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.
The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.
Well, not only does hoping that people die earlier than later so the buyers of these instruments can make lots of money seem extremely immoral and unethical, it would seem there are quite a lot of ways for this to go wrong, such that even MORE institutions lose lots of money playing around in things they don’t understand.
It’s also incredibly tone deaf. These people seem to have no understanding of the world that is going on around them. As I said, people are buying up these insurance policies for the sole purpose of making money, and (it goes without saying) as much money as possible. To do that, they really want the actual people holding these policies to die as soon as possible. Which would mean, if, say, someone who had a big stake in these kinds of financial instruments ALSO had a controlling interest in either a large healthcare organization or a insurance company, it would seem that there would be a huge incentive for those companies to REALLY start withholding medical coverage and denying insurance claims.
But Obama has “Death Panels”, and that’s all that matters, I guess. Obama wants to kill your grandmother…
This country is insane.