Wall Street's New Halloween Trick by Jim Hightower

[Better Believe It]

Wall Street's New Halloween Trick
by Jim Hightower
September 23, 2009


Halloween is still a month away, but ghouls, ghosts and other grotesque creatures are already roaming America's streets, possibly preparing to knock at your door. What makes them so scream-out-loud horrifying is that they are the newly issued spawn of — shriek! —Wall Street.

The very same greed-fueled bankers who brought us the disaster of 2008's financial crash have created another exotic financial horror to replace their securitized subprime-mortgage packages that exploded all over us.

It's a scheme based on the mundane (but huge) life insurance market. Wall Street intends to tap into the $26 trillion-worth of life insurance policies that Americans hold, using a financial mechanism called "life settlements."

Wall Streeters intend to turn these life settlements into a big boon for investment banks and super-rich speculators. First, they will take over the broker side of the business, setting up extensive networks of heavily advertised, life-settlement agencies across the country to entice sick and old folks into settlements. You can imagine the come-ons: "Free Cash!" "Cash-in BEFORE You Die!" "You CAN Cheat Death!"

Next, Wall Street banks will "securitize" these settlements — i.e., they will package thousands of them into bonds that they'll then sell (for hefty fees) to big investors around the globe. As a result, when Uncle Bob croaks in Dubuque, some speculator in Dubai will collect Bob's life insurance payout.

Why should we go along with this real-life Halloween horror? As suggested by Forbes magazine columnist Michael Maiello, Congress could and should implement a simple reform stating that there's no payout on any life insurance policy that is "transferred into an investable security."

This would still allow life settlements for the relatively few people who actually need them — but it would drive a stake in the cold hearts of Wall Street profiteers. What a happy Halloween that would be!

Please read the complete article at:

http://www.creators.com/opinion/jim-hightower/wall-street-s-new-halloween-trick.html