NEW YORK (CNNMoney.com) -- Several big life insurance stocks fell sharply Thursday, dragged down by jitters about their role in the credit crisis and fears sparked by a comment from Senate Majority Leader Harry Reid, D-Nev., Wednesday about a potential bankruptcy in the industry.
"We don't have a lot of leeway on time. One of the individuals in the caucus today talked about a major insurance company. A major insurance company -- one with a name that everyone knows that's on the verge of going bankrupt. That's what this is all about," Reid said prior to the Senate's approval of the $700 billion bailout bill.
Steven Schwartz, an analyst who covers insurance companies for Raymond James & Associates, said that even before Reid made his bankruptcy comment, investors were growing worried about life insurers' exposure to real estate as well as "secondary exposure" via investments in troubled finance firms like Lehman Bros, Wachovia and Washington Mutual.
But the comment from Reid clearly caused even more fear.
"Harry Reid didn't help any," Schwartz said.
Reid is frantically trying to undo the damage his statement created:
Today, however, Reid’s office sought to clarify the comment. His spokesman, Jim Manley, said Reid “is not personally aware” of any particular company being in trouble and has “no special knowledge” on the topic. Reid, the spokesman said, meant to refer in general terms about the financial sector and “regrets any confusion his comments may have caused.”Unfortunately, the Congressional leadership of the Dems are incredibly dim bulbs. They think they can say anything without repercussions. Nancy Pelosi found out last week that wasn't true, Chuckie Schumer had his InyMac moment, and Harry Reid has just added to his long collection of foolish statements.
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