Stupid (Government) Agency Tricks

[Welcome Google Finance readers!]

"The Treasury Department is looking at ways to aid insurance companies as part of the rescue package announced earlier this month."

You have got to be kidding!

Oh, you're not?

The Feds are now talking about diverting between $50 and a $100 billion of our tax dollars to carriers owning "distressed assets." Hey, I'm distressed by this foolhardy scheme; where's my bailout?

As we pointed out last month, insurers buying up mortgages, and then watching their value plummet, is a time-honored tradition. If they're not going to face consequences for ill-advised investment decisions, why would they ever stop? Rewarding bad behavior is a sure-fire way to encourage its repetition. You don't give your puppy a treat for peeing on the carpet, so why would the Feds be giving away so much of our money to these carriers?

We've already seen how "responsibly" at least one such beneficiary has behaved, why would we assume that its erstwhile competitors would be any more careful with "free money?"

On the other hand, at least some carriers are taking their fiduciary responsibility seriously:

"In recent weeks, insurance companies including Hartford Financial Services and MetLife [have] raised capital."

Hartford glommed on to about $2 and a half million from Germany's Allianz, while MetLife sold off about $2 billion in stock. Good on them for addressing the issue from the corporate boardroom, not the U S Treasury.