WASHINGTON--The Treasury department is maintaining its stance that insurers seeking federal bailout dollars must do so through a federal regulated entity, leaving those without a banking subsidiary or organization out in the cold.
At a press conference announcing a new federal facility to support lending to consumers and small businesses, Treasury Secretary Henry Paulson said that the department would continue to work only with those financial entities "where there is a federal regulator" as it considers applications for funds from the Troubled Asset Relief Program (TARP).
Mr. Paulson noted that several insurance companies have federal charters, either through owning banking institutions or charters as a bank holding company, and that those who have applied will be considered. "To broadly go to insurance companies," he added, though, "we have not made that decision yet."
At least four insurers have publicly announced their intentions to seek federal funds through the federal Capital Purchase Program within the TARP, including Hartford Financial Services Group Inc., Genworth Financial Inc., Lincoln National Corp., and AEGON N.V.
Overall, Secretary Paulson said the Treasury is working to establish processes for the companies and markets that fall within the parameters of the TARP. "We're working all the time to develop and deploy programs that we think will work and will be effective," he said.
Going forward, he said that the Treasury is not currently planning to seek more funding for the TARP from Congress, but that a process for doing so has been established and would be followed when the next wave of federal funds are to be dispersed. "There's no timeline for when," he said, "but there is a process."
The secretary also said that Treasury would respond when the time comes should lawmakers demand that the TARP be expanded, to include automakers or others. Additionally, he criticized those who argue that the continuing troubles in the credit market are proof that the Treasury's actions have been ineffective. It would be "na?ve" he said, "to think that a bill could be passed, or a single action be taken, that would make all our troubles go away."
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