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Washington, D.C.—Following a House Committee on Oversight and Government Reform hearing yesterday examining the $85 billion bailout of AIG and subsequent profligate spending by the company, Congressman Elijah E. Cummings (D-Md.), a senior member of the Committee, joined Chairman Henry A. Waxman (D-Calif.), Congressman Bruce Braley (D-Iowa), and Congresswoman Jackie Speier (D-Calif.) in sending a letter to Treasury Secretary Henry M. Paulson, Jr., urging him to protect taxpayers’ dollars by putting an end to the spending (text of the letter below).
“It is shocking to the conscience that AIG would take 85 billion taxpayer dollars to fund an executive spa week that included expensive resort suites, manicures, pedicures, massages, and bar tabs,” Congressman Cummings said. “If the Treasury Secretary allowed our taxpayer dollars to be wasted in this instance, how can Americans be confident that the $700 billion recovery package will be spent any differently?”
Yesterday’s hearing was the second of five planned by the Oversight Committee to examine the causes that led to the nation’s recent financial meltdown. The hearing revealed numerous instances of extravagant spending by AIG, including a week-long, half-million dollar conference at an exclusive resort in California held only one week after the government bailout was signed. The hearing also revealed that AIG continues to pay one million dollars a month to a former executive who helped bring about the company’s downfall.
“Every day, I see my neighbors in inner city Baltimore struggling to pay their bills, keep their homes, and feed their families while the government is spending billions of tax dollars on golden parachutes for executives who were reckless and irresponsible with their business practices,” Congressman Cummings said. “I sincerely hope that Mr. Paulson takes whatever measures are necessary to put an end to the wasteful spending of American tax dollars.”
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Text of 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, Elijah E. Cummings, Bruce Braley, and Jackie Speier
Members of Congress
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