Sen. Barack Obama brought it up during the presidential debate last week and called out AIG executives for their behavior. Headlines read: "AIG fiddles while Wall Street burns" and "AIG execs went on $500K retreat within days of taxpayer bailout."
AIG said the event was not a retreat and was thrown by one of its subsidiaries for independent life-insurance agents and not AIG employees. It also said no executives from its HQ were there.
AIG Chairman-CEO Edward Liddy penned a personal letter to Treasury Secretary Henry Paulson: "A recent business event held by an AIG subsidiary was mischaracterized as an 'executive retreat.' ... Mr. Secretary, I want you to know that AIG is focused on doing what is necessary to address capital structure, repay the Fed credit facility and emerge as a healthy global insurer."
AIG has canceled another such event to be held next week outside San Francisco for independent brokers and top producers for the company's private client group. "In light of the circumstances and knowing we wanted to watch all operating expenses in order to repay the fed loan and felt this decision was the best one," AIG spokesman Joe Norton said.
But for the public, it's too little, too late. Mark Hass, CEO of Publicis Groupe-owned Manning Selvage & Lee, said this is not the time for anyone in the financial-services industry to be involved in something that reeks of the reckless behavior and spending that helped create current mess.
"What you do in this kind of situation is say this is unacceptable and an error and move on and don't try to defend it," he said.