He and others pointed to the financial collapse of AIG Inc. under federal regulation. AIG insurance companies under state regulation remained solvent.
It was never a question in my mind that AIG, including its state regulated insurance operations, were insolvent. Rather the qustion in my mind was exactly how ignorant the State insurance commissioners that parrotted that III talking point above were and the relative degree of their stupidity. Sadly for our friends in Louisiana I concluded the hands down dumbest insurance commish was Jim Donelon mainly because even Mississippi’s Mike Chaney had enough sense to not parrot Robert Hartwig’s talking points on AIG.
At first, it was the big financial guys who were “too big to fail” that were getting all that bailout money. Billions to banks, insurance companies, and then to auto makers. If you are old enough to remember back to the depression, the popular song of the suffering epitomized what was taking place:
“Once I built a railroad, I made it run, made it race against time.
Once I built a railroad, now it’s done. Brother, can you spare a dime?”
Well you can sure tell that inflation kicked in. Instead of financial panhandlers asking passersby for a dime, they head to Washington and ask for a spare $50 billion or so.
At the front of the line is A.I.G., Louisiana’s biggest insurance boondoggle that this column wrote about last week. It is hands down the biggest single financial disaster in Louisiana history of a company with such a huge Louisiana presence. This is a company that recently posted the largest quarterly loss in American Corporate history-some $61.7 billion. To put this sum in perspective, A.I.G. was losing more than $27 million every hour. That’s $465,000 every minute.
Now one would assume that there are regulatory mechanisms in place to protect the weary and leery average citizen. And in fact, the supposed white knights are the various state insurance commissioners who took great umbrage of the accusations made in last week’s column of how perilous the financial condition of A.I. G. happens to be. “Misinformation is being circulated” with “inappropriate assertions based on incomplete information that ultimately hurt both policyholders and taxpayers,” the National Association of Insurance Commissioners’ press release lamented. The release went on to say that “A.I.G. companies are financially sound and fully able to pay claims.” Continue reading “Jim Brown ain’t backing down on AIG’s Insolvency: Captured Regulators and Jackassery at the NAICS”
Press reports, both nationally and at home, have confirmed what financial analysists and investigators have known for months. Louisiana continues to have the most dysfunctional insurance system and the worst insurance climate in the country. In almost every category, insurance rates are the highest nationwide. And just last week, the New York Times published a front page investigative report on major financial trouble involving Louisiana’s largest insurance company.
The American Insurance group (A.I.G.) does more insurance related business in Louisiana than any other company. A.I.G. recently received the largest bailout in history. Yet serious questions are being raised about insider swapping of both assets and liabilities among numerous A.I.G. subsidiaries. The Times article says A.I.G. is selling way too much insurance. “State insurance commissioners are supposed to keep insurers from writing new policies if in doubt that they can cover their claims,” the article concludes.
One of the voices raising alarms is former Louisiana chief insurance examiner W.O. Myrick. He was quoted extensively in the Times article, and has looked at a number of A.I.G. subsidiaries that do extensive business in Louisiana. W.O. was of great help in my initial days of taking over a deeply troubled department back in 1991. He assisted me in shutting down some 50 insolvent insurance companies. So he knows the territory, and when he says there is potential trouble, you can bet on it.
Remember now that we are talking not only about Louisiana’s largest company, but one that so far has received over $210 billion in federal bailout funds. That’s a lot of dough in anyone’s book. How much? Figure that $700 for you and each member of your family goes from the tax till to A.I.G. And since the government has to borrow the money, add in 10% for the next 30 years. We ain’t talkin’ chump change here. Continue reading “Jim Brown Joins Slabbed in Calling Out AIG: You’re Insolvent and We Know It”