Thu, 08 Oct 2009

Wall Street Pursues Profit in Bundles of Life Insurance

There's a book I'd like to recommend to these vampires: Dead Souls. Or maybe they've already read it.

Wall Street's reticence on health care reform suddenly makes a a whole lot more sense. If the courts allow this perversion of the market, we are setting up an economic and moral debacle that will make the current crisis look like a cake walk.

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one. The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

(link) [New York Times]

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