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.This from a story in Friday's paper:
Our tax dollars at work. The government is trying everything possible to shore up a crumbling financial sector. Yet things are still in free fall. The question needs to be asked have we hit the bottom. And I might add, if we haven't hit bottom, is it not a scary thought where the bottom might actually be.
The troubled insurance giant American International Group already has consumed three-quarters of a federal $123 billion rescue loan, a little more than a month after the government stepped in to save the company from bankruptcy.
The reason for expanding the bail out to the insurance industry is:
Government officials worry that 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.
I need to ask what in this day and age does "modest" mean. A modest drop in the Dow is 100 points. What would a "modest" impact on policy holders mean.
It looks to me more and more likely that the Treasury Department will be heading back to Congress to ask for a great deal more money. I think there needs to be some consideration at what point we say enough the government can do more. What happens if GM goes under, will the government step in and help them out.
Once again I've heard the word patience used. That it will take time for the programs the government are putting in place to take hold and do what they are supposed to do. I'm not sure how much more patience the US economy for that matter the world economy can take. I think not much.