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Monday, April 13, 2009
Larry Kudlow :: Townhall.com Columnist
TARP the Life Insurers? This is Nuts
by Larry Kudlow
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What was the biggest suprise of Election Day?



Is bailout nation about to strike again? Sure looks like it. According to a bunch of front-page news stories, life-insurance companies are about to get TARPed. This is nuts.

The public is clamoring for and end to TARP and bailout nation. That’s a key message coming from the heartland tea parties that are cropping up spontaneously around the country. This is turning into a real populist uprising against rising taxes (especially state, local, and property taxes), TARP, and all the federal bailouts -- and the trillions of dollars of deficits and debt being used for financing.

If Team Obama ignores this uprising, it has a political tin ear.

While commercial banks of all sizes are increasingly profitable and want to pay back their TARP money, the Treasury Department is now proposing to extend bailout funds to life-insurance companies, most of which are in no danger of failing. And for those that are in danger, surely it’s time for a bankruptcy proceeding instead of more taxpayer money.

We are already on the hook for banks, GM and Chrysler, and lube jobs for guaranteed government-backed GM warranties. And the banks themselves may go to war against an Obama administration that wants to maintain control over the big-bank sector and prevent these financial institutions from paying down TARP. It’s as if Team Obama is saying, “Don’t worry about the taxpayers. Just keep expanding government control over the economy.”

And now comes life insurance. But when will this country stop saving losers and start rewarding winners?

Meanwhile, no one has proven that life-insurance companies constitute true systemic risk to the financial system. No one. This is nothing but a bailout. Actually, it’s a precautionary bailout, since none of these insurers has failed.

Despite the stock market rally and proliferating signs of an economic comeback, a new TARP regime is being prepared in case insurers lose more money in their stock portfolios, or their bond investments, or their residential- and commercial-mortgage purchases. (By the way, corporate bonds -- which are heavily owned by life insurers to pay out retirement contracts -- are rallying big time, with prices rising and yields declining.) Continued...
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About The Author

Lawrence Kudlow is host of CNBC's Kudlow & Company

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(12 comments so Far)
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Reply # 1
Date: Apr 14, 2009 - 5:41 PM EST
Jason, You Completely Miss the Point

On September 16, 2008, Kudlow wrote,

“Treasury Secretary Henry Paulson is the man of the hour. This weekend he drew a clear line in the sand: no more federal bailouts. Not for Lehman Brothers. Not for global insurer AIG. Not for Merrill Lynch. Not for anyone. It was a gutsy decision for the former Wall Street bigwig -- and one that he had to step back from when it became clear that the collapse of AIG would be catastrophic and government intervention was necessary.”

The financial system would not have collapsed if AIG had been allowed to fail. Most of the players that had insurance with AIG had hedged with others. The AIG bailout was absolutely unnecessary. It was a multi-billion dollar swindle of the American people which Kudlow hailed and supported. Because of it, many players got paid twice. The financial system would not have collapsed without TARP either, which Kudlow also said was necessary. That was another swindle of the American people.

My criticism has nothing to do with the switcheroo that Paulson pulled after TARP passed.

When Kudlow got the personal phone call from Treasury asking him to support Paulson’s entire agenda, he became a part of the fraud. I will not mince words and argue whether or not Kudlow personally believed the lies he was telling America. However, if Kudlow really did believe what Paulson was spoon feeding him, then Kudlow is a damned idiot.

I sure as hell knew that Paulson and Bernanke were lying and I wasn’t getting personal phone calls from Treasury like Kudlow was.

Kudlow is a Eurosocialist Pseudo-Con Fraud.
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Reply # 2
Date: Apr 14, 2009 - 4:29 PM EST
Larry Kudlow and Rich weren't lying
I don't like Larry Kudlow or Rich Lowry, but they weren't lying. From my understanding they supported TARP. Toxic Asset Relief Program. Right after they supported the program the government changed it's mind and did nothing it promised. The program hasn't spent one dime on toxic asset relief which is fine. I expect politicians to lie shamelessly. What I don't like is them not being called out on it.

I believe everyone in the media was lied to so you can't completely blame it on Rich and Larry. They actually thought the government was going to do what it said it was going to do instead of pulling off the biggest lie in history.

It's amazing how this crisis has happened and no one in the government or media talks about reforming the financial system. Nothing says this was one big lie quite like that.

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