Jindal Could Face Financial Crisis
Thursday, September 18th, 2008
Baton Rouge, Louisiana
WHILE NATIONAL STAR SHINES,
JINDAL COULD FACE BIG FINANCIAL PROBLEMS IN LOUISIANA
To say that Louisiana Governor Bobby Jindal’s political stock continues to rise would be an understatement. He has been regularly profiled as a future presidential candidate in a number of national publications. And on the speaking circuit, the Louisiana governor is in high demand from coast to coast. But the perilous condition of the US financial system could cause some major economic problems in Louisiana. And the financial chaos that is taking place right now might well have a direct impact on the Governor’s future plans.
If you want to get an idea of how Jindal is being perceived around the rest of the country, take a gander at the latest addition of Esquire magazine. The 75th anniversary issue profiles the most influential people in the world today. A one page profile is given to such luminaries as Russian Prime Minister Vladimir Putin, Chinese Communist leader Deng Xiaoping, Bill Gates, Bill Clinton, Hezbollah Head in Lebanon Hassan Nasrallah, Oprah Winfrey, and Barack Obama. One page each. Bobby Jindal is given 10 pages.
Want to get in early and reserve the website addresses of Jindalforpresident.com or Jindal/Palin.com? You are too late. The names and others that are similar have already been bought up. And with the Louisiana recovery efforts slowing down a bit, Jindal will receive homage from Vice President Dick Cheney when he comes to Baton Rouge on October 6th to attend a Cassidy for Congress fund raiser. Then the following day, the Governor will welcome Vice Presidential candidate Sarah Palin as she travels to New Orleans for a campaign stop.
And how about Bobby Jindal and the first lady posing for their official portrait by noted artist George Rodrigue in front of Louisiana’s most famous tree, the Evangeline Oak. (You can view the painting at www.JimBrownla.com.) The Governor’s press office seems to be working around the clock outlining all that the Governor has been doing, and how well he’s been doing it.
Enter a crisis of confidence oozing out of those high temples of capitalism on Wall Street. The potential unraveling of a number of key financial institutions is not an abstract problem. The damage hits directly home to Louisiana businesses, individual investors, and insurance policyholders. Many Louisiana energy stocks dropped in value by 10% or more, and across-the-board, numerous Louisiana companies have suffered significant losses. Thousands of Louisiana investors have seen throughout this year a significant drop in their individual stock portfolios.
And yet another big hit for both Louisiana businesses as well as homeowners could be right around the corner. The nation’s largest insurance group, AIG, is teetering and in desperate need of a major financial infusion. Company officials have prevailed on the federal government to guarantee more than $85 billion in loans, something unheard of and never before done for an insurance company.
This is not just any ordinary insurance company as far as Louisiana is concerned. AIG is a major player for both businesses and homeowners throughout Louisiana. And insurance regulators have often looked away as AIG’s problems have mounted. The Teachers Retirement System of Louisiana was forced to sue AIG and its top executives for over $100 million, claiming that key operatives had siphoned off millions by steering business illegally to separate private companies. Louisiana is not the only state involved, yet insurance commissioners throughout the country stood by and did little. If these regulators have done their job, Louisiana citizens would not have had to foot the bill for the Teachers retirement System having to file such a suit in the first place.
In the case of other companies like AIG, Louisiana policyholders are at a particular disadvantage. Louisiana is one of the few states that have virtually no independent consumer protection office, and numerous companies like AIG charge at will without any pre-approval process. We have witnessed following the recent Hurricanes how property deductibles, the highest in the country, have caused major disruption in the lives of thousands of Louisiana homeowners. So policyholders are at a great disadvantage, and have to, for all practical purposes, go it alone in making a decision of whether to trust the insurance they are buying.
Not only does AIG and its subsidiary companies sell insurance directly to thousands of Louisiana customers, they often act as both broker and re-insurer to back up many other insurance companies that also do business in Louisiana. Bottom line? When AIG gets in trouble, there is the potential for widespread losses both directly and indirectly by thousands of Louisiana businesses and individual policyholders.
So how is Governor Bobby Jindal affected? In the vast majority of states, insurance regulators are appointed by the governor. And in the few states that do elect their regulator, the governor has been actively involved in a host of insurance issues. A typical example is Governor Charlie Crist of Florida, who has been in the forefront of pushing legislation to reduce the cost of insurance for both homeowners and drivers all across Florida. Even though Florida, like other key southern states (Mississippi and North Carolina for example) elect their insurance regulator, the Governor is in the middle of the mix. And for obvious reasons. If insurance rates stay high and problems like AIG mount in their respective states, the governor gets the blame.
The New York Insurance Department, where AIG is located, has stood by for way too long, and has allowed AIG to fritter a way billions of dollars. And if some quick action is not taken in other states including Louisiana, then Louisiana policyholders may not get their insurance claims paid, while having to bail out, through taxes, companies like AIG who acted irresponsibly.
So there’s a lesson here for Louisiana Governor Bobby Jindal. Don’t stand by and allow problems facing AIG and other insurance companies to fester. Without strong regulation, these insurance problems are only going to get worse. And particularly Louisiana, the Governor needs to take the lead. This is no time to lose some of the luster off his star that in recent weeks has been burning so brightly.
“It’s just a job. Grass grows, birds fly, waves pound the sand. I just beat people up.”
Peace and Justice.
Jim Brown’s column appears weekly, and is published on a number of newspapers and websites throughout Louisiana. You can read past columns by going to Jim’s website at www.jimbrownla.com. Jim’s regular radio show on WRNO, 995fm out of New Orleans can be heard each Sunday from 11:00 am till 1:00 pm.