The U.S. Treasury Department should open up the Capital Purchase Program to more life insurers, according to a financial services trade group head.
Steve Bartlett, president of the Financial Services Roundtable, Washington, made the case for CPP expansion today here at a hearing of the House Financial Services Committee on the Emergency Economic Stabilization Act.
Bartlett recommended making the CPP available to life insurers that do not have federally regulated subsidiaries and to insurers that are foreign-owned.
Up till now, Treasury has opened the program only to insured banks and thrifts, bank and thrift holding companies, and insurance companies that are also thrift holding companies.
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The Troubled Asset Relief Program, a program created by the Emergency Economic Stabilization Act, has two parts.
Bartlett’s testimony dealt with the CPP, a TARP operation that invests in financial institutions to encourage them to resume lending.
Since Friday, four insurers have announced plans to acquire troubled thrifts and to apply for CPP participation.
The 4 applicants are Hartford Financial Services Group Inc., Hartford; Genworth Financial Inc., Richmond, Va.; Lincoln National Corp., Philadelphia; and AEGON N.V., The Hague, Netherlands.
Treasury Secretary Henry Paulson testified at the hearing that the Treasury Department would be selective about letting insurers participate in the CPP by creating a bank holding company or a thrift holding company.
“I’m not sure that’s going to be a successful strategy,” Paulson said.
Using a bank or thrift holding company operation to apply for the CPP “may make sense” for insurers that have had bank holding companies for some time, Paulson said.