Since the unraveling of American International Group no one seems to have any sympathy for insurance companies that find loopholes in laws they are supposed to obey, or laws they have gotten passed exempting themselves.
So stories in today's Wall Street Journal should, at the very least, arouse the public's ire. The Journal reports that buried in a 239-page amendment to the U.S. House of Representatives' financial regulatory bill, which may pass today, is a provision exempting military insurer USAA from the bill's stricter provisions.
Assisting our military personnel is of the highest priority, but loosening the regulations for its insurer is another. The amendment doesn't refer to any company by name, but mentions an "industrial bank that provides services to the military," and USAA is the only one that fits, the Journal opines. To be fair, there are other exemptions in the bill for big corporations such as General Electric Co. and Pitney Bowes Inc., which presumably also have expensive and competent white-shoe lobbyists on the Capitol floor.
The other Journal story focuses on a special inspector general's report that criticizes the Treasury Department for allowing insurers to purchase small savings and loans just prior to qualifying for TARP funds. The report says that only a small part of the $4.35 billion The Hartford and Lincoln National received went to the banks they bought, while the remainder was used to shore up their insurance operations. There's no suggestion that what The Hartford and Lincoln did was illegal, just questionable.
As previously reported by BNET Finance, both insurers got in over their heads with bad bets on products such as variable annuities and were faced with the same kind of implosion as AIG, whose $182 billion bailout makes their handouts seem like chump change.
In regards to AIG, yesterday Treasury Secretary Tim Geithner told the congressional panel overseeing TARP that companies like AIG may never repay all the borrowed money they owe taxpayers.
Perhaps Congress and Geithner should remember that an insurer's job is to protect us rather than us protecting them.