy us another two months of screwing around in the sandbox.

It could buy all sorts of neat stuff. In theory at least, it's $68.00 for each American, so maybe we can all buy ourselves $68 prepaid giftcards to Best Buy or Amazon or something, lol.

[audtatious]

Ok, I'm not sure what the administrative costs will be to oversee an insurance company, but I guaran-f**king-TEE you it ain't going to be $10.2 BILLION DOLLARS ANNUALLY.....because that's what we're earning on those funds.

The "lifetime" isn't much, it's a two-year loan, so we'll earn $20,400,000,000 in two years, or thereabouts (it's a floating rate). Not too shabby.

I understand that which is why I added "with the way Gov handles things"

[HashiriyaS14]

I understand that which is why I added "with the way Gov handles things"

And my point is that, while I'm as distrustful of how the government manages funds as anyone, that no, not even THEY are going to be inefficient enough as to completely negate the value of a $20.4 billion profit. It WILL do good, and it IS a good deal for the taxpayers no matter how it's sliced, diced, or skewed.

Could private enterprise maybe put that $20.4 billion to better use? Maybe. Is there any extant private enterprise with the liquidity (at present) to CREATE that profit? Nope, apparently not. So the government gets it.

[audtatious]

We shall see where it is spent and call it a pig or a rainbow after the fact.

[HashiriyaS14]

We shall see where it is spent and call it a pig or a rainbow after the fact.

No, wrong again.

If something happens to come along and blow those proceeds, or if a future government makes some bad decisions, that doesn't mean that the decision to MAKE the profit was a poor one.

Let's illustrate your position with the following example:

"Jack, our fictional character, has the opportunity to buy the Empire State Building for a dollar. He does so, and immediately resells it for $1 billion.

Jack lives happily ever after and leaves the $1 billion to his son, Carl.

Carl then takes the billion dollars and loans it to the Iranian government for a proposed interest rate of 40%.

The Iranian government defaults, and he is left with nothing"

You are, in effect, asserting that the decision to buy the Empire State Building for a dollar is a poor one, just because certain things may happen later that threaten to negate the value created.

This is preposterous, as the decision to buy the Empire State Building for a dollar is, quite obviously, a pretty solid decision.

Thus we can safely proclaim it to be a "rainbow" now, we don't need to wait. The decision of where to spend the profits is wholly separate from the decision to generate them.

[audtatious]

While I don't support the Gov going into business for themselves by bailing out corporations in which are failing due to greed and Congress, you are twisting my point. You state 24 billion in income to the fed gov which I feel is one of the only good aspects of the whole thing. I'm also stating that the income will be mismanaged or cover pork projects based on the past. It's either going to go that way or they will actually do something right and put the money to proper use (rainbow). I'm sure it will simply go to some discretionary account and be picked apart by the buzzards. What's done is done. I just expect the Gov to piss the proceeds away.

So be it.

[AZhitman]

Well, I'd consider it money already spent, drop it on the deficit and run the risk of pissing off some taxpayers.

[HashiriyaS14]

Well, I'd consider it money already spent, drop it on the deficit and run the risk of pissing off some taxpayers.

And wise you would be.

It makes little sense to return any excess money to the taxpayers until the deficit is paid down, although your party (and, arguably, mine also) would tend to disagree.

It's like putting savings in the bank that earns 4% while you've still got a credit card balance you're paying 25% on. Doesn't make sense. Pay the deficit down and THEN issue "dividends".

But then again, when have politicians been known to be sensical.

[AZhitman]

Good point.

BTW, get your a$$ in the Mod forum and respond to my thread.

Dammit.

[audtatious]

And wise you would be.

It makes little sense to return any excess money to the taxpayers until the deficit is paid down, although your party (and, arguably, mine also) would tend to disagree.

It's like putting savings in the bank that earns 4% while you've still got a credit card balance you're paying 25% on. Doesn't make sense. Pay the deficit down and THEN issue "dividends".

But then again, when have politicians been known to be sensical.

I don't necessarily want it returned "to the people" but used to pay the deficit instead of some earmark. There has been no accountability in Congress at all so I don't have great hope that they will do the right thing.

[HashiriyaS14]

I don't necessarily want it returned "to the people" but used to pay the deficit instead of some earmark. There has been no accountability in Congress at all so I don't have great hope that they will do the right thing.

What they *should* do is specify, when writing these bailout packages, that any profit they return is pre-destined for deficit reduction.

Ultimately though, fiscal responsibility is the product of the President more than the Congress. A President is either inclined to engage in deficit spending or he/she isn't. Clinton generally was not, GWB generally is.

Unfortunately, I don't think that EITHER McCain or Obama would be as dedicated to reducing the deficit as Clinton was. This is sad, as I believe that if either are 2-term Presidents, they stand to preside over a very strong economic period indeed. After a year or two, I expect the US market to start generally going gangbusters, well ahead of any Euro or Asian recovery. There should be a lot of money to throw around, and hopefully it gets thrown around responsibly (i.e. reducing the deficit, balancing the annual budget, et cetera).

Hopefully they're both smart enough to realize the right thing to do, but I fear that McCain would spend it on tax cuts and Obama would spend it on infrastructure and social programs (some of which we inevitably won't need, some of which will probably be warranted).

[smockers83]

To reduce the deficit today, we would have to end our activities in Iraq and Afghanistan and move to a policy of containment, which allows us to combat terrorism with minimal forces and resources. Its pretty difficult to start reducing the deficit when you are engaged in hefty military activities.

[audtatious]

Ultimately though, fiscal responsibility is the product of the President more than the Congress. A President is either inclined to engage in deficit spending or he/she isn't. Clinton generally was not, GWB generally is.

Yes and no. Until Congress can start passing bills on their own merit without adding pork to them for votes then the responsibility must be spread out much more than it usually would. The problem the Gov has today as compared to the past is that more details are available to the citizens via the internet in which we have more opportunity to see what they are really saying, have said, doing or have done. They all need to shape up or ship out.

Ultimately, the responsibility is to the American people to get tired of the BS and start electing more fiscally conservative representatives who are interested more in the welfare of the US instead of pet projects and lobbyists.

[audtatious]

To reduce the deficit today, we would have to end our activities in Iraq and Afghanistan and move to a policy of containment, which allows us to combat terrorism with minimal forces and resources. Its pretty difficult to start reducing the deficit when you are engaged in hefty military activities.

I would agree to ceasing all activity as soon as we can start pulling our own oil to offset what we are getting from the likes of OPEC, Chavez and others.

[Jesda]

I'm on the fence on this one.

The trip was reserved in 2007. It seems unlikely that they could cancel and get a full refund. In addition, its a reward for the top-performing insurance guys. These are insurance salespeople who contribute tremendously to AIG's bottom line, which is something taxpayers should favor. They are not finance managers.

As far as AIG is concerned, the funds spent on this reward are not much different from direct compensation. If you fail to reward performance, you lose productive people and lose their sales. Canceling the spa visit might be a short-sighted and ill-advised move.

It is in very poor taste and horribly timed, but I think it -could- be justified, but again, the timing is just awful.

[audtatious]

Yeah, I agree with that. Bad timing and incentives. We have "Club" at my company for salesmen who are 10% over their GP goals for the year. Last year they probably had 30+ people from the company sent to the Bahama's for 3 days (the guy I support and his wife went).

[Hijacker]

One thing I noticed with this thread is that nobody mentioned how intertwined with New York City (and the State for that matter) financial and business sectors. AIG was a business that couldn't fail. The long term effects of what they would drag down with them would make Enron's collapse pale in comparison. Like it or not, the government had to step in and prop them up. Bank of America is in the same boat as well, so with all the current banking issues we've been having, I've been keeping a sharp eye on BoA.

It was my understanding from the regional president of our New York and North Eastern offices (I work for a national insurance company, so AIGs problems were big news to us) that AIG was going to be broken down into smaller companies and then auctioned off by the government. A forced selloff pretty much. Maybe I just misunderstood what he was saying, I was kind of zoning in and out during that particular branch meeting. He had a voice that made even the biggest and most important news feel drull.

[Eikon]

I have a question about this issue... Just playing Devil's advocate here--

The Bill shows that they made a $400k deposit. Do we know when that deposit was made? Perhaps they did the same thing last year and placed the deposit shortly afterwards?

I'm not trying to defend AIG. I think big business does some pretty rediculous things on a regular basis. I've been with some companies that nickel and dime their regular workforce like no tomorrow.. then take all the execs on $20k per person vacations.

[audtatious]

I'm sure it was before all the mess started. It's a problem I run into all the time in my job in that different business units have their own budgets and are somewhat completely separate "internal" entities within a single company. The right hand knows not what the left hand is doing. Only some upper management have a clue and it is these people who should have stepped in and used the almost 1/2-mil to help other internal business units.

The people who went on this "junket" do get paid and do get bonus' money for performance. If they got pissed over missing this little outing then they should go elsewhere.

[smockers83]

Dare I say my company is taking 1900 couples down to the Atlantis in February, all expenses paid? The one in the Bahamas, the one that is #1 resort on the Travel Channel.

[audtatious]

That's totally up to them and the board I would say.

[Eikon]

That's totally up to them and the board I would say.

As long as they aren't getting Billions from the Federal government on the other side of the table..

[smockers83]

Nope, we're very stable and growing.

[Encryptshun]

Nope, we're very stable and growing.

Are you hiring?