Politics

Further Testimony From Oversight Hearing On AIG

By Karina

This afternoon, the House Oversight Committee continues their hearing to examine the regulatory mistakes and financial excesses that led to government bailout of AIG. Learn more about the hearing and read prepared testimony and documents at the Oversight Committee website.

Witnesses testifying are:

Eric R. Dinallo, Superintendent, New York State Insurance Department
Lynn E. Turner, former chief accountant, Securities and Exchange Commission
Robert B. Willumstad, former Chief Executive Officer, AIG
Martin J. Sullivan, former Chief Executive Officer, AIG

Rep. Bruce Braley (D-IA) and Chairman Waxman question Robert B. Willumstad and Martin J. Sullivan on executive compensation:

Waxman: “When I retire I want to come to work for you at a million dollars a month. What a good deal that is. And what a good signal that is - the man goes out on his own in these derivative deals that bring down AIG and he gets a million dollars a month retainer in case you need his advice.”

Rep. Chris Van Hollen (D-MD) and Chairman Waxman question Robert B. Willumstad and Martin J. Sullivan on executive compensation:

Rep. Van Hollen: “I gotta say, a lot of people are scratching their heads when they look at how in good times you stick with the general scheme for pay-for-performance and in the bad times it gets reinterpreted in a way that benefits executives.”

Rep. Peter Welch (D-VT) asks about SEC oversight:

Welch: “You said that the SEC office of risk management was reduced to a staff. Did you say, of one?” Turner: “Yeah, when that gentleman would go home at night he could turn the lights out in February of this year. We had just gotten down to one person at the SEC responsible for identifying the risks at all the institutions. Welch: “So that included the $62 trillion dollar credit default swap?” Turner: ?That’s correct.?

Rep. Betty McCollum (D-MN) on AIG’s public statements vs. the reality of their financial situation:

Rep. McCollum: “In December 2007, for example, Mr. Sullivan told AIG investors ‘we believe we have a remarkable business platform with great prospects that represent tremendous value.’ Two months later AIG posted $5.3 billion dollar losses for the quarter.”

Rep. Jackie Speier (D-CA) on executive compensation:

Rep. Speier: “I have to tell you, you make a shameful profile of corporate America. To you Mr. Willumstad, I will say thank you for foregoing your golden parachute. And to you Mr. Sullivan, shame on you. The shareholders of that company have nothing and you walked away with $50 million dollars.”

Rep. Chris Van Hollen (D-MD) on executive compensation:

Rep. Van Hollen: “You hear a lot of talk from some of the CEOs about how they have these pay for performance plans - in the good times they benefit but when times are tough they take a hit. I think the more that we look at these different companies like AIG we find that they rig the rules so in good times they do well and in bad times they do well.”

Rep. John Yarmuth (D-KY) on executive compensation:

Rep. Yarmuth: “We had CEOs walking away from a train wreck with huge severance packages…including a $15 billion dollar severance package…My question that most every American would have is - is there any way that the compensation committee or the corporation could justify that type of activity as being responsible or in the best interest of the stockholders if there’s such a dramatic turnaround and loss…?”

Full post as published by The Gavel on October 07, 2008 (boomark / email).