Tuesday, August 31, 2010

Can I Buy Audit Insurance Too?

Here's a funny one: Lexington Insurance, a division of Chartis, (the company formerly known as AIG,) has recently announced they'll provide insurance guaranteeing the payment of low income housing tax credits

Get it?  You can buy, from a company controlled by the Federal Government, an insurance policy protecting you in the event the government doesn't want to pay you money you think you are owed!

This sounds a lot like the old K&R problem: Kidnappers don't have much success collecting ransoms unless those kidnapped actually carry insurance.  Call it greasing the skids of an inefficient market.  However, doesn't that make the insurance company complicit in the crime?

More importantly, how much do I pay AIG to make sure I don't get audited?

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