WASHINGTON, D.C. – Claire today fired off a letter to Federal Reserve Chairman Ben Bernanke and Secretary of the Treasury Hank Paulson expressing her serious concern regarding AIG’s $440,000 company retreat at a luxury resort just days after receiving an emergency loan from the federal government.  In her letter, McCaskill asked them to ensure that AIG repays the amount spent on such frivolous activities and take steps to make certain that similar incidents do not happen in the future.  Copy of Claire’s letter is below.

 

 

October 9, 2008

 

Dear Chairman Bernanke and Secretary Paulson:

 

As you are well aware, documents obtained by the House Committee on Oversight and Government Reform show that AIG spent over $440,000 on a company retreat at a luxury resort less than a week after receiving an emergency loan of $85 billion from the Federal Reserve.  Taxpayers, including my constituents, have rightly reacted with outrage that public funds could be used for such frivolous expenditures. 

 

The Treasury is now authorized to spend up to $700 billion taxpayer dollars to stabilize credit markets and restore confidence in the American banking system.  This is in addition to the billions of dollars that the Federal Reserve has put on the line to prevent the collapse of firms like Bear Stearns and AIG, which this week received an additional $38 billion, on top of its existing $85 billion loan facility.

 

If the emergency actions of the Treasury and the Federal Reserve are to restore market confidence, then citizens, taxpayers, business owners, and financial institutions need to be able to trust that the taxpayer money used for these loans will go toward rebuilding capital and increasing liquidity.  Stories like the one involving AIG undermine that trust.

 

With that in mind, I ask that the Federal Reserve set an example by seeking immediate repayment from AIG or its executives of the $440,000 spent on the retreat.  I also ask that both the Treasury and the Federal Reserve inform me of what policies and procedures they will put in place to prevent similar occurrences at firms receiving emergency funds in the future.  Such controls will be essential to the effectiveness and legitimacy of government intervention in the market, especially if the Treasury begins to acquire equity stakes in troubled financial firms or if the Federal Reserve provides emergency loans to additional institutions.

 

Sincerely,

 

­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­Claire McCaskill

U.S. Senator