This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.

Bingo.

Taxpayers aren't going to get anything in return for your investment in AIG if the business has to approve expense reports in the court of public opinion. That's why they kept it a secret. I would have liked to have seen their ROI research on this sort of conference to make the point stronger because I'm sure there are already 30 angry "burn in hell" replies to this already, but they've done enough.

"This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer."

Questions :
1) Then why did you keep it secret if everything was totally aboveboard ?

2) Did this have to be in one of Arizona's finest (expensive) resorts ? Hardly seems consistent with cost cutting.

3) What is "minimal" cost? If you are taking my tax dollars,sir, I want to know how many of my children's children's dollars will be claimed to feed appetizers and liquor to a bunch of people that can afford it on their own.

No sale,asshole. Break up AIG and stop the teat sucking,NOW.

What does "independent financial planner" mean? Commission salesmen who work primarily for AIG but are not technically "employees"? The same ruse that other companies use when they classify employees as "independent contractors"?

"More than 90 percent of the costs were paid either by sponsors". Who are these sponsors and why would they pay AIG's bills for these events?

Kudos to Liddy for coming out and saying this. I think most of the public would have little problem with the conference or things like it if there is a reasonable justification presented. They are, after all, part-owners.

AIG - whether you like it or not, the media is watching everything you do. Maybe it'd take the wind out of any backlash if you announced these things -beforehand- instead of trying to hide it and then play damage control once it gets out?

But as far as damage control goes, you responded very well to this particular conflagration.

/sets voodoo doll back in the cabinet

Taxpayers aren't going to get anything in return for your investment in AIG.

End of discussion.

@ADismalScience: Would it have been so hard to say something along the same lines -before- the conference and not just hope that the media wouldn't find out?

@Red_Flag:

AIG - whether you like it or not, the media is watching everything you do. Maybe it'd take the wind out of any backlash if you announced these things -beforehand- instead of trying to hide it and then play damage control once it gets out?

That's too much to ask. AIG will not be competitive if every last sales meeting gets announced to the public. Not only will some of them get poached, but the public will consistently complain about the cost and insist they know how to run a financial firm's sales division.

AIG's advisory business is extraordinarily profitable. They're crippled because of credit default swaps, not because they don't know how to sell insurance products and derivatives to financial advisors. Not only does the public have no idea how to run this business, but AIG is doing a fine job of it without meddling.

I'm probably in the minority here but what AIG said here makes sense to me. (disclosure: I have ZERO connection with AIG.)

An unfortunate reality in the biz is that you have to spend money to make money. I don't blame AIG for wanting to keep their name secret as it would have caused unwarranted attention.

So around 10% of this was paid by tax payers.

That's still to much IMHO.

Repay the taxpayer? Dead wrong. Any money the govt. gets back will be spent on some other crap. No way is "The American Taxpayer" going to get "paid back".

My question would be: Apparently these conferences are to disseminate information to people? Are people only receptive to information at high dollar resorts?

@ADismalScience: I'm sorry, but there is no excuse for these conferences taking place in such extravagant settings.

So, I should be expecting my check from AIG, when, again?

Oh, that's right. NEVER.

@Red_Flag:

They did! The October 10th statement cited above included the strategy for expense management. But explaining your business model in town hall is somewhat bad for business, no?

They are trying to avoid media attention and scrutiny because taxpayers will not wait for the rational explanation for this. Read the other comments in response to this - can you rely on the public and media to understand this business model? The bottom line is that the mainstream media does a shitty job of explaining high finance - Consumerist included, which is why I rarely post here - and consumers don't even bother listening to the explanation.

@brent_r:

Extravagant?! It was a Hilton; I understand Hiltons aren't exactly Red Roof but they aren't Dubai either. And as the press release states, few of the costs were paid by AIG.

Oh, thanks for the letter...I completely trust your judgment AIG...it's not like you've ever completely bundled financial decisions in the past or anything. You could replace the CEO with KoKo the Gorilla and the company wouldn't miss a beat. In fact, that way, AIG could pay the taxpayers faster since now the compensation for the CEO would be a boatload of bananas. Much cheaper than the millions he's currently making.

@ADismalScience:
You seem to miss the entire point.

This isn't about the fact that these conferences are held.
It's about the fact that these conferences were wasteful.

The fact that you can claim these conferences served a useful purpose is irrelevant.
And you've yet to present a "rational explanation" for the frivolous extravagance.

@ADismalScience:
You're never going to get anywhere arguing with some of the people on here, Red_Flag included. The general public seems to think that they know how to run AIG better than AIG knows how to run itself. You're right that it's too much to ask of AIG to pre-announce and pre-clear any normal business activities it intends to conduct. Right or not, you will find much opposition from good 'ol Joe Six Pack and Joe the Plumber who have absolutely no idea what AIG even does, yet they have strong opinions on how it should be run since it's "their" tax dollars funding AIG. What they seem to forget is that while the government does own a huge equity stake in AIG, they still have to be allowed to do business if the taxpayers want to see a return on that investment. Putting up tons of red tape and hoops for them to jump through in order to do business certainly doesn't further the goal of getting a decent ROI for the US. But again, you'll never win any argument like that on here.

Close friends are losing their jobs and are looking at a retirement without medical benefits, and these assholes are spending their welfare money like there's no tomorrow. People need to grow some balls and get rid of these jerks.

@Saboth:
These conferences are also designed to wine and dine the people that bring $200 million a year in revenue into AIG. If AIG doesn't wine and dine them, some other company will. It's simply the reality of the business. If AIG said "We're having our Financial Advisor retreat at the Red Roof Inn this year, you can bet the Advisors would say "No thanks, we'll be attending XYZ's retreat at a fancy resort. Better luck next time!"

OFF WITH THEIR HEADS!!!

We should listen to everything they say because they emailed it from public relations. Drink the Kool-Aid.

@Pylon83: Ah, I can just feel the love. We'll break out into strains of Kumbaya any minute now...

Oh, wait, we have completely different ideas on regulation, my particular standpoint being that a completely laissez-faire free market is going to to rise and fall and anyone who calls themselves a capitalist should have let companies with bad decisions, bad management and/or bad luck wither and die. That's how capitalism works.

You don't like regulations? You don't like gov't oversight? Don't like being told how to conduct your private business? Simple solution: don't accept public money.

Please! I work for a state funded program that works with handicapped babies. All of our travel and training has been cut due to the economy and we're making due with conference calls. That's how we're disseminating information.

Come on, these corporate sales seminars are and always have been excessive and unnecessary, they are a showing of wealth and power on the companies side to wow potential clients, clearly in the case of AIG it's just a smoke screen as any investor/client should know by now they're not in a good place.

If there is really such a dire need to keep people abreast of new products how about a Webinar? Pretty cheap to run, serves the same purpose, but then you can't show off your fancy powerpoint presentation while eating free egg rolls and drinking champagne.

"On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events."

So they were going to have 160+ expensive, nonessential conferences or meetings, unnecessary travel and excessive overhead events but since the U.S. citizens bitched about these events in the past we saved them lots of $ right? Thats how I read it.

@Pylon83:

I suspected that is the case, but when they present the conference as "It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG"., they are pretty much covering up the fact it is just a reward package with thinly veiled "business" on top of it.

Since AIG is government-owned, their travel needs to be under the same scrutiny as any government employee's travel would. Mr. Liddy needs to quit whining - if he doesn't like it, he can find his own damn bailout funding.

@brent_r:

Frivolous extravagance is throwing a conference at a Hilton funded primarily by the target audience and co-sponsoring firms?

Stop the presses.

343,000 dollars is absolutely zero in this business. It's less than a drop in the bucket. Finance is a world where some products have initial investment minimums in the 10's of millions. Criticizing a business for spending 343,000 - which, from the letter it seems they did not - to drum up business with 150 FA's who could each provide that much revenue in a single year with a single investment from a single client is, um, shortsighted.

A single sale from that conference to a client of one of those 150 advisors could pay for the cost of the seminar in full. It was a worthy investment, and you are unprepared to provide a fair and responsible critique.

@ADismalScience: It doesn't have to be a town hall for the public, but for Pete's sake, let someone other than people on the AIG payroll look at it. (As far as I can tell from the above, the Oct. 10 statement was an internal thing). I might be satisfied if it was at least run by the Treasury Sec. or the Fed, or someone who isn't getting their paycheck signed by Liddy.

(And I'm not saying each and every thing has to be cleared, just a general, "we'll hold X meetings this year at a projected cost of Y for reasons blah, blah, blah).

I agree with you fully that the media (and the public) jumped the gun. It's not as nefarious as it seems at first glance.

@halftank:
AIG isn't "government owned". The government just owns a large stake of a still-private company. There is a significant difference. At this point, the government is just a large shareholder, no different than if a hedge fund or another large company had taken an 80% stake in AIG. Investment != full ownership.

So, you couldn't have passed along this information by hosting the seminar at, say, a holiday Inn?

I mean that seemed to work fine for the Better Day Co-Op in The Wire. And they were only slightly more corrupt and criminally inclined than AIG.

For those of you who never watched The Wire, the Better Day Co-Op was an organization set up to allow drug dealers to work together and to invest their money in property they would then flip to developers.

"It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG."
Translation: GEEZ We have never heard of a webinar before. You mean we don't have to fly these ppl and put them up in expensive hotels to tell them this.

"The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of September 30th."
Subtext: But we still need to borrow $40B from the .gov

@Red_Flag:

(And I'm not saying each and every thing has to be cleared, just a general, "we'll hold X meetings this year at a projected cost of Y for reasons blah, blah, blah).

This has already happened - the firm knows it is under scrutiny and that its expenses are being carefully monitored. Isn't their attempt to conceal their involvement in this conference evidenciary of that?

Cuomo, however, isn't going to go public with relevant information like that. There's no political will to take the risk!

AIG should just come out and do the necessary. No more hiding. Taxpayers aren't going to get it and the media is only interested in playing gotcha games instead of providing a full and reasonable explanation for this activity.

It's insane, and infuriating. We're a nation of fucking Ellsworth Tooheys.

@ADismalScience: 24.5 million lost last quarter and they're borrowing even more money for the government now..."fine job" my eye.

Translation for the PR impared...

" Recent news reports have grossly mischaracterized an American International Group seminar for 150 independent financial planners held in Phoenix last week."

...damn it, I thought we had this one hidden. Especially when we told the hotel employees that we were "the company that shall not be named" and all.

" The financial planners are not AIG employees. In addition, the cost to AIG for this event was minimal. More than 90 percent of the costs were paid either by sponsors or by the independent financial planners themselves."

It's amazing what we can get other people to pay for, like our "sponsors" the US government.

" It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG. The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of September 30th."

We have fun, and oh, by the way, we also spend one or two hours talking about how wonderful our funds are, and why it makes perfect sense to invest in our funds even though we needed ~$400 billion from taxpayers. Or is it $500 billion? I lose track after getting that much...

" On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events. We conducted a top-to-bottom review of all expenses of the Phoenix meeting in advance and found that it was consistent with my October 10th directive."

We've cancelled all these "expensive" events, like employee appreciation lunches, so we can still give the executives massive bonuses.

"This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer."

We already had this booked, so we figured no one would be paying attention...

Seriously, I suspect that:
1) They had it booked and it would have cost more to cancel than it would to go ahead.
2) That is where they make most of their money - convincing "independent" advisors that AIG is wonderful, so they should convince their clients to invest in them.
3) I have to agree about the media coverage - that picture of the person coming out of the exercise room is just stupid, and has no relevance to the bigger issue.

@ADismalScience: I just don't think it behooves them to be keeping any secrets at this point.

@Red_Flag:
See, I'm not entirely of the belief that the fact they took in public money should put them under any more scrutiny that had they taken in private funds. The government is simply a majority shareholder now, not the owner. As any responsible shareholder of that magnitude would do, there will be significant oversight. But at some point it's necessary to realize that they still have to go about their business in an efficient fashion. Having a department have to clear expenses through management, who then has to clear them with the government is inefficient. First, have you ever been to the post office? I assume so. You are thus aware of how "efficient" our government is. It could take a significant amount of time to get anything cleared by a government agent, slowing business, reducing revenue and resulting in a smaller, or negative, ROI for the US.

@William Mize: Agreed! When do I get my check?

I found this statement completely hilarious:

..."because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer."

Riiiiight.

Although I do retract my previous statement of "burn in hell AIG" from yesterday, I still do not approve of the fact that it's costing me money in some shape or form.

@BoomerFive: Well, not directly, no. Of course, the idea is that this "investment" will help turn the economy around, and people will eventually be better off financially because of it.

Not saying I agree with the whole mess, but that's the rationale behind calling it an investment.

@3drage: @MrsLopsided:

Let me explain this too you. Ed Liddy used to be our CEO for Allstate. Basically it means all the agents are not really employees for AIG.

Basically all of them run there own buisness so AIG for example does not have to give them benefits and such.

For example Working for an Allstate Agent at his office doesn't mean you work for Allstate. It's literally like franchising a Mcdonalds or Burger King

@Pylon83: So, what's the harm in XYZ successfully wooing these clients from AIG by means of their own money? Otherwise we'll have to bail them out as well.

@randomizer9:

You do realize that losses on credit default swaps have absolutely no relevance to the profitability or success of AIG's advisory sales business, correct? The people who are losing all that money likely have never even met the people in advisory.

Since we are all about sharing here at Consumerist, I've been meaning to chat with you about *our* girlfriend...

@3drage:

Retirement benefits are overrated and obviously are killing this economy as well. For example GM is going bankrupt because of there Union and so many of their past retired workers are drawing benefits in larger numbers.

Basically we are refusing to fix Social Secruity and took away the negative aspects of a company killing our country and economy. We are becoming a nursing home to cater the baby boomers

What really ticks me off about this stuff is that if they hadn't been spending so much on luxury things maybe they wouldn't have needed the bail out in the first place. Whether or not their competitors have the same types of expenses makes precious little difference considering their business can support itself.

@ADismalScience: I'm totally with ADismalScience here... I love comsumerist, but for a rational person, and not an overwrought internet mob, this particular event is a total non-issue.-----

And you're right; they definitely should have provided some ROI information. I work for an organization funded almost entirely by state taxes so every communication we send out to the public regarding a program or any expense seeks to justify the expense with detailed information about the ROI for that program.

@KStrike155:

Write your congressment demand we pull out of AIG!

@Pious_Augustus: You'd have a better time explaining if you spelled words correctly.