David Goldman, "Insurers, again," Inner Workings, March 5, 2009.

Leading the dive in the S&P today is Hartford Financial, trading just over $4 a share at 11:30, which is to say down 94% over the past year. Bank of America is down 90%, and Citicorp is down 95%. Hartford is a fairly conservative organization. As a strategist for Credit Suisse and head of research for Banc of America Securities, I dealt with their portfolio managers and senior management regularly from the late 1990s to 2005. In 2004 I gave a presentation to the board on the use of credit derivatives, which Hartford viewed with extreme skepticism, even as a hedging tool. Where AIG wanted to be as cutting edge as possible (to the point of placing the edge against its own throat), Hartford was a serious and staid credit shop.

Hartford like some other insurers made the mistake of offering customers minimum payouts on variable annuities. Its exposure to bank capital paper is extensive, along with the rest of the industry. But in general the management of Hartford was prudent, even conservative. When firms of this sort get into deep water, that indicates the extent of systemic crisis.

The Obama financial team is too clever for its own good. It is creating circumstances that will make the next set of bailouts all the more expensive.

The biggest question in my mind is when President Obama will tire of Larry Summers’ much-vaunted cleverness and send Marine One to pick up Paul Volcker.

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