Thanks, Harry Reid
The power of anyone’s words is sobering; the sheer power of an elected leader’s words is scary. I would hope that the Democrats call for his resignation at such irresponsibility.
Several big life insurance stocks fell sharply Thursday, dragged down by jitters about their role in the credit crisis and fears sparked by a comment from Senate Majority Leader Harry Reid, D-Nev., Wednesday about a potential bankruptcy in the industry.
“We don’t have a lot of leeway on time. One of the individuals in the caucus today talked about a major insurance company. A major insurance company — one with a name that everyone knows that’s on the verge of going bankrupt. That’s what this is all about,” Reid said prior to the Senate’s approval of the $700 billion bailout bill.
Steven Schwartz, an analyst who covers insurance companies for Raymond James & Associates, said that even before Reid made his bankruptcy comment, investors were growing worried about life insurers’ exposure to real estate as well as “secondary exposure” via investments in troubled finance firms like Lehman Bros, Wachovia and Washington Mutual. But the comment from Reid clearly caused even more fear. “Harry Reid didn’t help any,” Schwartz said.
New York-based MetLife (MET, Fortune 500) was one of the hardest-hit insurers Thursday. Its stock plunged more than 17% in early trading before recovering somewhat. Thursday’s drop comes after a 14% decline on Wednesday. In light of this, MetLife issued a statement Thursday afternoon to address Reid’s comments.
“The statement yesterday by Senate Majority Leader Harry Reid does not apply to MetLife. MetLife is financially sound and has high ratings from all of the major insurance ratings agencies. MetLife is fully able to meet all its obligations,” the company said.
A spokesman for Sen. Reid backtracked a bit Thursday and said that the senator was not aware of any company being in danger of bankruptcy.
“Senator Reid is not personally aware of any particular company being on the verge of bankruptcy. He has no special knowledge about [a bankruptcy] nor has he talked to any insurance company officials,” said Jim Manley, spokesman for Sen. Reid, in an email to CNNMoney.com.
Source: CNN Money
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