Where is George Bush's $750 billion bailout money going?
Well, AIG executives, who have received $85 billion of bailout money, headed off for a week-long stay at a Californian luxury resort and spa!
Rooms at the resort cost over $1000 a night.
AIG documents obtained by Congressman Henry Waxman show the company paid more than $440,000 for the retreat, including nearly $200,000 for rooms, $150,000 for meals and $23,000 in spa charges.
This has angered New York Attorney General Anthony Cuomo who, in a letter to the AIG board of Directors, has warned that if the company didn't recover its recent "unwarranted and outrageous expenditures," his office would take legal action.
This includes expenditure on other executive jaunts including an ‘overseas hunting party’ and ‘a golf outing’.
He also singles out a "top-ranking executive who was largely responsible for AIG's collapse" who received $34 million in bonuses and a $1 million a month consulting gig when he resigned in February. That exec is Joseph Cassano who apparently did little, if any, ‘consulting work’. The payments continued even after the bailout, only halting one day before last week's congressional hearing into Wall Street'S murky financial affairs.
Meanwhile its reported that US banks are hoarding their bailout money instead of using it to begin lending again.
The Bush administration doesn’t actually require them to do anything with the money and has no way of forcing them to begin lending again. Some $250 billion has been earmarked for the banks. $125 billion has gone to the nine major US banks.
Rather then lending the money the banks are using the money to save themselves.
The chief executive of Merrill Lynch, John Key’s former employer, told investors, the bailout money is “just going to be a cushion’.
Says the New York Times:
'Since mid-2007, when the credit crisis erupted, the country’s nine largest banks have written down the value of their troubled assets by a combined $323 billion. With a recession looming, the pain is unlikely to end there. The problems that began with home mortgages, analysts say, are migrating to auto, credit card and commercial real estate loans.'
According to economist Nouriel Roubini, who warned of a meltdown several months ago, the massive losses mean the government is going to have to double the amount of bailout money it's offering the banks.