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Saturday, September 19, 2009

Goldman Sachs launches son of sub-prime-investors make more if you die sooner

  • Regulation? What regulation?:
"Wall St. Wants to do to Life Insurance What it Did to Housing," by Daniel Tencer, Raw Story, 9/5/09:
  • "The New York Times reports that large investment banks are lining up to begin securitizing “life settlements,” life insurance policies that ill and elderly people sell so that they can get cash before they die....

THE FASTER YOU DIE, THE MORE INVESTORS MAKE

  • The Times names two companies that it evidently believes to be heading up the effort to securitize life insurance. One is the Swiss bank Credit Suisse, and the other
  • "Some financial firms are moving to outpace their rivals. Credit Suisse, for example, is in effect building a financial assembly line to
buy large numbers of life insurance policies, package and resell them — just as Wall Street firms did with subprime securities.

The bank bought a company that originates life settlements, and it has set up a group dedicated to structuring deals and one to sell the products.

The bank bought a company that originates life settlements, and it has set up a group dedicated to structuring deals and one to sell the products.

Goldman Sachs has developed a

tradable index of life settlements,

enabling investors to bet on whether people will live longer than expected or die sooner than planned.

The index is similar to tradable stock market indices that allow investors to

bet on the overall direction of the market without buying stocks.

According to the Economist, the life-settlement market in existence today is worth about $18 billion to $19 billion, meaning that about that amount of life insurance policies is bought and sold every year.

  • $500 billion."
via mention in Poynter.org article 9/18, Al's Morning Meeting

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