One of the indelible scenes in literature, and one aided immeasurably by George Cruikshank’s illustration, is of Charles Dickens’ Oliver Twist in the workhouse going up to the stern man serving the gruel with the unprecedented request, ‘Please, sir, I want some more.’  

I know it is in another era and seemingly unconnected, but I can’t help but think that those insurers who said they are going to accept TARP funds from the U.S. are going to be portrayed as some kind of modern twist on dear young Oliver.

Yes, they’re the ones who are in the poorhouse, going hat in hand to the fat, censorious master asking for ‘more.’  At least that’s how they are likely to be portrayed by the competition.

A while back we ran a poll question on our terrific new website (www.lifeandhealthinsurancenews.com, which you really need to visit if you haven’t), and the results were interesting, although by no means scientifically valid.

The question was: Will competitors try to attach a stigma to those insurers who accept TARP bailout funds from the U.S. government?

Five times as many respondents answered ‘yes’ to that question as those who answered ‘no.’  A blowout, in other words.

This tells you a few things.  First, even though it is not kosher (and is probably illegal) to badmouth your competition, people are going to do it anyway. 

It also tells you why some insurers who initially expressed interest in TARP funds, thought the better of it and said, “Thanks, but no thanks.”  This sends a message that quite effectively erases their previously expressed interest.

Of course, those insurers who are going to accept TARP funds will say they’re taking the money simply to become even stronger, not out of some kind of Oliver Twist-type dire need.  They’ll also remind people that Oliver eventually ends up leading a happy, peaceful life in the country.

The happy ending is true of the book.  But I have to say that I had to remind myself of what eventually did happen to Oliver.  The scene in the workhouse, however, took no referring back to the book.  I’ve never forgotten it.  And neither, to be sure, have millions of others.

The federal government has completed its stress tests of the nation’s 19 largest banks and bank-like institutions and in this era of trillions of dollars, there is good news.  The amount of capital deemed to be needed by these banks is a mere $75 billion. 

I don’t know about you, but after what we’ve become accustomed to, $75 billion seems to be in the realm of Monopoly money.  Or perhaps, it’s that all money has entered the realm of Monopoly money.

In any case, almost half of that $75 billion (or $33.9 billion) is said to be needed by Bank of America.  Wells Fargo is said to need $13.7 billion, while the only other institution in the 11-digit category is GMAC, which would need $11.5 billion.

The one insurer in this group of 19, Met Life, apparently does not need to raise more capital.  That’s good news for the insurance industry (which certainly can use some).

The results of these stress tests were judiciously leaked over a week’s time, which greatly relieved any stress the stock market had been feeling in this regard.  So, BofA needs $34 billion?  Man, that’s nothing, chump change.

The announcement of the results of the tests set off a scramble among those banks deemed needy to raise the required capital.  In lickety-split fashion, Morgan Stanley and Wells Fargo raised billions within hours. 

Just how stressful these stress tests actually were is a good question.  A lot of the pressure was on the government, which had to walk a fine line between declaring a lot of the banks zombies, which would have freaked out the market, and letting them all off the hook, which would have looked like a whitewash job.  The market seems to have been satisfied that the administration walked that line the way it was supposed to.

The banks also were apparently able to negotiate with the government on certain parameters of stress measurement.  It does so much to relieve stress when you can call at least some of the shots, doesn’t it?

These tests were done to see how much additional capital might be needed under a worst case scenario.  The actual amount of losses that would be sustained is much larger, totaling some $600 billion.

What is somewhat scary is that mortgages and real estate loans, which caused the first tsunami of losses, are not the biggest problems for some of these banks.  A couple at least are on the hook for huge potential losses in credit cards, which are just starting to get into dangerous waters.

Whatever the results of these tests, one thing is fairly clear to me: Banks, no matter what size, need to be reined in.  They’ve gotten way too big, way too wayward and way too brazen.  And all of this was under federal regulation and oversight! 

It seems to me that when you get to a certain age you lose faith in panaceas.  Federal regulation is not the panacea a lot of folks would like to believe it is or could be. 

Those who are looking at tougher federal regulation as a panacea (now that the horse is out of the barn and is dragging our financial system with it) are chasing some kind of pipe dream. 

Part of the problem has been that federal regulators, as I’ve pointed out in the past, have been more cheerleaders for their wards than overseers.  They enabled the unbridled growth and inordinate amount of risk-taking that brought the system perilously close to collapsing.  Has that really changed?

Did I mention before that the one insurer in this group of 19 was judged not to need more capital?  Yes, I did.  

It makes me think that any federal regulator or agency needs to get some stiff training from their state insurance counterparts so that they can recognize that regulation means strict oversight with regard to solvency and leveraging, not thrusting pom-poms as forcefully as you can, while shouting, “Give me a B, give me an A, an N, a K!  Go banks!”

Once again I had the privilege of being a judge in the Life and Health Insurance Foundation for Education’s RealLIFEstories program. (To call it a ‘contest’ makes it seem a little too tawdry, although there is a definite competitive element involved.)

There a few things that bring you so close to the noble calling that so many long-time agents give as their reason for getting into-and even more important, continuing in-the life insurance selling business.

Having done this judging before, I was well aware that I needed to prepare myself for an emotional onslaught.  Most, if not all, of these stories are tear-jerkers in the best sense of the word.  They pack a wallop. 

I’m not going to go into particulars here, but you can always count of a number of the stories recounting early and unexpected deaths, with grieving families left behind to grieve, but also in much better condition to bear that grief because life insurance proceeds took care of immediate and long-term financial needs.

One other consistent factor in these stories is how often agents go above and beyond the selling of a policy.  Servicing the policy takes on a whole other meaning and dimension when you read about how involved some agents become in taking care of the survivors in the aftermath of a family’s tragedy.

(Just as an aside, I’d like to offer one bit of advice to any agent considering entering their own story: Presentation matters.  Just as life insurance doesn’t sell itself, but has to be sold, so it is with RealLIFEstories entries.  A well-told story creates much more resonance than a bare-bones accounting of what happened-thus upping its chances of being a winner.)

In any case, it is good to be reminded about the raison d’etre of life insurance and the good that it does.  In this sense, LIFE’s program has a very important mission within the business.

The 4 finalists in this year’s round of entries will (as is customary) be featured in a special section in Newsweek sometime in the early fall, bringing these stories to a wide swath of the public.  In addition, these stories will be available to agents to use in their own struggles to convince often reluctant clients to plunk down some premium dollars.

I know times are tough for many life insurers right now.  And I’ve heard that some companies are cutting back on their budgets for LIFE. This may be understandable under the circumstances, but it is also short-sighted. 

Agents don’t give up when the going gets tough, and neither should companies. In good times and bad, LIFE happens.