Wall Street to start trading in death

I had to check the date and the website to make sure it wasn’t Apri Fool’s Day and that I wasn’t on The Onion but the article turned out to be real and from a generally trusted source, the New York Times:

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.

Not only are investment firms actively trying to turn this into their next money-making bond market (like the mortgage-backed securities that wrecked the economy before) but they are doing so in the murky world of “life settlement” companies.

…the industry has been plagued by fraud complaints. State insurance regulators, hamstrung by a patchwork of laws and regulations, have criticized life settlement brokers for coercing the ill and elderly to take out policies with the sole purpose of selling them back to the brokers, called “stranger-owned life insurance.”

How will these policies be packaged?

A bond made up of life settlements would ideally have policies from people with a range of diseases — leukemia, lung cancer, heart disease, breast cancer, diabetes, Alzheimer’s. That is because if too many people with leukemia are in the securitization portfolio, and a cure is developed, the value of the bond would plummet.

Wow, that sounds just like the packaging behind the sub-prime mortgage securities but much more horrid. Not only have these companie unmitigated greed plunged the country into a recession (some say depression) and spike unemployment up to 10% but they are now willing to trade on the deaths of people and organize it by disease.

It seems Wall Street will go to whatever means they can to profit off and undermine whatever institutions we have left in this country. What’s not surprising is that one of the major “bad guys” behind the bailout, Goldman Sachs, is right on top of this new effort.

5 Comments

  1. Chris

    When I saw this article yesterday, it did seem like some sort of nightmarish joke. I also think that’s exactly how the Times writer intended it to come across.

  2. Clint

    Do you have a link to the article?

  3. Chris

    Clint,
    The link is added.

  4. Clint

    Grazie.

  5. Ian

    Its bad, but it isn’t like you couldn’t buy stock in companies that made weapons.