Friday, June 12, 2009

AIG Gets It Wrong Again

What is it with AIG? First it got a whopping $173 billion of American taxpayer money during the Wall Street meltdown last fall. Then it proceeded to spend part of that money on swanky corporate junkets and $35 billion in bonuses for the very executives who had run the company into the ditch.

The public outcry was so great that Congress got into the act and hauled top execs in front of an investigative committee. Eventually, the boys gave back their bonuses and we thought AIG had learned its lesson.

Well, here we go again, folks. If you had a look at today's New York Times, you saw that AIG made the front page of the Business Section and it wasn't a good thing. Seems that AIG insured the US Airways jet that bellyflopped in the Hudson River on January 15th and they are not going to pay up.

Evidently airllne insurance doesn't work like homeowners or automobile insurance, AIG is only required to pay if the crash resulted from the airline's negligence. Since it was a flock of geese and not pilot error that caused the plane to go down, AIG is playing hardball and refusing to honor survivors' claims. To its credit, US Airways has already handed out a $5,000 check to each passenger, though it had no legal obligation to do so.

The cruelty and inhumaneness of this kind of corp-think takes my breath away, but I suppose I should not be surprised. Welcome to the wonderful world of American free market capitalism. They must be going nuts over in the corporate relations department of AIG today. I'm hoping that once again Congress will get involved on behalf of all of us American taxpayer shareholders and force AIG to do the right thing.

Sometimes the spirit of the law is more important than the letter, and this is one of those time. Shame on you, AIG. You got it wrong again.

source: New York Times


Steph said...

If they weren't insuring my cars, I'd say "Booooo!!! AIG!!!" Then again, would it make a difference if I played nice? I doubt it.

OK then, Boooo!! AIG!!!

pinkpackrat said...

I guess business is business, but sometimes the bottom line needs to take a back seat

Susan said...

Doesn't it make you just boil? I begin to believe that rather than appoint all these political "czars", there should be a cabal of everyday people before whom all these things must be paraded and whose judgement is final.
You took bailout money? You're now within the jurisdiction of the People's Board of Oversight. You bilked investors out of millions? Welcome to the Board. You're a mortgage lender that got help from the taxpayers but are playing hardball on loan mods? Board time.
It's Democratic with a capital D.
I'm willing to serve.

JamaGenie said...

Sorry, I never did believe companies "too big to fail" should be rescued by taxpayers. AIG is a perfect example. The bailout did nothing more that enable them to keep doing what got them in trouble in the first place. Similar to handing a gambling addict $$ to pay off IOUs instead of forcing him/her to face the consequences. AIG is still addicted to gambling - with Other People's money, same as before. At least Bernie Madoff went to jail. AIG's execs should too.

pinkpackrat said...

Wow what wonderful and insightful comments.

Susan-- I like your idea, although it would probably take all of Wall Street down the tubes--oh well. What the hell LOL

Jama-- I agree, but the problem is the government was sort of held hostage and still is. We are, as they say, between a rock and a hard place. That said. AIG sucks!