While official results of the Obama administration's stress test on the nation's biggest financial institutions won't be released until Thursday evening, the unofficial results were leaked this morning. What's interesting is not only the list of 10 needy banks that will likely have to boost their capital, but also who's not on it: MetLife, the nation's largest life insurer.
MetLife is not only an insurer but also a bank, because, like many insurers, it bought a bank earlier in its life to enable it to diversify. But unlike banks such as Wells Fargo, Bank of America and Citigroup that are apparently on the distressed list, it never got into any trouble.
Despite the fact that MetLife is the nation's largest life insurer, with assets of more than half a trillion dollars, it has managed to stay under the radar where scandal is concerned. Its claim to fame is that, in bad situations, it avoids the limelight.
When rating agency Standard & Poor's put 23 banks on Creditwatch yesterday with negative implications (meaning they could be downgraded at least one notch within 90 days), many of the nation's biggest financial institutions were among them, including those taking Obama's stress test. MetLife was not.
Again, when life insurers, including Hartford Financial and Prudential, went to the U.S. Treasury Department earlier this year begging for TARP funds, MetLife was not among them. Even though MetLife technically qualified for federal assistance (as the owner of a bank), the New York-based insurer said it didn't want the money. MetLife CEO Rob Henrikson even laughed when the question was asked by an analyst, saying MetLife had no need for the money.
The market's reaction yesterday to news that banks would need even more of a federal bailout was to send bank stocks soaring, an indication, at least to some, that the Bear Market may be ending.
Well, perhaps. But instead of buying stocks in need of transfusions, it might make sense to take a look at staid old MetLife, which has been bumping along at around $28 a share. It took a hit in April when it said it wouldn't take TARP funds, and another after it reported earnings last week that were below expectations.
But isn't there something to be said for being solid? Isn't that what a "bank" is supposed to be?