New Snouts at the Trough

Three new snouts at the trough. Insurance companies. Hedge funds. Auto companies. Yes, no and maybe. Not surprising. $700-billion is going to attract flies.

Insurance companies. They are regulated financial institutions providing a utility-like function to the general public. The AIG rescue amply demonstrates that an insurance company collapse can have systemic repercussions. As financial institutions, they are in the general scope of the problem the bailout, er, rescue package was intended for. Yes, though, as always, the devil is in the details.

Hedge Funds. Let's see, hedge funds are unregulated pools of capital contributed by sophistical investors and run by the most arrogant and avaricious group of people this side of the Russian oligarchs. Unlike, say, a venture capital firm or a postal savings system, they have no redeeming social purpose, but exist, like a drug cartel, solely to enrich the participants. I'd say no space at the trough. If hedge fund failures create systemic issues, address them in the institutions burned by those collapses, and create a conduit with plenty of bandwidth to the criminal justice system.

Auto companies. Hmm. They really weren't part of the original problem. But they are a problem. I'm old enough to remember the Chrysler bailout. That had a mixed outcome. It kept the company afloat (good), allowed the ossified culture of the auto industry to be perpetuated for another generation and delaying the day of reckoning (with additional accrued interest) for a quarter century (bad) and inflicted Lee Iacocca on the public consciousness for a decade (the price you pay, I guess). A toss up. Maybe the next Congress should deal with it as part of a general industrial policy, a la francaise?