{"id":328,"date":"2010-07-22T13:01:18","date_gmt":"2010-07-22T20:01:18","guid":{"rendered":"https:\/\/scotshonor.com\/?p=328"},"modified":"2010-07-22T13:01:18","modified_gmt":"2010-07-22T20:01:18","slug":"be-afraid-be-very-afraid","status":"publish","type":"post","link":"https:\/\/scotshonor.com\/?p=328","title":{"rendered":"BE AFRAID, BE VERY AFRAID!"},"content":{"rendered":"

According to this article from Investor\u2019s Business Daily<\/em>, the new financial regulations included setting up the Office of National Insurance:<\/p>\n

http:\/\/www.investors.com\/NewsAndAnalysis\/Article\/540854\/201007191905\/Insurers-Set-Up-For-Next-Affordable-Crisis.aspx<\/a><\/p>\n

This office \u201cshall have the authority to monitor the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products regarding all lines of insurance, except health insurance.”<\/span><\/strong><\/p>\n

If the Obama administration is successful in nationalizing insurance regulation, particularly with a goal of social justice, it could set off an economic disaster that will make the meltdown of 2008 look good by comparison.\u00a0 During the Great Depression, the insurance industry did much better than the rest of the financial markets.\u00a0 To protect the economy, in 1933 the Glass-Steagall Act restricted the ability of banks to get involved in risky investments; specifically, it prevented banks from going into the insurance business.<\/p>\n

http:\/\/topics.nytimes.com\/topics\/reference\/timestopics\/subjects\/g\/glass_steagall_act_1933\/index.html<\/a><\/p>\n

The act worked well for 66 years.\u00a0 But, banks were desperate to get a piece of what they considered to be the lucrative insurance industry, and in 1995 they gained a new powerful advocate in Robert Rubin, Treasury Secretary for the Clinton Administration. Robert Rubin was viewed with awe by the main stream media as a financial genius.\u00a0 He is the one who proposed repealing Glass-Steagall because modern day banks were so much more sophisticated than the banks during the depression era. Those depression era financial restrictions were so<\/em> yesterday.\u00a0 In 1999, the Gramm-Leach-Bliley Act repealed Glass-Steagall and just may have set off the entire financial meltdown we have seen over the last two years.<\/p>\n

http:\/\/www.sourcewatch.org\/index.php?title=Gramm-Leach-Bliley_Act<\/a><\/p>\n

Shortly after he left the White House, Robert Rubin went to Citigroup, as their senior financial spokesman, \u00a0for a nice $15 million per year.\u00a0 He brilliantly helped them take advantage of this great legislation to get into lots of exciting new investment opportunities, including the insurance business.\u00a0 It was a disaster.\u00a0 Ultimately, Citigroup was spared insolvency only after a $45 billion federal bailout.\u00a0 Actually, if the following article is accurate, the true cost to tax payers is much higher than that:<\/p>\n

http:\/\/www.thenewamerican.com\/index.php\/usnews\/politics\/3225-citigroup-bailout-retrospective<\/a><\/p>\n

During the hearings in front of congress explaining this mess, Rubin was quoted as saying:<\/p>\n

Almost all of us involved in the financial system, including financial firms, regulators, ratings agencies, analysts and commentators missed the powerful combination of forces at work and the serious possibility of a massive crisis.\u201d<\/em><\/strong><\/p>\n

Duh, ya think?\u00a0 Actually, a lot of people were warned about this, but no one was listening.<\/p>\n

Today, very few people in the financial industry are interested in what Robert Rubin has to say, except for one place; the White House.\u00a0 He is one of the people helping Timothy Geithner make all these great decisions, including the new and exciting Financial Reform Legislation.<\/p>\n

The bottom line is this.\u00a0 If this wonderful new government agency discovers that minorities and lower-income communities are paying more for insurance than, say…suburban white folks, they are going to try and fix the problem.\u00a0 What this means is insurance companies will be required to offer coverage to people regardless of loss experience <\/em>and the rest of us are going to be paying higher premiums as a result.<\/p>\n

Less you think this to be fantasy, Californians are already paying more than necessary for their automobile insurance today because of this kind of thinking.\u00a0 Proposition 103 was passed in 1988.\u00a0 This prevented insurance companies from adjusting insurance rates based on zip codes.\u00a0 The insurance industry fought this tooth and nail, because they thought it was unfairly discriminatory and definitely not a good idea.\u00a0 But, after prodding by the ever brilliant John Garamendi, the courts finally ordered the insurance industry to implement this law in 2005.\u00a0 It took the industry about five years to even figure out how to do it.\u00a0 This year, it has happened and if it hasn\u2019t hit your pocketbook yet, it certainly will in the near future.\u00a0 For those of you interested in more details on how you are now subsidizing drivers in L.A., the following article does a good job of explaining the situation:<\/p>\n

http:\/\/cainsurancesolutions4u.blogspot.com\/2010\/02\/rural-californians-get-ready-to-pay-for.html<\/a><\/p>\n

This probably already has your blood curdling, but that is not the major problem.\u00a0 It is bad enough to pay too much for insurance, but it is even worse if idiotic regulation causes insurance companies to go insolvent.\u00a0 The Obama administration does not seem to grasp the concept that profits are really necessary for companies to stay in business.\u00a0 With the insurance industry, it is not just profitability, but solvency.\u00a0 If the insurance industry melted down like the banks, the results would be even more catastrophic.\u00a0 No one would ever be able to borrow money for a car, or a boat or a home or anything else without insurance.\u00a0 No bank would loan the money without the security of an insurance policy protecting the collateral.\u00a0<\/p>\n

Just in case anything thinks I am over exaggerating the problem, I refer you to the following article:<\/p>\n

http:\/\/www.kaiserhealthnews.org\/Daily-Reports\/2010\/July\/22\/Consumers-Union-Analysis.aspx<\/a><\/p>\n

Now the same group of clowns who decided banks were too conservative want to help the health insurance industry do similar financial planning.\u00a0 I was involved in a health care 501c9 trust where the managers decided they had too much surplus, so they gave a refund to participants. Several contacts from the health insurance industry warned me not to do that.\u00a0 So, I met with senior management and literally begged them to not deplete the surplus.\u00a0 They not only did not listen, I was criticized for daring to question their superior wisdom.\u00a0 Three months later there was an adverse development in loss experience and the remaining surplus was all gone.\u00a0 The trust literally had to borrow money to pay claims.\u00a0 The same people who had criticized me earlier now were begging me for a plan of action to deal with the financial disaster they created.\u00a0\u00a0 We were able to fix it, but it took about five years to completely repair the damage that had been done in less than three months.\u00a0 \u00a0This was one small trust.\u00a0 Making this kind of mistake with a major health insurance carrier would be beyond catastrophic.<\/p>\n

There is only one good piece of news.\u00a0 These guys are not that sharp and their world is falling down around their heads.\u00a0 Even Democrats are starting to talk about extending those worthless Bush tax cuts.\u00a0 As Lincoln said:<\/p>\n

\u00a0<\/em><\/strong>You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time<\/em><\/strong>.<\/p>\n

\u00a0Right now, they aren\u2019t fooling anyone.\u00a0 Here is your therapy session.\u00a0 Just keep repeating the same phrase over and over and over again:<\/p>\n

I CAN SEE NOVEMBER FROM MY HOUSE!<\/strong><\/p>\n

I CAN SEE NOVEMBER FROM MY HOUSE!<\/strong><\/p>\n

There!\u00a0 Feel better?<\/p>\n

This could be our last chance.<\/p>\n

TDM<\/p>\n","protected":false},"excerpt":{"rendered":"

According to this article from Investor\u2019s Business Daily, the new financial regulations included setting up the Office of National Insurance: http:\/\/www.investors.com\/NewsAndAnalysis\/Article\/540854\/201007191905\/Insurers-Set-Up-For-Next-Affordable-Crisis.aspx This office \u201cshall have the authority to monitor the extent to which traditionally underserved communities and consumers, minorities, and … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-328","post","type-post","status-publish","format-standard","hentry","category-latest-headlines"],"yoast_head":"\nBE AFRAID, BE VERY AFRAID! - SCOTS HONOR<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/scotshonor.com\/?p=328\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BE AFRAID, BE VERY AFRAID! 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