[Vision2020] The New Conservatism/Republicanism formerly known as Communism: Second Installment

[Ted Moffett]

"Right or left wing, conservative or liberal, are political stereotypes to
manipulate the public to pursue an agenda based on maximizing wealth and
power for a economic elite, now expressed in a multinational globalized
economy."

Ted Moffett, writing on Vision2020, Tues. Sept. 2, 2008:

http://mailman.fsr.com/pipermail/vision2020/2008-September/055835.html
----------------

On 10/25/08, Art Deco <deco at moscow.com> wrote:
>
>  Bailout expands into insurance Government would take equity stakes in
> several companies
>
>   David Cho, Binyamin Appelbaum<http://www.spokesmanreview.com/news/bylines.asp?bylinename=David%20Cho,%20Binyamin%20Appelbaum>and Zachary
> A. Goldfarb<http://www.spokesmanreview.com/news/bylines.asp?bylinename=Zachary%20A.%20Goldfarb>
> Washington Post
> October 25, 2008
>
> WASHINGTON – The Treasury Department is dramatically expanding the scope of
> its bailout of the financial system with a plan to take ownership stakes in
> the nation's insurance companies, signaling new concerns about a sector of
> the economy whose troubles until now have been overshadowed by the banking
> industry, government and industry sources said.
>
> Insurers, including The Hartford, Prudential and MetLife, have pushed the
> Bush administration to include them in the plan. Many firms have taken
> losses from mortgage-related securities and other investments and are
> struggling to replenish their coffers.
>
>   Government officials worry the collapse of a major insurer could further
> destabilize the financial system because of the crucial role the companies
> play in backstopping a wide range of financial transactions, although the
> direct impact on holders of car, life and other insurance policies would be
> modest, industry officials said.
>
> The new initiative underscores the growing range of problems that Treasury
> is scrambling to address with the $700 billion allocated by Congress this
> month. The shape of the plan has changed repeatedly since Treasury Secretary
> Henry Paulson introduced it last month as an effort to rescue banks by
> buying their troubled mortgage-related assets. That original mandate has now
> been pushed aside by a plan to take equity stakes in banks and insurance
> companies, and other businesses are lobbying to be included.
>
> The government has been forced to expand the plan partly because the
> federal guarantees previously given some institutions, such as banks, have
> put other companies and financial sectors at a disadvantage, making them
> less attractive to uneasy investors.
>
> The government's power to choose winners and losers in the crisis was
> illustrated Friday when the Cleveland-based bank National City was forced to
> sell itself when regulators turned down its request for a Treasury
> investment after deciding the firm was too weak to save, according to people
> familiar with the matter. Instead, the Treasury gave $7.7 billion to PNC
> Financial Services Group to help buy National City. It did not require that
> the money be used for new lending, the stated purpose of the government
> plan. PNC will become the fifth-largest bank in the country by deposits.
>
> The cost of saving the country's largest insurer continues to rise. Senior
> managers at troubled insurance giant American International Group warned the
> Federal Reserve Friday that the company would likely need more taxpayer
> money than the $123 billion in rescue loans the government has provided,
> according to two sources familiar with the private talks.
>
> AIG is having a painful time trying to pay off bad bets it made
> guaranteeing other companies' risky mortgage investments, which have lost
> much of their value. Five weeks after the government launched an
> unprecedented bailout to save the private company from bankruptcy, AIG has
> so far burned through $90.3 billion of government credit.
>
> The troubles at AIG highlight the difficulty of rescuing insurance
> companies after they begin to unravel. Each week, AIG has faced multimillion
> dollar collateral calls to pay off the mortgages and other assets it
> guaranteed, sources said. The calls were triggered largely because AIG's
> credit rating was sharply downgraded. The Federal Reserve of New York and
> AIG declined to comment Friday on the talks or to characterize AIG's
> situation.
>
> "In light of worldwide economic and financial conditions, we are in
> constant conversations with the Federal Reserve," said AIG spokesman Joseph
> Norton, who offered no further comment.
>
> The move to rescue other insurers raises questions about how much the
> government will need to spend to prop up the insurance sector and which part
> of the nation's financial system might need help next.
>
> "The big problem is whether the resources they've got available are
> sufficient as they expand to more and more sectors," said Roberton Williams,
> a budget expert at the Urban Institute. "Now that they're going to expand to
> certain insurance institutions, is there enough money to cover that? And
> what would be the next domino to fall?"
>
> The Emergency Economic Stabilization Act approved by Congress and signed
> into law Oct. 3 permits Paulson to invest in any financial institution,
> including insurance companies. But when Treasury drafted rules for spending
> the first $250 billion to recapitalize banks, the program was limited to
> banks and bank holding companies. In order to buy stock in insurance
> companies, Treasury officials would have to redraft the rules for the
> program or create a new one.
>
> Insurers lobbied federal officials for inclusion in the program, arguing in
> part that it would "level the playing field" between banks and insurance
> firms. An industry trade group and several insurance companies have met with
> Treasury officials to discuss participation, industry sources said.
>
> Several insurers Friday emphasized that their industry is less vulnerable
> to the mortgage-backed securities and other complex investments that have
> damaged the balance sheets of some banks.
>
> A recent report by Goldman Sachs noted that many insurers are struggling to
> raise enough capital to keep their credit ratings and meet regulatory
> requirements. Several major companies report earnings next week, putting
> their problems on public display.
>
> "These people are not in the same precarious position as AIG, but it would
> still be prudent for some of them to take on additional capital," Donn
> Vickrey of Gradient Analytics said. "Given how large the losses are and how
> long they've been building, they're running out of time."
>
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