The Treasury’s bailout is moving beyond banks to include major insurance firms hurt by bad investments, the Washington Post reports. Companies such as MetLife, the Hartford, and Prudential hope to be covered in the plan, under which the government would provide money in exchange for ownership stakes. Big insurers provide a safety net for a variety of transactions, so the consequence would be far-reaching if one collapsed.
The move was needed in part to prevent worried investors from leaving insurance firms for companies, such as banks, that were already included in the bailout. Meanwhile, AIG has said it may need federal support beyond the $123 billion it has received as it attempts to recover from backing bad mortgage investments. If insurance companies need backing, what’s “the next domino to fall?” asks an analyst.