Are Insurers Lining Up for Federal Handouts?
October 27, 2008
According to American Banker's "Morning Scan," unnamed sources told the Wall Street Journal that MetLife, Prudential and New York Life are considering making requests for some of the $700 billion bailout money, now known as TARP—and Treasury is considering giving it to them.
Following the $85 billion rescue loan by the government to giant insurer American International Group Inc. in exchange for an 80% stake in September, reports of interest from carmakers and state and local governments also have surfaced, although the Bush Administration has repeated its directives that the primary focus for the money would be financial institutions.
But that doesn't preclude the insurance industry from stepping up to the table. "Broad participation in the rescue program would put more power in the hands of government to reshape the finance industry," writes the Wall Street Journal.
According to the New York Times, "Although the insurance industry is under pressure because of investment losses, some analysts said they did not understand why insurers needed immediate government help."
The Financial Times said bond insurers might be among the first to fit into an expanded program. Further, American Banker quotes an opinion piece in the Washington Post in which New York Life chief executive Ted Mathas wrote that effective regulation of the insurance industry should begin with imposing strong capital standards.
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