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.
Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.
#26
> is your reference to
> the mostly correct
> posting at #17 correct?
Correct. I presumed the author was referring to Congressional Republicans and getting health care legislation passed.
> You say nonsense
> and then make the
> opposite argument
> actually supporting
> what #17 said.
I’m not sure how you conclude that. I’m saying that blaming the Republicans on issues such as health care reform is ridiculous. Responsibility for getting any legislation passed is solely in the hands of the Democrats.
This is straight out of the pulp novel THE BETTOR’S CLUB, about a group of rich bored people who bet on the recovery (or death) of total strangers they read about in the hospital. Of course this being a pulp novel a few of the players take out some “assurances” that they will win…