The Bailouts Keep Coming: Treasury Considering Expanding Bailout To Insurance Companies
Sure. Why not? Spending other people’s money is easy.
The Treasury Department is considering buying equity stakes in insurance companies, a sign of how the government’s $700 billion rescue program could turn into a piggy bank for a range of beleaguered industries.
The availability of U.S. government cash in the middle of a global credit squeeze is drawing requests from insurance firms, auto makers, state governments and transit agencies. While Treasury intended for the program to apply broadly, the growing requests could put a strain on the $700 billion, a sum that only last month stunned lawmakers.
MetLife Inc. and Prudential Financial Inc., two of the nation’s largest publicly traded life insurers, and New York Life Insurance Co., one of the highest rated insurers in the U.S., are interested in exploring a sale of equity stakes to the government, according to people familiar with the matter.
Broad participation in the rescue program would put more power in the hands of government to reshape the finance industry. On Friday, PNC Financial Services Group Inc., said Treasury would buy $7.7 billion of preferred stock and warrants. The cash injection will help the bank purchase struggling National City Corp., a move pushed by federal regulators. (Please see related article.)
In September, the government extended an $85 billion rescue loan to giant insurer American International Group Inc. in exchange for an 80% stake.
Next up? Ethanol.
Heck, I think the government should just buy up all the banks and all the insurance companies and all the energy producers. That way they’d never fail and we could all live happily in Marx’s utopia.
