The government is now insuring insurers. Guess who’s at the center of the drama.
By Chadwick Matlin of The Big Money
In honor of spring cleaning, it’s worth taking inventory of what’s underneath the TARP. We’ve got some disgruntled banks, some rusted-out car manufacturers, and the morbidly obese AIG, which seems to get smellier every day. And, oh, what’s this newest addition? Life insurers? Who let them in here?
These days, the TARP is acting more like a big tent. When Henry Paulson and friends originally designed the Troubled Asset Relief Program, it was only supposed to be used to facilitate auctions for toxic assets. But then everybody and their mother needed saving and we only had so many facilities to provide capital, so the TARP became an all-purpose, $700 billion behemoth. Adding in life insurers, as the Wall Street Journal is reporting the government plans to do, is just more proof that the TARP’s mission creep has turned it into a refugee camp. But before welcoming life insurers into the fold (likely costing tens of billions of dollars), it’s worth stopping to ask why they were invited into the TARP in the first place. The answer should come as little surprise: It all has to do with AIG.
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