In an astonishing display of hubris, executives at insurance AIG headed to a $440.000 retreat at one of the nations most luxurious resorts. The retreat was held less than a week after the Federal Government offered an $85 billion dollar bailout to the insurance giant. Executives had no qualms about tapping into the $85 billion dollar loan sending executives to the St. Regis resort south of Los Angeles. Executives received royal treatment including golf and $28,380 worth of spa treatments. Angered congressmen expressed outrage at the frivolous spending of taxpayer dollars meant to shore up the troubled company's finances.
Democrat Henry Waxman expressed the feelings of many when he said in an opening statement, "Average Americans are suffering economically. They're losing their jobs, their homes and their health insurance. Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."
Lehman Brothers CEO Defends Compensation Package
In another amazing display of arrogance the CEO of the recently bankrupt Lehman Brothers investment bank defended executive pay of himself and other executives responsible for Lehman Brother's woes. Former Lehman Bros. CEO Richard Fuld attempted unsuccessfully to defend the $484 million he has received in salary, bonuses and stock options. In an attempt to shed blame Fuld blamed the failure of Lehman Brothers on short selling and market "manipulation" and conceded no errors in judgment.
The congressional hearings finally put a face-Fuld's- on their outrage at corporate CEO's who took home millions while betting on risky mortgage backed investments that brought the world's financial markets to a grinding halt. Internal company documents and emails revealed that despite financial troubles executives "continued to squander millions on executive compensation" in the words of California Representative Henry Waxman. Waxman also cited another company document that showed that four days before filing for bankruptcy, the compensation committee recommended that three departing executives receive more than $20 million dollars in "special payments."
Fuld also nixed a suggestion from Neuberger Berman, the company's money management subsidiary, that Lehman management should forgo yearly bonuses. The suggestion was designed to "send a strong message to both employees and investors that management is not shirking accountability for recent performance." In a time when many Americans are losing their homes to foreclosure congress was less than receptive to excuses given by executives who received millions for poor performance.
Because of executives like Fuld, world credit markets, stock markets, and financial institutions are currently in dire straits. The bailout remains politically unpopular in the US and investigations by congress are bound to reveal sordid financial dealings by executives of failed financial institutions. The only market that has produced any positive results has been Forex markets where the dollar is trading high against several currencies including the Euro. The Euro is currently at a 14 month low against the dollar. At present it would seem that Forex markets are the only place where investors can hope to come out on top.
Author Resource:-
Anthony Wayne works in the marketing department of the Forex Interbank site Interbank-FX in Pennsylvania. He is also editor of the Forex Network Site a network of Forex information and news sites.
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