American International Group Inc., castigated by the White House, Congress and Barack Obama for hosting a $440,000 conference days after an $85 billion federal bailout, plans to hold another gathering for brokers next week.
President Bush didn't push for the bailout "to help top executives go to a spa," White House spokeswoman Dana Perino said Wednesday at the daily press briefing. Hours later, the Federal Reserve agreed to lend AIG an additional $37.8 billion on top of the initial $85 billion.
Under the new program, the Federal Reserve Bank of New York will borrow up to $37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.
The arrangement will help AIG secure funds on an as-needed basis, the New York-based insurer said in a statement.
Meanwhile, the company's event next week, at the Ritz-Carlton in California's Half Moon Bay, aims to "motivate and educate" about 150 independent agents who sell AIG coverage to high-end clients, said spokesman Nicholas Ashooh.
Perino on Wednesday said the expenses from the first gathering were "despicable." Company executives attended a weeklong conference last month at the St. Regis Resort in Monarch Beach. The costs included $23,000 for spa services, according to Rep. Henry Waxman, chairman of the House Oversight and Government Reform Committee.
AIG considered buying advertisements to explain its position, only to be told by public relations consultant George Sard that it would be "a really bad idea."
"To spend the taxpayer's money on an expensive ad campaign to apologize for how you used taxpayer money leaves you open to further attacks," Sard wrote in an e-mail to Ashooh. Sard, chief executive officer of New York-based Sard Verbinnen & Co., said the message was a private e-mail mistakenly sent to Bloomberg and wasn't intended to be a public statement.
AIG Chief Executive Officer Edward Liddy, who replaced former CEO Robert Willumstad as a condition of the federal loan, on Wednesday told Treasury Secretary Henry Paulson that the company intends to reevaluate expenses.
"We understand that our company is now facing very different challenges," Liddy wrote in a letter to Paulson. "We owe our employees and the American public new standards and approaches."
Obama, the Democratic presidential nominee, said during Tuesday night's debate with Republican candidate John McCain that AIG should repay the U.S. Treasury for the costs of the event.
"AIG, a company that got a bailout, just a week after they got help, went on a $400,000 junket," Obama said. "And I tell you what: The Treasury should demand that money back, and those executives should be fired."
In his letter to Paulson, Liddy said the gathering was planned "many months" before the Federal Reserve's loan to AIG. Next week's meeting was also planned before the loan, AIG spokesman Nicholas Ashooh said.
"This sort of gathering has been standard practice in our industry for many years," Liddy wrote. "Let me assure you that we are reevaluating the costs of all aspects of our operations in light of the new circumstances in which we are all operating."About 50 AIG employees will also attend the Half Moon Bay meeting. Ashooh said he didn't know the cost of the event or how long it would last. Next week's meeting has more of an educational component than the St. Regis meeting, he said.
Contributing: Associated Press.