The Next Big Bailout

[Puppycow]

U.S. to Offer Aid to Life Insurers (http://online.wsj.com/article/SB123914741752198971.html)

The Treasury Department has decided to extend bailout funds to a number of struggling life-insurance companies, helping an industry that is a lynchpin of the U.S. financial system, people familiar with the matter said.

The department is expected to announce the expansion of the Troubled Asset Relief Program to aid the ailing industry within the next several days, these people said.
. . .
Only insurers that own federally chartered banks will qualify for the program. Treasury had said last year that life insurers could be eligible for TARP funds if they owned bank-holding companies, but it hadn't officially decided to give funds to these companies as it focused much of its energies on banks and auto makers.
. . .
A number of life insurers, including Hartford Financial Services Group Inc., Genworth Financial Inc. and Lincoln National Corp., struck deals last fall to buy regulated savings and loans so they could call themselves banks and qualify for government funds. Hartford and Lincoln have applied for TARP funds. Genworth said it has applied with the Office of Thrift Supervision to approve its thrift purchase as a step toward gaining access to the federal funds.

Prudential Financial Inc., which owned a thrift before the crisis struck, has also applied for the funds.

[Darat]

"struck deals last fall to buy regulated savings and loans so they could call themselves banks and qualify for government funds"

I assume the decisions for government funds isn't based on a check-list? If so then to me that sounds as if they are trying to abuse the system so I would hope that their request are denied.*



*This is just a tad above a "knee-jerk" opinion as it is based on very little actual knowledge so please feel free to explain to me why it's a stupid opinion to hold - but base your explanation on facts please!

[Oliver]

How much this time? :popcorn2

[Puppycow]

"struck deals last fall to buy regulated savings and loans so they could call themselves banks and qualify for government funds"

I assume the decisions for government funds isn't based on a check-list? If so then to me that sounds as if they are trying to abuse the system so I would hope that their request are denied.*



*This is just a tad above a "knee-jerk" opinion as it is based on very little actual knowledge so please feel free to explain to me why it's a stupid opinion to hold - but base your explanation on facts please!

Well, in the worst case, regular folks or their beneficiaries who paid for life insurance policies and could reasonably expect the insurance company to honor them could be out of luck if the companies were insolvent.

But, the TARP funds weren't supposed to be for life insurance companies, but for banks. I believe that these would be loans that are supposed to be repaid. Perhaps the banks that receive TARP bailouts aren't willing to lend to the life insurance companies because they don't consider them good credit risks?

[charles brough]

U.S. to Offer Aid to Life Insurers (http://online.wsj.com/article/SB123914741752198971.html)

I notice the article uses the term "bailout." Just what is that supposed to mean? It sounds like it means "giving money away." Yet, is that what the government did there? Or has it LOANED money to them that will be repaid with interest later on? Seems to me there is a big difference and that failure to specify is possibly deliberate political deception.

I did not bother to read the whole article. If it does ever mention loaning, I'll bet it is hidden enough in the article that one never actually realizes that this is all good business. The government will very likely make a profit on much of the so-called "bailout."

[mhaze]

Well, I suppose some brain dead zombies on life support Could Recover, go back to work, and pay their hospital bills off.

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Naw...