The Treasury Department has decided to give struggling life insurance companies access to federal bailout funds, insiders tell the Wall Street Journal. The industry—which had earlier seemed largely immune to the credit crisis—has been hit hard by stock market and real estate declines, leaving some firms on the hook for big payouts they may find impossible to deliver.
The move is expected to give capital markets a boost by allowing life insurers currently hoarding cash to resume buying bonds, and by saving the firms from selling off their holdings to raise cash. An official announcement that the insurers can join the TARP program is expected within days. It's unclear whether the news will spark the same outrage triggered by the bailouts of the banking and auto industries.