NEW YORK (CNNMoney.com) -- A House committee chairman blasted former chiefs of American International Group Inc. on Tuesday, blaming their huge paychecks and the company's lavish style for the federal government's $85 billion bailout of the insurer.

Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government, said the executives received large bonuses that they didn't deserve. He also said company officials wined and dined at a posh resort even after the government issued the company a taxpayer-funded $85 billion credit line on Sept. 16.

The ex-CEOs themselves blamed accounting rules and market conditions for the problems that led to the crisis.

In testimony for the committee hearing, ex-CEOs Robert Willumstad and Martin Sullivan said the rules forced AIG (AIG, Fortune 500) to take billions in writedowns and led to a downward spiral that led to the government action.

But Waxman put the blame for AIG's troubles squarely on its past and present leaders, comparing them to the former Lehman chief executive Richard Fuld, who testified Monday about the investment bank's bankruptcy.

"In each case, the companies and their executives grew rich by taking on excessive risk," said Waxman. "In each case, the companies collapsed when these risks turned bad. And in each case, their executives are walking away with millions of dollars while taxpayers are stuck with billions of dollars in costs."

Waxman added, "The AIG CEOs are like the Lehman CEO in one other key respect - in each case, they refuse to accept any blame for what happened to their companies."

In particular, Waxman singled out AIG's financial products division, headed by Joseph Cassano.

"This (bailout) was a direct result of the mistakes made by Mr. Cassano," Waxman said, blaming him for putting AIG in a situation where it had a $60 billion debt without the money to pay it. "Yet even today, he remains on the company payroll, receiving $1 million a month."

'Wining and dining'

Waxman also attacked company leadership for throwing a one-week retreat at the St. Regis Resort in Monarch Beach near San Diego, Calif. just days after the bailout, at a cost of $440,000.

"Average Americans are suffering economically. They are losing their jobs, their homes, and their health insurance," said Waxman. "Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation."



Rep. Elijah Cummings, D-Md., a senior committee member, described the expensive retreat as "outrageous." He said it included visits to the spa and golf course, with $10,000 in so-called "leisure dining" - which he suspected was actually drinking - with lodgings that cost more per night than some of his constituents spend on their monthly mortgage payments.

"The American people are paying for that, and they're very upset," said Cummings.

Willumstad replied that he was unaware of the retreat and that it "seems very inappropriate."

Sullivan replied that he was not leading the company at the time, adding, "If I had seen bills like that, if I was CEO, I can assure you I would have been asking questions."

But AIG spokesman Nick Ashooh said that the St. Regis retreat had been "completely mischaracterized." He said it was an event to reward top-performing sales agents, and it was not for executives.

"They're playing it as AIG executives running off to California while all this was going on," said Ashooh, adding that the event was scheduled a year ago. "It wasn't AIG executives running off for a lavish weekend."

Four committee Democrats - Waxman, Cummings, Bruce Braley of Iowa and Jackie Speier of California - released a letter to Treasury Secretary Henry Paulson about Cassano and the resort stay, urging him to "protect the taxpayers' money and end this profligate spending."

On Oct. 3, AIG said it had already gone $61 billion into debt to the government, and was selling off parts of the company to pay for it.

Willumstad, who was CEO from June through the September action by the Federal Reserve, said "mark to market" accounting rules - which require companies to value securities at current prices in distressed situations - forced financial institutions to book billions of dollars in losses for securities that were not in default.

He said those losses led to a spiral that included debt rating downgrades.

Sullivan, who was CEO from March 2005 until June, said the accounting rules were key among several factors leading to AIG's problems, saying they had "unintended consequences for financial institutions when markets seize up."

But under blistering criticism from the committee for trying to insulate himself from blame, Sullivan said he wasn't trying to criticize the accounting rules, and that he wasn't trying to "point fingers at accountants."

In his testimony, Willumstad told the committee, "I don't believe AIG could have done anything differently," blaming instead the "unexpected and unprecedented market-wide crisis of confidence."

In an unusual move, Willumstad refused his $22 million in severance pay. In a letter written at the time, Willumstad said he did not have the time to launch his restructuring plan and that he preferred "not to receive severance payments while shareholders and employees have lost considerable value in their AIG shares."

Greenberg's testimony

Maurice Greenberg, who was CEO of AIG for 35 years until his 2005 retirement, did not attend the hearing because of an illness, according to the committee.

In his written testimony, Greenberg said he was blameless because he was out the door more than three years before the company's takeover.

"How did this happen?" wrote Greenberg. "I was not there, so I cannot answer that question with precision. But reports indicate that the risk controls my team and I put in place were weakened or eliminated after my retirement."

He also referred to the $85 billion credit line as a "bad deal" because it requires AIG "to pay interest on money it does not borrow," encouraging the company to take out the full loan even if it didn't need it. Also, Greenberg said that AIG doesn't need the equity, because it has more than $1 trillion in assets.

Tuesday's hearing was the second by the House Oversight panel to examine what went wrong with the economy. It focused specifically on the Fed's decision to bail out AIG over concerns that its failure would cause widespread damage to the economy, while allowing Lehman to fail.

"Quite frankly, based on a lot of the decisions you made, you deserved to fail," said Rep. Tom Davis, R-Va., ranking minority member of the committee, addressing Sullivan directly.

AIG spokesman Ashooh told CNNMoney.com that the testimony focused on the non-insurance part of the company. He described the insurance part of AIG's business as sound.

"We're focused on the future and on paying off the federal loan, addressing the capital structure and continuing the business," said Ashooh.

The first hearing, on Monday, grilled Fuld about why his company went under. The committee said Fuld and Lehman were partly responsible for the economic failure that led to the $700 billion bailout of Wall Street.

But Fuld blamed a "crisis of confidence" that had swept through the financial markets.

Waxman also hammered Fuld for reaping about $480 million in compensation since 2000 at Lehman, while Fuld disputed that tally.

On Oct. 16, the House will hold a hearing on the regulation of hedge funds. An Oct. 22 session will focus on the breakdown of credit rating agencies, and a hearing on Oct. 23 will scrutinize the role of federal regulators.