Crop Insurers’ $14 Billion Some See as Money Laundering
http://www.bloomberg.com/news/2013-09-10/crop-insurers-14-billion-some-see-as-money-laundering.html
Former American International Group Inc. chief Maurice Hank Greenberg has a new business partner: the U.S. taxpayer.
Greenbergs Starr Indemnity & Liability Co. is one of 18 companies approved to get federal cash for insuring farmers against loss of crops or income. Wells Fargo & Co. (WFC), the nations fourth-largest bank by assets, Zurich-based Ace Ltd. (ACE) and units of American Financial Group Inc., (AFG) Deere & Co. (DE) and Archer-Daniels-Midland Co. (ADM) all enjoy similar public backing.
The government subsidies show how a program created to safeguard the nations farmers has evolved into a system that in most years all but guarantees profits for insurers. In 2012, taxpayers spent $14 billion paying more than 60 percent of farmers insurance premiums, the companies operating costs and the lions share of claims triggered by a historic drought, according to the Congressional Research Service.
What weve got is a money-laundering operation, says Harwood Schaffer of the University of Tennessees Agricultural Policy Analysis Center. It looks like were doing a free market thing and its not free market at all.