Ethics

The recent global financial crisis has adversely affected various countries. Both rich and poor nations experienced the untoward consequences of the aforementioned problems, which include the bankruptcy of big financial institutions and other business organizations as well as the rise in the unemployment rate that affected the social conditions of the country. The United States of America is one of the countries that have been mostly affected by the global financial crisis, as many corporations in Wall Street declare bankruptcy and others are already in the brink of foreclosure.  Being the case, the United States government gave bailout money to different corporations and organizations to save these institutions from closing. The main purpose of the bailout money is to serve as additional capital for different organizations in order to continue the operations of their respective businesses but companies still need to lessen their costs, since they only have limited fund (Ritholtz et al., 2009). However, there are still companies who managed to overly compensate their employees despite this financial crisis and one example of this is the American International Group Incorporation (AIG).

The AIG is recognized as one of the biggest American insurance corporation in the world. The company even ranked as the 18-largest publicly-owned company in the world by the Forbes Magazine during its 2008 issue. However, the company experienced a liquidity crisis in September 2008 when its credit ratings decline below AA. As a result, the United States Federal Reserve Bank gave 152 billion bailout money in order to save AIG from its near bankruptcy in September 2008. Nevertheless, the way by which AIG is spending their bailout money is subject to much criticism, especially since there are allegations that the company is using millions of that money for programs, which sound more like bonuses than actual productive training (Ferrell et al., 2009).

In 2008, the CEO of AIG declared that he is only taking a single dollar from the fund given by the United States Treasury for his compensation and the other 60 top executives are not getting any bonuses for that year. However, the financial crisis that AIG is facing did not stop the company for finding a different way in order to keep their top employees from getting retention payments (After Rescue, Bonuses Still Flow at AIG, 2008). One of the most controversial spending of AIG took place just after a week the company was given the bailout money. The employees and distributors affiliated with AIG attended a retreat in California that amounts to 444,000 total costs for the company. The retreat allegedly includes featured spa treatments, expensive meals, and golf trips. AIG justified the retreat as a reward for their top-performing agents and that the excursion was planned even before the bailout was given. In relation to this, the Federal Reserve even gave the company an additional 37.8 billion loan. Just days after the additional loan was given AIG were reported to spend on a lavish English hunting trip.    

The allegations regarding the unwise spending of AIG also reached the attention of lawmakers, which resulted for them to question the decision of the Assistant Treasury Secretary Neel Kashkari regarding the bonus plan of AIG. Rep. Elijah Cummings even commented that these so-called retention payments are nothing less than bonuses (After Rescue, Bonuses Still Flow at AIG, 2008, n.p.). Moreover, Rep. Cummings stated that no one is indispensable, particularly when youve got tens of thousands of people being laid off from Wall Street and financial firms every day (After Rescue, Bonuses Still Flow at AIG, 2008, n.p.). However, no substantial efforts are being done in order to stop the inappropriate spending of AIG. The company is promising its employees with high-compensation and other benefits in order to stay in the company, which angers many people in the government as well as those who find themselves in the unemployed population of the society. The decisions and actions of AIG should be properly addressed, as they are wasting billions of money that comes from the hard work of taxpayers. Moreover, this kind of situation should be immediately attended to prevent other companies from emulating the untoward action of AIG.