Jim:      I have been a cheerleader for almost virtually every single bail out that has happened to date…not because I like them… nobody likes to have to rescue the entire financial system…. nobody likes throwing money at companies, many of which made colossal mistakes… but I did think that they were necessary… I thought that they made sense… and I thought that the Fed and Treasury did the right thing… so keep that in mind when I tell you that I am outraged and perplexed by the fact that Lincoln Financial and Hartford Financial Services Group are allowed to get Federal money after screwing up so badly.

This morning Lincoln announced that it is going to raise $2.05B of which a whopping $950M is preferred sold to the government… that is on top of Hartford accepting $3.4B in US bailout funds as well selling $750m in shares… now maybe they needed the money… but we have gotten so used to the idea that the Fed should bailout anyone in need… that we have stopped allowing any Darwian process of late stage capitalism from happening at all… there is literally nothing forcing companies to merge or die… why didn’t we do that to Lincoln and Hartford? … it is not like any other insurance company took help… what befell them is not an industry wide problem, like in banking… it is that Lincoln and Hartford took on an amazing amount of risk… and now instead of forcing them to pay the price, we are saving them from the consequences from their own bad decisions.

It is obvious to me that the whole banking system was devastated by mortgage… as almost all of them gambled on housing prices endlessly going higher… yes, that was dumb… there is no question about it… but Lincoln and Hartford, these companies gambled on the stock Marcet… basically they took peoples money in annuities and offered them policies that they could not make good on if the stock Marcet went bad… they simply underwrote really badly… they also invested poorly in their portfolios… and for this they get bailed out.

I would like to know the justification for this… there is so much else that could have been done… I think that they should have been made to run off their portfolios… if they had saleable assets, as Hartford did with its property and casualty division… the government should have made them sell it off… so it could back the annuities itself with the cash received from the sales… instead of you and I having to back them.