Post

i'd like some of my erstwhile neoliberal colleagues to explain why, if in 44 states shortfalls are ultimately paid for by tax payers, life insurance should remain a private for-profit industry rather than a service administered by the state? cf @ddayen.bsky.social prospect.org/2026/08/03/a...

prospect.orgPrivate credit companies are key owners of AI-related assets. Many of their parent private equity firms own life insurers that are dumping grounds for bad loans—and subject to state bailouts.Instead of passing through bankruptcy, insolvent life insurers have all their liabilities—in particular the policyholder claims—paid for by state guaranty funds.

12/8/26, 10:48 am25 reposts95 likes

Unreconstructed Curmudgeon

@ems1944.bsky.social

12 Aug

Maybe the wrong question? Legislation could fix this, making state-backed guarantees available only if insurance company is a stand-alone corporation, or some variation thereof. The guarantee is valuable socially. It's the untoward use of it as a financial refuge that isn't.

Steve Randy Waldman

@interfluidity.com

12 Aug

the guarantee is essential. that’s not the issue. the issue is what role private investors serve given the necessity of the guarantee. they do not, cannot, bear the downside risk. why should they skim from the upside before any downside materializes? 1/

Steve Randy Waldman

@interfluidity.com

12 Aug

it doesn’t matter whether they are a standalone company or not (although obviously becoming a capital source for private equity is particularly abusive). the risk is borne either by the state or by policyholders if the state absented itself. 2/

Steve Randy Waldman

@interfluidity.com

12 Aug

you could have regulators insist on safe portfolios, but then what’s the advantage in having regulators make investment decisions indirectly vs a state-owned corporation making those decisions itself? /fin