A New Wall Street Profit Center They Don't Talk About
Most sentient beings already view Wall Street as a criminal enterprise. The bankers facilitate massive money laundering and Ponzi schemes; the rigging of commodity and currency markets; the creation and sale of fraudulent triple-A securities that cost millions of people their homes and life savings;
the rigging of interest rates that affect what people, governments and businesses pay to borrow money; the taking down of cities and even entire countries with interest rate swaps, derivatives and cook-the-books schemes that local officials don’t understand or are bribed to accept; and much, much more.
These actions aren’t even disputed. The banks have entered multiple felony guilty pleas, paid billion-dollar fines and settlements, and even after the Justice Department gives them “deferred prosecution” agreements, are caught doing the same things.
Even the capo di tutti capi’s rap sheet never approached that of Wall Street’s most notorious figures.
The tax-deductible settlements, fines and civil penalties announced with great fanfare at Eric Holder’s Justice Department press conferences fooled people for a while, but as with the bales of marijuana and kilos of cocaine spread out for the television cameras in the never-ending war on drugs, people aren’t fooled anymore. Still, we seem to have grown accustomed to the idea that these people will never be called to account and they know it. Wall Street is in a f*ck you and what are you going to do about it? mode — and so far the answer has been not very much.
Eric Holder finally returned to Covington & Burling, the white-shoe Washington law firm that represents virtually all the major financial players. While he was Attorney General, he limited CEO exposure to fines and settlements, which are paid by the corporate entities they control, in cases where the real cost of corporate wrongdoing was ultimately shouldered by U.S. taxpayers. His law firm kept his corner office vacant for six years awaiting his return.
The Republican Party is of course hopelessly corrupt. But it’s not only Republicans; Holder’s approach is the embodiment of the Democratic Party’s feckless response to the gangster capitalism of our era. As Sen. Dick Durbin of Illinois famously remarked, “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
Eric Holder (photo credit:OECD Flicker)
Jamie Dimon (photo credit:Wikimedia Commons)
Lloyd Blankfein (photo credit: Fortune Live Media, Flicker)
If readers can bear reading anything more about what our government is letting Wall Street get away with every day, we recommend Wall Street on Parade, which publishes the most insightful and accessible material on the country’s financial sector that we’ve come across. We would only note that the above is how we see Wall Street, and may or may not reflect the views of Wall Street on Parade.
Here is a short excerpt from one piece that describes a particularly unsavory scheme that you may not know about. We didn’t until we read it there.
The Other Thing JPMorgan Was Doing In Its Chief Investment Office:
PROFITING ON THE DEATH OF EMPLOYEES
From Wall Street on Parade. This Excerpt Used By Permission
Gambling on high-risk synthetic credit derivatives is not the only area of interest at JPMorgan’s Chief Investment Office (CIO) — the division that has thus far admitted to losing $6.2 billion in the London Whale debacle. According to Exhibit 81 released by the U.S. Senate’s Permanent Subcommittee on Investigations, Ina Drew, the head of the CIO, was also overseeing the investment of funds in the firm’s Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI) plans — a scheme enshrined by the U.S. Congress in 2006 that allows too-big-to-fail banks as well as many other corporations to reap huge tax benefits by taking on workers — even low-wage workers — and naming the corporation the beneficiary of the death benefit.
According to the exhibit, Drew was tasked with “maximization of tax-advantaged investments of life insurance premiums” for the BOLI/COLI plans. According to a report in the Wall Street Journal in 2009, JPMorgan had $12 billion in BOLI, noting that a JPMorgan spokesperson had confirmed the figure. Other insurance industry experts put the total for both BOLI and COLI at JPMorgan significantly higher.
Most Americans are unaware that for at least 25 years big business and banks have been secretly taking out millions of life insurance policies on their workers and naming the corporation the beneficiary of the death benefit without the knowledge of the employee. The individual policies are frequently in the hundreds of thousands of dollars and sometimes millions. To keep track of employees who have left the company, deaths are routinely tracked through the Social Security Administration. The policies became known as “dead peasant” or “janitor” policies because corporations took out life insurance on millions of low-wage workers, including janitors, without their knowledge or consent.
The insurance can give a nice boost to bottom-line corporate profits because it provides multiple tax breaks, including: the cash buildup in the policy is reported as income but is tax-exempt because it resides in a tax-sheltered life insurance policy; the cash payment the company receives when the employee dies is also tax-free under existing tax law.
Read the rest of this article at wallstreetonparade.com