Insurance Companies Gain Eligibility For Tarp Funds
A number of insurance companies have purchased banks in recent months in order to gain access TARP funds. Albeit not on the scale of their financial brethren, the insurance industry has also struggled during the financial crisis and has seen it’s largest company, AIG, require massive federal aid in order to avoid bankruptcy.
Two life insurance companies, the Hartford and Lincoln National received approval last month to convert into bank holding companies, paving the way for them to be eligible for federal aid. Troubled bond insurers, Ambac and MBIA have also applied to the government for capital injections in recent months.
Giving aid to bond insurers would help out the municipal bond sector, which has been in upheaval for the past year ever since a number of the major players received credit downgrades. A number of critics have complained that this would purport the original intention of TARP in the first place.
Some have called for the insurance industry to receive their own sort of bailout program as TARP was set to originally help re-capitalize the banking system. While the insurance industry is a part of the financial services sector, helping them out will do little to help unfreeze credit markets.
With only $350 billion remaining, not many people believe that will be enough to help both the banking system and the insurance industry.
