WASHINGTON—Two former C.E.O.'s of American International Group insisted today that the insurance giant was a victim of unruly markets. But lawmakers on Capitol Hill confronted them with what they said was evidence of executives' missing warning signs while awarding themselves rich payouts.

Federal regulators warned A.I.G. in March that corporate oversight of major subsidiaries, including its finance products and lease finance units, "lacks critical elements of independence, transparency, and granularity," said Henry Waxman, the Democratic chairman of the House Oversight and Government Reform Committee, reading from a letter from the Office of Thrift Supervision.

As the economy is roiled by a credit crisis, Congress is starting to examine the reasons why the government became embroiled in providing support for financial companies, including $85 billion in assistance for A.I.G.

Committee members were sharply critical of the compensation received by A.I.G. executives, in particular former C.E.O. Martin Sullivan, who attended the hearing with his successor, Robert Willumstad.

"Shame on you," said Jackie Speier, Democrat of California, to Sullivan, who was chief executive from 2005 to 2008. "The shareholder has nothing, but you walked away with $15 million."

Not only did A.I.G. executives receive big payouts, but less than a week after the federal bailout, the committee said that executives frolicked during a week-long retreat at the exclusive St. Regis Resort at Monarch Beach, California. Rooms at the resort—a photo of the luxury hotel was flashed on the screen—can go for more than $1,000 a night.

The meeting cost about $500,000, including $23,000 on spa services, which prompted Elijah Cummings, Democrat of Maryland, to complain that A.I.G. employees were "getting facials, manicures, and massages and the American people were footing the bill."

In one of the few light moments, Cummings wondered out loud what $10,000 on "leisure dining" was for.

"Bars!" was the helpful shout-out from someone in the audience.

But dwarfing any fancy spa or huge bar tab were the sums awarded to executives, not only to Sullivan but also to Joseph Cassano, the London-based head of A.I.G.-Financial Products. As Lynnley Browning reported for Portfolio.com, A.I.G.-Financial Products was largely responsible for nearly toppling the insurance company with its huge losses on credit default swaps.

Over eight years, Cassano—who was not present at the hearing—received $280 million in salary. Since leaving A.I.G. in March, he has been on a $1 million-a-month retainer.

An incredulous Waxman asked both Sullivan and Willumstad, who was chief executive from June until the September bailout: "Why didn't you fire him?"

The long and short of Sullivan's answer: Cassano has long-term knowledge of the investments and his expertise in "winding down exposure would be valuable to the company."

"Is it a good signal when a man makes these derivative deals and he gets $1 million a month?" asked an obviously frustrated Waxman.

Other committee members were frustrated trying to connect the dots. Mark Souder, Republican of Indiana, denounced A.I.G.'s  actions as "unbridled greed."

There were also hints of how tracking the financial crisis may well involve a lot of conspiracy theories. Lawmakers tried to delve into Goldman Sachs' possible role in the bailout of A.I.G., but those lines of inquiry did not get very far.

Scheduled to appear with Sullivan and Willumstad was another former C.E.O., Hank Greenberg, who had built the company into a global titan over four decades. But Greenberg pleaded illness and avoided an appearance—perhaps spooked by the angry, placard-waving protesters who chased former Lehman Brothers head Richard Fuld to his car following his appearance before the committee Monday.

Failing to show before Congress didn't prevent Greenberg from trying to throw a little sand into the gears with his prepared testimony.

In his statement, he criticized the $85 million bailout, saying, "Those millions of Americans could have fared better if A.I.G. had filed for bankruptcy protection, since they would have at least have had the chance of recouping value on their investments in A.I.G. over the longer term."  
Greenberg's refusal to accept any blame for the collapse of the company—which was noted by Waxman as he opened the hearing—was echoed by Sullivan when his turn came before the committee.

Sullivan, who headed the company from March 2005 to June 2008, insisted that his tenure had been "marked by unprecedented transparency with our investors and regulators."

He attributed A.I.G.'s problem to one "particular factor— the role played by one accounting rule applied to corporations."

Those accounting rules require certain assets be "market to market," he said. That requires companies to declare the value of those assets on a quarterly basis at the price such assets could sell for on the market at that point in time. But, in a time of crisis, companies, he said, "are forced to declare the value of those assets at fire-sale prices."

But Lynn Turner, former chief accountant for the Securities and Exchange Commission who appeared at an earlier panel with Eric Dinallo, the New York state insurance commissioner, took exception to his explanation.

The rule, he said, requires the company to separate the value of the investments in such a way so they can "understand with greater confidence in the nature and types of investments."

"That's like blaming the thermometer for the fever," he said of the accounting rule.

Waxman's focus was on compensation, contending that in this financial crisis, "each executive grew rich by taking excessive risk."

"In each company, when risk turned bad, the companies collapsed. And in each case, executives walked away with millions of dollars while taxpayers are stuck with billions of dollars."