"Reminder: why the Treasury needs the banks to look better April 14th, 2009
By David Goldman
The next sector to collapse would be the insurers: as I’ve said here again and again, the big pyramid scheme in the US financial system is that the insurers own the bottom of the capital structure of the banks. Bank preferreds, trust preferreds, hybrids, etc. were the favorite repast of yield-hungry insurance portfolio managers.
The big insurance companies all are trading like junk, still. Here is the cost of five-year credit protection on two of the biggest:
It’s cheaper to refloat the banks than to go in and bail out insurers after public confidence collapses."