Wednesday, October 08, 2008

"Standard Practice"

With the demise of defined benefit retirement plans and the rise of self-funded plans, such as 401(k) plans, hundreds of billions of dollars have been poured into the stock markets. This wasn't due to the brilliance of corporate executives. It was (and is) where workers were advised to place their money. That didn't (and doesn't) stop CEO's from taking the credit for this influx of cash, to lay claim to astronomical salaries and stock options, and corporate benefits and perks that could make a Saudi Prince drool with envy. The best part is, they can keep pulling out those salaries and benefits right up to the day they either run a company into the ground, or get booted out and float gently to earth thanks to a generous golden parachute. Or perhaps better, they can run the company into the ground, get a multi-billion dollar taxpayer bailout, and still indulge:
American International Group Inc., the insurer that hosted a $440,000 event at a California resort less than a week after receiving an $85 billion federal loan, said it is "reevaluating" its costs a day after facing Congressional criticism for the trip.

"While this sort of gathering has been standard practice in our industry for many years and was planned many months before the Federal Reserve's loan to AIG, we understand that our company is now facing very different challenges," Chief Executive Officer Edward Liddy wrote today in a letter to U.S. Treasury Secretary Henry Paulson.
Because there's nothing like indulging yourself before, during, and after you set about a course of atrociously bad business decisions that run your company into the ground.

Congratulations - you helped bail out AIG, so that they could continue their "standard practices". But nobody's going to bail out your retirement savings.

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