bodies. The government mandated that mortgage lenders make subprime deals. Everybody should have a home. No one held a gun to anyone’s head.... I don’t understand why we’re raking over all this again. We’ve moved on. You clearly haven’t, but I’d urge you in the strongest possible terms to get over it .”
Edmund was exerting as much self-control as he could, speaking slowly and evenly. Russell knew the plug on the volcano was shaking, the whole thing was threatening to blow. Robotically Edmund continued.
“We have the utmost confidence that LifeDeals is a winner and is going to prove to be so in the very near future.”
“Oh really,” Gloria said. “Well, I have half a million in credit default swaps on the line that says it won’t. And I’m going to buy more. And you know what, I’ll be glad when it fails, because I think you’re stealing again, only this time you’re stealing vulnerable people’s life insurance, and you’re paying them pennies. These are old people who are desperate for money because they need an operation and don’t want to go bankrupt because our health system has written them off.”
Edmund was massaging his temples. They were bankers, they made money, end of story.
“The Supreme Court has ruled that life insurance policies are equity that people can buy and sell,” Edmund said.
“You’re paying fifteen percent of face value. Ten if you can.”
“We are offering a legitimate financial service to older Americans who need cash for whatever reason. We haven’t created the need, we’re merely filling it. It’s of no concern to me whether an individual is paying for a new hip or a cruise to Alaska. Perhaps they just don’t want their ungrateful children to get the money. There’s nothing immoral or unethical about it. We’re helping put money back into the economy. You should thank us.”
“Oh, spare me, Edmund. Now that the mortgage market has dried up, some clever analyst zeroed in on life insurance. It’s another gold mine and damn the consequences for the people involved.”
Russell could see this was going nowhere fast. He moved forward in his seat. “Gloria, with all due respect, Edmund and I didn’t drive down here to debate the ethics of life settlements, although I have to say they have been around for years with little protest. We’ll have to agree to disagree. We’d like to know why you’re so sure we’re wrong. I brought along some research as backup.”
Russell placed financial statements in front of Gloria along with complicated graphs that showed bell curves for the life expectancy of people whose policies LifeDeals had purchased, separating them by the diseases the holders suffered. He gave Gloria the whole picture, letting her see her more information than was normally presented to prospective hedge fund managers. He then described the plan, how they would securitize the policies into bonds, resulting in vastly increased income that was then used to buy up more policies to make into more bonds. The bonds were weighted, the largest segment based on diabetes, the second largest on cardiovascular disease, and the third on kidney disease. While Russell talked, Gloria glanced at the financial statements and the bell curves. It didn’t take her long. When she was finished, she tossed them aside as if she didn’t believe any of it.
Finally Russell explained that since the bell curves could accurately predict when the policies would pay out, they could factor in all the other cogent data and determine their cash flow extremely accurately and buy as many policies as the revenue streams allowed. Their actuarial data was enormous, going back fifty years, and even longer if they needed it.
“We’ve left nothing to chance,” Russell said. “It’s foolproof, based on real numbers. Sure, a few people are going to have spontaneous remissions, but others will pay out faster than predicted. It’s all based on accepted mathematics and the bedrock is
Edmund was exerting as much self-control as he could, speaking slowly and evenly. Russell knew the plug on the volcano was shaking, the whole thing was threatening to blow. Robotically Edmund continued.
“We have the utmost confidence that LifeDeals is a winner and is going to prove to be so in the very near future.”
“Oh really,” Gloria said. “Well, I have half a million in credit default swaps on the line that says it won’t. And I’m going to buy more. And you know what, I’ll be glad when it fails, because I think you’re stealing again, only this time you’re stealing vulnerable people’s life insurance, and you’re paying them pennies. These are old people who are desperate for money because they need an operation and don’t want to go bankrupt because our health system has written them off.”
Edmund was massaging his temples. They were bankers, they made money, end of story.
“The Supreme Court has ruled that life insurance policies are equity that people can buy and sell,” Edmund said.
“You’re paying fifteen percent of face value. Ten if you can.”
“We are offering a legitimate financial service to older Americans who need cash for whatever reason. We haven’t created the need, we’re merely filling it. It’s of no concern to me whether an individual is paying for a new hip or a cruise to Alaska. Perhaps they just don’t want their ungrateful children to get the money. There’s nothing immoral or unethical about it. We’re helping put money back into the economy. You should thank us.”
“Oh, spare me, Edmund. Now that the mortgage market has dried up, some clever analyst zeroed in on life insurance. It’s another gold mine and damn the consequences for the people involved.”
Russell could see this was going nowhere fast. He moved forward in his seat. “Gloria, with all due respect, Edmund and I didn’t drive down here to debate the ethics of life settlements, although I have to say they have been around for years with little protest. We’ll have to agree to disagree. We’d like to know why you’re so sure we’re wrong. I brought along some research as backup.”
Russell placed financial statements in front of Gloria along with complicated graphs that showed bell curves for the life expectancy of people whose policies LifeDeals had purchased, separating them by the diseases the holders suffered. He gave Gloria the whole picture, letting her see her more information than was normally presented to prospective hedge fund managers. He then described the plan, how they would securitize the policies into bonds, resulting in vastly increased income that was then used to buy up more policies to make into more bonds. The bonds were weighted, the largest segment based on diabetes, the second largest on cardiovascular disease, and the third on kidney disease. While Russell talked, Gloria glanced at the financial statements and the bell curves. It didn’t take her long. When she was finished, she tossed them aside as if she didn’t believe any of it.
Finally Russell explained that since the bell curves could accurately predict when the policies would pay out, they could factor in all the other cogent data and determine their cash flow extremely accurately and buy as many policies as the revenue streams allowed. Their actuarial data was enormous, going back fifty years, and even longer if they needed it.
“We’ve left nothing to chance,” Russell said. “It’s foolproof, based on real numbers. Sure, a few people are going to have spontaneous remissions, but others will pay out faster than predicted. It’s all based on accepted mathematics and the bedrock is
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