Hicks said MetLife, the biggest U.S. life insurer, gave consumers the misimpression that its Total Control Account Money Market Option account for death benefits was insured by the Federal Deposit Insurance Corp. Still, he threw out the suit, which claimed the insurer unfairly profited on the policy, saying the beneficiary had not lost money….

‘An ordinary reasonable person, provided with the contract at issue, would be under the impression that they were receiving either a money-market account or an account associated with money market protects,” Hicks wrote.

Far from endorsing retained asset accounts, Hicks characterized them as confusing, providing further support to the Bloomberg story.

The story on the ruling (which, again, came after DeFillippo complained) also noted that “Most court rulings on retained-asset accounts have favored the insurance industry.”

In his e-mail to us, DeFillipo accurately describes the judge’s ruling but left out the important context of his comments.

I think Bloomberg did a good job, even in its first July 28 story, of making it clear that litigation by account holders against insurance companies was far from a slam-dunk.

Insured deposits?

From DeFillippo’s complaint:

Further, Bloomberg has deliberately misled its audience by consistently claiming that these accounts are not federally insured by the FDIC. While the statement is true and designed to lead you to believe the accounts are risky, Mr. Evan’s and Bloomberg fail to report—despite repeated attempts to correct the record—that retained asset accounts are protected by State Guaranty Funds that provide protection of at least $250,000 and up to $500,000. These guarantees are at least the same as—and in most cases exceed—FDIC guarantees.

In the first, July 28 Bloomberg story much is made of the lack of FDIC protection for these accounts.

In tiny print, in a disclaimer that Lohman says she didn’t notice, Prudential disclosed that what it called its Alliance Account was not guaranteed by the Federal Deposit Insurance Corp…

This unregulated quasi-banking system operated by insurers has none of the protections of the actual banking system. Lawrence Baxter, a profesor at Duke University School of Law in Durham, North Carolina, say the potential exists for a catastrophe….

There’s more than $25 billion out there in these accounts,” Baxter says. “A run could be triggered immediately by one company not being able to honor its payout. The whole point of creating the FDIC was to put an end to bank runs…..

‘The way Prudential has set up the ‘checks’ implies that JPMorgan stands behind the accounts and that they are thus backed by the FDIC,’ Duke’s Baxter says.

It’s a fair and important point to make that some beneficiaries (and regulators!) didn’t understand that the accounts are not covered by the FDIC. But I think that, since the industry argues that the accounts are protected by state guaranty funds, that point of view should be noted in any story that raises the FDIC issue. DeFillippo said he made that point to Evans in talking to him for the first, July 28, story, but it wasn’t reflected there or in some subsequent stories that raised the issue of the lack of FDIC coverage.

Bloomberg presented the fact that the accounts are protected by state guaranty funds only a day later, July 29, in two related stories about regulators and New York’s attorney general launching probes into the accounts. (UPDATE AND CORRECTION: One of these stories ran on July 28, the same day as the first installment in the series, as well as on July 29.)

In addition, on August 13, Bloomberg published a story headlined “Lawmakers Question Value of Insurer Safety Net to Beneficiaries.” It quotes industry officials at some length about the protection that the state guaranty funds provide, although it also raises questions by others about how much protection they really offer. It’s a balanced account.

A subsequent story on August 24, by David Glovin, also raised questions about whether the state guaranty funds provide adequate financial protection.

But even after those stories ran, Bloomberg went back to raising the issue of the lack of FDIC coverage without mentioning the industry position that beneficiaries are protected by the state guaranty funds.

In the September 14 story, although the lack of FDIC coverage comes up again—among other reasons because FDIC Chairman Sheila Bair had raised the issue—the industry point of view that the accounts are protected isn’t reflected, and it should have been.

A deal’s secrecy

Martha M. Hamilton , CJR's Audit Arbiter, explores complaints about fairness, accuracy, and other issues arising from business-news stories. Send possible story ideas her way at the link on her name. A former reporter, editor, and columnist at The Washington Post, she is a writer and editor for PolitiFact.com.