Lawmakers put AIG execs on the spot
— -- "Average Americans are suffering economically," said Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government Reform, which held the hearing. "Yet less than a week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."
Testifying at the hearing, Robert Willumstad, AIG's chief executive before the government took over the company last month, said he did not know about the event. "I was not aware of it, and if I had been, I would not have let it happen."
According to records the committee obtained, the event's expenses included nearly $200,000 for rooms, about $150,000 for banquets and $23,000 for spa services.
In testimony, Willumstad and Martin Sullivan, his predecessor who headed AIG from 2005 until July, avoided taking responsibility for its collapse.
Although Willumstad refused the $22 million severance package the company offered him at his departure, he testified, "I don't believe AIG could have done anything differently."
Martin said, "At the time I left the company, I thought it was well capitalized and had liquidity."
Willumstad and Sullivan said the company was hurt by "mark-to-market" accounting rules that forced the company to write down the value of its credit default swaps by tens of billions of dollars, requiring AIG to raise more capital.
Although AIG's insurance businesses remain healthy, the company's crisis accelerated last month because of its sales of insurancelike securities known as credit default swaps, which buyers of mortgage-backed securities bought to protect themselves against defaults. As defaults increased in mortgage-backed securities, AIG's credit rating dropped, and that forced it to raise billions of dollars in additional collateral.
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