Death bonds are also known as "life settlement-backed securities". Approximately 90 million Americans own life insurance. But in an economic downturn with health insurance costs skyrocketing, people who are very sick or aging may find it financially desirable to sell their life insurance for a lesser cash value up front. The company that buys the insurance policy then keeps paying the premium and, when the policy holder dies, the company collects the money.
Buying up life insurance policies traditionally preys on the sick and elderly, who in desperation and with a lack of un-baised information, may accept sham deals to get cash. And the life insurance-buying business has always been plagued by the gruesome equation that the sooner the policyholders die, the more profitable the deal (since the company gets to collect the final insurance value but pays less in annual premiums the sooner the policy holder dies).
But now, Wall St., looking for a new way to squander taxpayer bailout money and jeopardize the American economy with risky schemes, is bundling these purchased life insurance policies into mutual funds and bonds that investors can bet on. There was no death bond market in 2001. By 2006, it was a $15 billion market. And now, with Wall St. hungry for its next money maker, analysts predict the death bond market could reach $500 billion.
In the wake of the financial meltdown, one Wall St. bank managed to thrive more than any other: Goldman Sachs. Helped by high-level political connections, including Secretaries of the Treasury Henry Paulson followed by Timothy Geitner, as other financial institutions crumbled, Goldman Sachs surged ahead. In the second quarter of 2009, Goldman Sachs reported record profits of $3.44 billion --- more than the firm earned in all of 2008. After taking $10 billon in taxpayer bailout money, Goldman's spending on executive compensation and benefits in the first half of 2009 rose to $11.4 billion, up 33% from the previous year.
Goldman Sachs CEO Lloyd Blankfein made $68 million in 2007 but settled for $42.9 million in 2008, fearing it looked bad enough that a quarter of his pay was our taxpayer money. In a speech on September 9, 2009, the Associated Press reported Blankfein "also addressed concerns that overly complex financial products destabilized the financial system." The man who runs a firm that pioneered complex financial products for the super-rich to bet on whether we live or die was more concerned about killing the market than concerned about killing actual people.
It's no wonder that Wall St. banks like Goldman Sachs are in bed with the big insurance companies to kill health care reform. If private insurance companies continue to have a monopoly on our health care, not only will their profits go up but, as the quality of our health care goes down, the death bond market will skyrocket! Bad health care is good for their business.
Our favorite excerpt from Goldman Sachs death bond index:
The reference life for the QxX key 61EE5D9FA22DB1DF5BE1BF38FB8716FC5C533BB1 was reported as deceased in the March, 2009 publication. At March 27, 2009, the Social Security Death Index no longer reports this life as deceased and the current value of the Indices reflects the reintroduction of this reference life.Not only are they betting on our lives with death bonds, but sometimes they get it wrong? This is a gamble our economy, our families and our country can't afford.
Tell Goldman Sachs: Stop using taxpayer money to bet that Americans will die.