A bailout watchdog says the participation of two big insurers in the $700 billion financial rescue contradicted the goals of the government program. The inclusion of Hartford Financial Services Group Inc. and Lincoln National Corp. “was incongruous with the spirit and intent” of the bailout program, according to the report by Special Inspector General Neil Barofsky. The taxpayer investments in the two companies were supposed to be for “banking business.” Instead the money went to support their insurance businesses, not the small thrift institutions they acquired in order to qualify for the bailout.
The report illustrates that the amount of money they received from the government – $3.4 billion for Hartford, which is based in Hartford, Connecticut, and $950 million for Philadelphia-based Lincoln – was based on the assets of their parent insurance companies and “dwarfed” the size of the thrifts they acquired. It was stated further in the report that “treasury fit the enormous investments in these insurance companies, huge proverbial pegs, into the small round holes’ of eligibility for the bailout program.” It’s detailed in the report how six companies used $81 billion in taxpayer money they received and whether they kept it separate from other company funds.
General Motors and Chrysler, for example, used large portions of the money to cover daily operating expenses like paying suppliers and meeting payroll. Only time will tell how ineffective the federal bailouts actually have been. I suspect that will take some time. I have to believe that our nation’s economy was saved.
Source: Insurance Journal
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