AIG says they are turning over a new leaf... yea right. So riddle me this kiddies, if AIG is stating they are no longer lobbying, then why are they only downsizing their workforce in the lobbying offices, and not closing then? And would you believe that former chief executive Greenberg is even petitioning the SEC for better terms on the federal loan?!?!?
Ya know, its kind of interesting how things are playing out. AIG goes bankrupt, gets bailed out by the Feds, the parties continue, the AIG lobbying continues to lax regulation on mortgages, the media finds out parties are still going on, the NY AG sends a threatening letter to stop partying or face legal action, Waxman sends a letter to AIG saying he wants receipts of "conventions", two Reps send a letter to AIG to stop the lobbying, and voilà, AIG suddenly says they are going to mend their wicked ways, not waste money anymore, and pay back the loan by year end...... hmm.. gee...... guess they don't like being regulated, "watched" and told what to do so they are going to step up the pace to pay back the loan.
Sorry, I have to go wash the "stupid" on my forehead that AIG just pasted there..................
WEDNESDAY, Oct 15.
If you remember, on Wednesday last week New York State Attorney Cuomo assailed AIG for making "unwarranted and outrageous expenditures" that he said violated New York law and advised them to stop "extravagant" expenditures and recover millions of dollars in unreasonable payments, or face legal action.
THURSDAY, Oct 16.
On Thursday AIG announced that they would cooperate with the NY AG and announced that it would cancel all junkets or perks not justified by "legitimate business needs" and would be canceling more than 160 conferences and events that were to cost a total of $80 million, according to AIG spokesman Ashooh. This of course comes after the media outlets learning of a $440K retreat to St. Regis in California only days after the $85 billion loan, a "insurance convention" for execs and their wives on October 3rd to Las Vegas that included golfing, a $86K plus hunting trip in England, among other events. And during that time, also asked for an additional $37.8 billion loan.
It was reported in the Wall Street Journal on this day that AIG was still engaging in a state-by-state effort to soften new federal regulations requiring mortgage originators get licenses and provide extensive background information. According to a Wall Street Journal article:
AIG is currently working to ease some provisions in a new federal law establishing strict oversight of mortgage originators, according to state regulators. The law requires that originators be licensed by the states, and that they supply comprehensive information so state regulators can track their activities.
The goal of the new rules is to hold originators accountable if they engage in the sorts of improper or fraudulent lending that ultimately contributed to AIG's downfall. The law was passed by Congress in July as part of a sweeping housing-industry rescue package.
On Sept. 16, the day of the federal takeover of AIG, company lobbyist Brett J. Ashton was meeting with Indiana banking regulators about the law, said Judith Ripley, director of the Indiana Department of Financial Institutions. Two weeks later, Mr. Ashton spent three days at a Hilton hotel in Beverly Hills, Calif., where he briefed other financial-service industry representatives on "key legislation and regulatory concerns."
Mr. Ashton referred questions about his activities to an AIG spokesman. "We are maintaining government-affairs activities," said Nick Ashooh, an AIG spokesman. "We're not the only financial-services company that has expressed concerns" about the new mortgage-lending oversight rules. "We're rebuilding value in AIG to pay back the Federal Reserve loan and to restore AIG as a vital, ongoing concern."
AIG had said that it would continue to lobby, which it argued was important for protecting the interest of taxpayers and shareholders of the 20% of the company not in government hands. In an October 10th article, AIG spokesman, Joseph Norton stated "We are not a GSE [government-sponsored entity] and are therefore not restricted. We remain a share-holder owned entity and continue advocacy activities."
In 2007, AIG spent $11 million on lobbying. In the first quarter 2008, AIG spent $3.7 million on lobbying. The company spent more than $3 million on federal-government lobbying in the second quarter 2008 alone, and more at the state level. During that same second quarter, AIG spent at least double on federal lobbying by outside firms than most other financial-service conglomerates, including Merrill Lynch, Citigroup, Coldman Sachs Group Inc and Lehman Brothers Holdings, according to congressional filings.
"They're trying to reintroduce things that really are superfluous and get in the way of implementing the act," said Thomas Gronstal, Iowa's superintendent of banking. "Basically, they're just objecting to having to be regulated. ... I frankly think that takes a lot of gall, given what the industry has done and what we're trying to do."
Kenneth Gross, an attorney at Skadden, Arps, Slate, Meagher & Flom in Washington who advises lobbyists and their clients stated:
"I would think it would be difficult to justify a sustained lobby budget of that magnitude in bailout mode." The $3 million AIG spent on outside federal lobbyists in the second quarter "is a lot for an entity under any circumstance," Gross said. "The industry norm is about half that."
FRIDAY, Oct. 17
Then on Friday of last week, Waxman of the Oversight Committee asked AIG for a detailed listing of all conferences, events, or retreats paid for AIG since January 1, 2008, as well as any future events during the next six months, as well as, any bonuses paid to AIG executives. And on that same day stated they may have to additional ask for another $10 billion through the commercial paper program. As of that day, AIG had already used two-thirds of its $122.8 billion credit line in only 30 days.
Also on Friday, Senator Feinstein (D-CA) and Senator Martinez (R-FL) wrote to AIG Chief Exec Liddy (PDF), telling him not to use its governmental loan to try and roll back tougher mortgage-industry licensing requirements and other controls.
"We are troubled that AIG is fighting against more robust oversight and regulation, given the company's role in the credit crisis and financial market instability."
"We find it unconscionable that AIG would take advantage of these taxpayer loans while paying lobbyists to rollback taxpayer protections against misrepresentations, deception, and fraud in mortgage lending."
"I will introduce legislation to prohibit the use of federal rescue funds or government loans for lobbying purposes," Feinstein said in a statement. "Federal dollars were not intended to be used for lobbying, and it would be an unconscionable say for these companies to misuse taxpayer dollars in this way."
MONDAY, Oct. 20
So today, Monday, according to a Wall Street Journal article, AIG has said it will stop lobbying lawmakers and regulators, after coming under congressional pressure and questioning about how it is using more than $120 billion loaned by the government to keep the company afloat. Ashooh said that for now, AIG was not closing any of its lobbying offices, but that workforce reductions would be part of the company's restructuring.
"We're not suspending lobbying as a cost-saving measure but as a part of an overall review of what activities we should be involved in," Ashooh said.
And Ashooh also stated, "We haven't said we're never going to lobby again."
As part of its internal review, Ashooh said on Monday, Liddy has told employees that any personal expenses incurred during the California spa weekend must be reimbursed.
And suddenly AIG thinks they are going to have money. Liddy said today on CNN Money that the company should start selling off pieces of its sprawling global business by year end, with some 15 to 20 buyers each walking away with a unit of AIG. Liddy declined to comment on the prices, saying its "too soon" however, he told CNN Money that he expects to be able to repay the $85 billion loan.
Liddy also said that the company does not expect to need additional financing beyond the $85 billion to continue operating, and that AIG has already drawn down $69 billion of that loan.
He also stated "I apologize to the American people for those things [the extravagant spending on conventions & retreats]. They were terribly insensitive."
And if you wish to see Liddy talking about the asset sales, paying taxpayers back in full and the fallout from the recent company retreat, check out CNN Money's Video.
Purdential shares jumped by 22% today on speculation that the insurer is working on deal to buy part of AIG from $9.97 to $12.19. The UK insurer Prudential could sell a 20 percent stake worth up to $2.1 billion in itself, according to The Sunday Times of London, in order to fund a $15 billion bid for the Asian business of AIG.