EDITORIAL: Another shoe drops

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There is no doubt that the bank bailout was mismanaged. Now it's time to buckle up for a government run on the insurance industry.

That's the signal the White House is sending by nominating Neal S. Wolin, a former senior executive with the Hartford Financial Services Group Inc., as deputy secretary of the Treasury. The department already has the power to take over stakes in life-insurance companies through the Troubled Assets Relief Program (TARP) but has yet to do so. With Mr. Wolin coming aboard, it appears that the Obama administration is putting the team in place to expand government's control of private companies one step further.

Treasury has confirmed that insurers are among the institutions that are being considered for TARP funds and, thus, the government control that comes with the cash. It hardly seems like a coincidence that Mr. Wolin is about to join Treasury as the Hartford, his old firm, is expected to be among the first to join the soup line. While many large life insurers, such as New York Life Insurance Co., MassMutual and Northwestern Mutual Life, continue to manage their core insurance lines successfully, others such as the Hartford and Genworth Financial Inc. rushed to buy regulated savings and loans just so they could call themselves banks and qualify for government TARP funds.

There is little chance that Congress will step in and stop this power grab. The Hartford and other potential recipients have been very generous to members of Congress. According to the Center for Responsive Politics, Senate Banking Committee Chairman Christopher J. Dodd, Connecticut Democrat, received $1.4 million from the insurance industry last year, including more than $762,000 for his short-lived presidential campaign.

This is a bailout too far. The life-insurance industry is not facing a systemic collapse. TARP should not become a bottomless piggy bank used to provide unsuccessful businesses with less expensive alternatives to capital markets. As for the politics of the matter, the idea that President Obama and the Democrats would bring new, cleaner politics to Washington can be put to rest. Revolving doors between industry and the administration and fat-cat political contributors getting bailed out at taxpayer expense sound like business as usual. This certainly isn't change we can believe in.