Executive Ghouls at Megabanks profiting from employees deaths

[CARLHAYDEN]

From Fox News:

Banks are using a little-known tactic to help pay bonuses, deferred pay and pensions they owe executives: They're holding life-insurance policies on hundreds of thousands of their workers, with themselves as the beneficiaries, the Wall Street Journal reported.

Banks took out much of this life insurance during the mortgage bubble, when executives' pay -- and the IOUs for their deferred compensation -- surged, and banking regulators affirmed the use of life insurance as a way to finance executive pay and benefits.

Bank of America Corp. has the most life insurance on employees: $17.3 billion at the end of the first quarter, according to bank filings. Wachovia Corp. has $12 billion, J.P. Morgan Chase & Co. has $11.1 billion and Wells Fargo & Co. has $5.7 billion. (Wells Fargo acquired Wachovia at the end of last year.)

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

[??????????]

Your title puts way more "OMG evil" in the story then is necessary.

[opebo]

Well actually it is reasonable to depict the economic relationship between all owners and workers as one of cannibalism.

[CARLHAYDEN]

Your title puts way more "OMG evil" in the story then is necessary.

I gave the short version of the story.

The full version, including how this came to public attention is truly disgusting.

A megabank insured an employee, then fired him, cancelled his life insurance through the company which was payable to his beneficiaries, but left the more than a million dollars the policy the company had on him payable to the executive fund!

The insurance company made the mistake of sending the check (payable to the former employer) to the widow, who ended up getting nothing!