AIG Insurance Fraud

Image by justinsomnia, used under a CC license.

What happens when the people we pay to cover us when things go wrong can’t manage their own finances? Are they punished for costing their customers money? Do they face criminal investigation? Or do they get publicly funded multi-billion dollar bailouts with little or no reporting requirements?

On a related note, it was reported today that FDIC collected zero premiums from the banking industry between 1996 and 2006. Banks apparently exerted political pressure to get excused from the payments, arguing that they were so properpus that they would probably never need FDIC’s help.

Insurance is supposed to be about preparing for the unforeseen. So why were gigantic financial institutions allowed to be so reckless? And why is the bill for their foolishness being passed on to us?

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