For insensitivity, Wachovia refuses to be outdone
While waiting to see if the government will relieve it of bad loans, the bank prepares to send 75 employees on a Mediterranean cruise.
As ailing Wachovia Corp. waits to see whether it will be acquired by Wells Fargo & Co. or Citigroup Inc. -- possibly with taxpayers paying the tab for hundreds of billions of dollars in bad loans -- some of the company's top brokers are preparing to depart Saturday for an all-expenses-paid cruise of the Greek Isles.
The weeklong trip for up to 75 employees of brokerage A.G. Edwards, which Wachovia acquired last year for nearly $7 billion, will also include spouses and significant others, said Teresa Dougherty, a Wachovia spokeswoman.
"This is one way that we recognize our top financial advisors," she said.
Word of the Wachovia junket follows reports that senior executives of troubled insurance giant AIG attended a $440,000 company retreat last month at Southern California's swanky St. Regis Resort in Monarch Beach just days after being bailed out with $85 billion in taxpayer funds.
A White House spokeswoman Wednesday called the AIG outing "despicable." Yet even as the Bush administration was wagging its finger at AIG, the Federal Reserve was announcing $37.8 billion in additional loans for the company.
Moreover, a spokesman for American International Group said the company was going ahead with plans to host a three-day confab for about 150 insurance brokers at the Ritz-Carlton Resort in Half Moon Bay next week. About 50 AIG employees also will attend.
"This is an annual affair," said AIG's Joe Norton. "It's a key meeting."
Such five-star shindigs have long been a standard practice for the U.S. financial industry. They serve as incentives and rewards for top performers, and as regular get-togethers for senior execs.
But the gatherings raise ethical questions at a time when many institutions are turning to taxpayers to cover their bad mortgage bets, and when millions of Americans are tightening their belts.
"It's clear that these executives don't get it," said Stephen Conroy, an associate professor of economics at the University of San Diego who focuses on business ethics. "These are the same excesses that got them where they are today."
Conroy acknowledged that companies still need to recognize their biggest moneymakers during hard times, and that such events are typically scheduled months in advance. But he said the only prudent thing to do when a company faces troubles like AIG or Wachovia does is to behave with some humility.
- For insensitivity, Wachovia refuses to be outdone Oct 09, 2008
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