Re: Eligible life insurers being put on public dole.

[David Farber <dave () farber net>]

Begin forwarded message:

From: John Levine <johnl () iecc com>
Date: April 8, 2009 1:01:17 PM EDT
To: dave () farber net
Subject: Re: [IP] Eligible life insurers being put on public dole.

> According to WSJ The Treasury Department plans to extend the Troubled
> Asset Relief Program to certain eligible life insurers. Several life
> insurers have been burdened lately by capital constraints amid ailing
> markets.
>
> Why are all the vultures getting massive welfare while the public is
> getting what amounts to a mortgage on a second home without getting
> the home?

I have a large life insurance policy that is indended to support my
wife and daughter if I am hit by a bus.  It would be, to put it
mildly, a problem if I were to die and they didn't pay.  The WSJ
article says that a large part of the problems prompting the TARP
action is variable annuities, which are sold mostly to old folks who
use them for retirement income.  Again, it would be a problem if they
didn't pay.

I'm no fan of financial manipulation, but since life insurance
companies have a whole lot more normal people as customers than Lehman
Brothers or AIG ever did, I hope we could resist the urge to cut off
our noses to spite our faces.

What would be most interesting is an analysis of the insurers'
problems do see to what extent they were honestly suckered by AAA
ratings on what turned out to be trash, or they have assets that are
illiquid rather than worthless, and to what extent they loaded up on
stuff they should reasonably have known was too risky.  The answers to
that question depend on one's political leanings, but it would be nice
to find someone who could cut through the noise and do some real
financial analysis.

Regards,
John Levine, johnl () iecc com, Primary Perpetrator of "The Internet for  
Dummies",
Information Superhighwayman wanna-be, http://www.johnlevine.com, ex- 
Mayor
"More Wiener schnitzel, please", said Tom, revealingly.




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