Government Aims To Take Over Insurance Industry Next

First the financial industry, then the auto industry...now Michelle Malkin brings word that the government is aiming to take over the insurance industry, too:

You know that bank bailout program to buy up toxic assets that morphed into a capital injection plan and then back again? Well, now TARP is going to be expanded to cover life insurers.

Yes, life insurers:

The Treasury Department has decided to extend bailout funds to a number of struggling life-insurance companies, helping an industry that is a lynchpin of the U.S. financial system, people familiar with the matter said.

The department is expected to announce the expansion of the Troubled Asset Relief Program to aid the ailing industry within the next several days, these people said.

The news will come as a relief to a number of iconic American companies that have suffered big losses made worse by generous promises to buyers of some investment products. Shares of life insurers have fallen more than 40% this year. Their troubles led to a string of rating-agency downgrades that, in a vicious cycle, made it more difficult for some insurers to raise funds.

The life-insurance industry is an important piece of the U.S. financial system. Millions of Americans have entrusted their families’ financial safety to these companies, so keeping them on solid footing is crucial to maintaining confidence. If massive numbers of customers sought to redeem their policies, it could cause a cash crunch for some companies. And because insurers invest the premiums they receive from customers into bonds, real estate and other investments, they are major holders of securities. If they needed to sell off holdings to raise cash, it could cause markets to tumble.

The decision by the Treasury Department adds a third industry to the banks and auto companies that have already received bailouts from the government. While American International Group Inc. is a major insurer and is the biggest recipient of government money, its problems weren’t caused by its life-insurance operations, but derivative bets that went bad.

Only insurers that own federally chartered banks will qualify for the program. Treasury had said last year that life insurers could be eligible for TARP funds if they owned bank-holding companies, but it hadn’t officially decided to give funds to these companies as it focused much of its energies on banks and auto makers.

Those insurers better think long and hard before they take TARP money. Be careful what you wish for.

As predicted, the government takeover is just beginning. Malkin also links to a SNL sketch that mocks -- yes, they finally made one -- Obama's actions. Unfortunately, it's a bit too close to reality for comfort, and I suspect that in a couple years we'll look back on this and it won't be the least bit funny at all.

It'll be especially unfunny to all the people who have lost their jobs or are working under the whimsical thumb of the mental morons politicians in Washington rather than the executives of their own companies.

There's my two cents.