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Banks Use Life Insurance To Fund Bonuses

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http://online.wsj.com/article/SB124277653430137033.html

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.

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.

................what can you say, really?

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................what can you say, really?

Nothing - not until you explain to us in layman's terms what's going on.

You've obviously studied this subject and perhaps you could spell it out to us - particularly as it affects UK banks. And, how it affects us, as individuals, too.

(Don't forget, there's always been an 'insurable interest' between employer/employee. What's different now?)

Edited by a+b+c+d

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Nothing - not until you explain to us in layman's terms what's going on.

You've obviously studied this subject and perhaps you could spell it out to us - particularly as it affects UK banks. And, how it affects us, as individuals, too.

(Don't forget, there's always been an 'insurable interest' between employer/employee. What's different now?)

:rolleyes:

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:rolleyes:

At a particularly cynical point with a previous employer I discussed (with equally cynical co-slaves) how the HR dept and directors could be lying on the roof with sniper rifles, picking off people as they went to the car park, and how this would suit them financially and fit their personalities. The only thing likely restraining them was the likelihood of getting their collars felt.

Edited by General Melchett

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