Apparently dead peasants can be worth millions. It's an investment scheme in fact. "Dead peasant insurance" is officially known as corporate-owned life insurance and was originally intended to insure corporations against the death of key employees and executives, but it is sometimes used for general employees. Bank of America holds $17.3 billion in such policies.
Let's just get to the creepiness factor. It's bloody insane to give corporations a financial incentive to see anybody dead. I hope I don't need to review the last year of stories about arrogant bailout recipients and blatant fraud. We've all been thoroughly schooled in the lessons of greed.
But I predict it's going to get worse. Stranger originated life insurance is yet another insidious practice where investors pay senior citizens to apply for life insurance, pay the premiums for the policies, and then resell them to speculators. Investment banks are planning to package hundreds or thousands of these policies together into bonds. The investors will receive the insurance money when the insured people die.
If these slick, complicated, risky, idiotic games to turn money into more money sound familiar to you, it's because that's how we got into this financial mess in the first place! Subprime mortgage securities, credit-default swaps, structured investment vehicles, collateralized debt obligations... here we go again.
But now Wall Street is not just betting on the peasants' mortgages -- it's wagering on their lives.