If the “official” (read: “press release”) reaction from insurance industry trade groups about the Fed's $85 billion-dollar bailout of AIG is any indication, the controversial move is quite simply a Very Good Thing. They point to the fact that there are safeguards — AIG has 24 months to pay off the loan with interest, most likely by selling off substantial portions of its business to who knows what investors. They say it will stabilize the markets and will not lead to the domino effect of more bailouts.

Then why am I so bothered by the principle of the thing?

We all work within the insurance industry, and we all want it to do well. But above and beyond our connection to insurance, we're also consumers and taxpayers. And this latest financial fiasco should infuriate anyone who pays taxes, has a 401(k) and is watching their investments go down the crapper.

And the price tag is a lot more than $85 billion. According to blogger Hale Stewart:

Between the $29 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion apiece to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the Federal Housing Authority, Tuesday's $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion.

Make no mistake, the suckers footing the bill for all of this are you, your children and your grandchildren.

We've been hearing for years about how free trade, unfettered business dealings and minimal regulation can only benefit the economy — and in turn, you. Big businesses have hammered the doctrine into our heads that too much government is bad. In the political arena, these same opponents of big government are also fond of the term “personal responsibility,” at least when it comes to welfare mothers, broke homeowners defaulting on their mortgages, and underinsured property owners who get hit with a disaster. (After Katrina, some of the comments made anonymously on insurance forums about hurricane victims by so-called ”professionals” made my blood run cold.) It's funny how these same opponents of “handouts” for ordinary citizens don't mind heading to the dwindling government trough when they're in trouble themselves.

The big brains at AIG, who make a living specializing in risk, should have had an inkling that adequately insuring something as risky as mortgage-backed securities might be a problem. Even former AIG helmsman Hank Greenberg has blamed management's failure to practice sound risk management as the reason for the meltdown.

At this point, the big question is, who's next? The pundits are saying that AIG's loss will be its competitors' gain. Unfortunately, the bottom-line losers in all this fiscal sleight-of-hand are the insurance buyers, who end up with fewer markets and more uncertainty. Oh, and the insurance agents and brokers who have to explain it all to them.

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