You remember the US Treasury bailout of AIG last month. Here’s what you didn’t know from UK Telegraph:

We now know that it was French finance minister Christine Lagarde who begged Mr Paulson to save the US insurer AIG last week. AIG had written $300 billion in credit protection for European banks, admitting that it was for "regulatory capital relief rather than risk mitigation". In other words, it was underpinning a disguised extension of credit leverage. Its collapse would have set off a lending crunch across Europe as banking capital sank below water level. The drama has exposed Europe's dark secret for all to see. EU banks took on even more debt leverage than their US counterparts, despite the tirades against ''le capitalisme sauvage'' of the Anglo-Saxons.

Now you know that the $85 billion AIG bailout was followed within days by a further injection of $123 billion of government funds, thinly disguised by a round robin loan transaction, and within Treasury’s ample bosom, sensible and prudent steps are being taken to de-lever AIG and presumably eventually to pay off the taxpayers largess. If you believe in that prudent and sensible oversight that Paulson promised you, then the reality will be quite a revelation. This neat summary from Robert Gottliebsen’s Business Spectator in Australia:

The searchlight of post-bust outrage is settling on the top executives of insurance giant, American International Group. But it’s not the fact that AIG led a massive fraud using credit defaults swaps to subvert the rules on bank gearing ratios that’s causing the outrage.

It’s the partridge shooting party that four of the executives, and four guests, went on in rural England two weeks ago that cost more than $100,000, and the $650,000 week-long retreat for the sales team at St Regis Monarch Beach resort near Los Angeles a week after the US Government bailed the company out.

The News of the World newspaper sent some undercover operatives to spy on the AIG “bigwigs” and reported some fabulous details of their tweeded excess (the capital letters are the newspaper’s):

“During their luxury stay at the 17th Century Plumber Manor in Dorset, the four AIG big shots and their four guests blew US taxpayers’ cash on:

* FOUR aristocratic-style shooting parties costing a whopping £25,000 in total.

* A PRIVATE JET for two of them from Germany costing £10,000.

* FLIGHTS to and from Madrid and a fleet of CHAUFFEUR DRIVEN cars at £5,000.

* SUMPTUOUS feasts washed down with bottles of fine wines and liqueurs costing £5,000 – plus giant PICNIC HAMPERS to guzzle in between slaughtering birds.

* LUXURY rooms totalling £5,000.”

Separately, according to The Times, the junket for the sales team at St Regis cost $US442,000, including $139,000 on hotel rooms, $147,000 on banquets, $23,400 on spa treatments and $6,950 on the golf course. Room service and bar tabs topped $10,000. This was all on September 22, a week after AIG collapsed and the government had to bail the company out.

AIG issued a statement: “This type of gathering is standard practice in the industry and was planned a year in advance of the Federal Reserve’s loan to AIG. We recognise, however, that even activities that have long been considered standard practice may be perceived negatively. As a result, we are re-evaluating various aspects of our operations in light of the new times in which we operate.”

Standard practice indeed. Nice work if you can get it and business as usual at all costs!