Insurance companies now feeding at the TARP trough

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If you were operating under the illusion that the financial services industry was going to receive less in political favors from the Obama Administration, then you should take a look at this Tech Ticker video. Yesterday, the insurance industry got into the TARP program to the tune of $22 billion. What is interesting about this are the following points, all addressed in the video:

  • Questions: Didn’t we just have stress tests on banks?  I thought that had cleared up the systemic risks to the financial sector?  Why then are insurance companies suddenly getting TARP money? Answer: crony capitalism.
  • Question: Given the fact that banks are fleeing TARP as quickly as they can because of pay caps and governmental oversight, why would insurance companies be so eager to get into the program? Answer: things must be pretty bad for them.
  • Question: if the announcement about insurance companies happened after the bell yesterday, why were insurance companies up so vigorously in the trading session before th announcement?  Answer: insider trading.
  • Question:  why are bank creditors getting 100 cents on the dollar when Chrysler and GM bondholders are getting stuffed?  Answer: crony capitalism.
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My interpretation of all of this is up in my most recent post on Naked Capitalism.  Again, it seems like an example of pigs feeding at the trough, does it not.  We should remember that pigs are first fattened but are then slaughtered.  The federal government is certainly aiding the former.  The latter will come in due course.

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Source
$22B Bailout for Life Insurers: Mystery of Thursday’s Rally Revealed! But Why Now? – Tech Ticker

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