According to CNN,
The attorney general's office said it appears some insurers tell families of fallen military personnel that policy payouts will be placed in an interest-bearing account. But the bulk of the interest benefits the insurers, and the cash is not placed in banks insured by the Federal Deposit Insurance Corporation (FDIC), Cuomo's office said.
His office said insurers place cash in their corporate accounts, reportedly earning up to 4.8 percent interest while paying families as little as 0.5 percent interest.Eight insurance companies have been subpoenaed, including Prudential and MetLife. Prudential's practices are offered as an example of the way this
"Instead, Prudential must send money to JPMorgan Chase before the checks can clear," the attorney general's office said. "Prudential beneficiaries are also not informed that, under a 2008 law, they have one year to place the death benefits in a Roth IRA and earn tax-free investment gains for the rest of their lives. Thus, real financial harm is suffered by Prudential's lack of disclosure."So, to break it down, they keep the death benefit and earn corporate interest on it, pay a lower interest rate to the beneficiary (who believes the money is earning a "competitive interest rate"), pocket the difference, and control the gate through which the money flows (possibly slowing that flow if it benefits the corporation?). Scummy. Slime. Bags.
Both the Veteran's Administration and Secretary of Defense Robert Gates' office are looking into the investigation. And, of course, we're taking all this with a grain of gravel, since Cuomo is running for the governor's office in New York.
Another example that we are not dealing with true capitalists, just immoral crooks.
ReplyDeleteSadly this isn't a bit surprising.
ReplyDeleteJust finished Michael Lewis' 'The Big Short' and am halfway through Joseph Stiglitz' 'Freefall: America, Free Markets, and the Sinking of the World Economy'. Both provide great overviews of the financial crisis we're saddled with. How it started. Who aided and abetted. Who made money. And who paid the tab.
Of course that would be us. The US taxpayer and taxpayers from other countries around the world in thrall to the 'beauty' of the 'free market'. Marks barely begins to describe our role in this tawdry, destructive episode.
Corporate whizbangs and the free market at work. Rather financial industry criminals gaming the system and bringing us all done with it when it crashed.
If there is a more bloodless, amoral population roaming these great United States outside of these Wall Streeters I cannot begin to imagine who they are.
How in the fuck are we not at the "gates" on this shit by now?
ReplyDeleteFriday afternoon and I'm soooo sick of this news!!!!!!!!!!
S
How absolutely despicable and shameful.
ReplyDeleteArthurstone and Tom,
ReplyDeleteI read The Big Short recently. My private term for all this is Crapitalism. Capitalism does not have to be moral to make a profit in the short run, but it does have to be moral to survive scrutiny.
Suzan,
I'm half sick all the time from the constant bad news, too--unless I think of it this way: investigative journalism, the 24 hr. news cycle, the internet-shrunken world, and public support for whistleblowing are all possibly, maybe, kinda, perhaps beginning to make it expensive to be unethical and unprincipled. I can wish, anyway.
Even in Death we dishonor our troops.
ReplyDeleteThis is beyond shameful.
You have to wonder how long this has been going on and who's going to jail over it. Everybody has to watched, what the hell is wrong with us.
Nance,
ReplyDeleteIn my formerly non-cephalopod life, I worked a brief stint at American Express and wrote a post about that stink experience here at the Swash Zone: American Express - Don't Launder Money Without Them. It deals with a banking concept known as "float" ... how our stalwart financial institutions make money in the money laundering business.
Float refers to the interval when you first purchase travelers checks versus the moment when you actually spend them. The delay can be weeks, even months. During that interval, American Express and other check issuing banks make money on your money. It just so happens that the longest float of all is on travelers checks intended to launder money ... money from drugs, arms, contraband, organized crime. And the longer the float, the more money the banks make.
These insurance companies are making money not only on the interest rate markup but also on the "float" ... which can be years for a sizable death benefit claim. My advice to anyone who receives a death benefit claim in the form of a checkbook: Redeem the full cash amount immediately and then talk to an accountant and/or financial advisor about how best to invest it.
I've been hearing bits and pieces of this story since it was featured on Nightline recently. This is voodoo economics that rivals Reagan's trickle down theories. The banks haven't denied their practices; they've defended them as meeting industry standards. I don't know much about banking law, but friends that do suspect that the only issue that may be of questionable legal status is the failure to disclose re: the moving of funds to Roth IRAs, but even that may be more a matter of ethical policy rather than a legal violation. These bastards may be untouchable.
ReplyDelete"...they've defended them as meeting industry standards..."
ReplyDeleteLaws or standards? Which have been promulgated, written, and passed by whom? My guess is that the US Congress, which works for the banking lobby, very nicely worked all of this out to the banking industry's benefit.
Come on Shaw.
ReplyDeleteIndustry standards/regulations as set by government legislation are invariably written by members of the industry they are intended to regulate.
Keeps things cleaner. This way Congress doesn't have to waste a lot of time working the problem.
The business of America is business!