U.S. banks have devised a new investment instrument, making the insurance contract in bonds

Posted by DeXtR at 2:50 AM | Labels: ,
U.S. banks can put a bomb under the next financial market. After the collapse of the mortgage, they decided to make money, making the contract of insurance patients and the elderly in bonds and offer them to the market.

New tools may mark the return of Wall Street to produce new and complex product.

Investment banks on Wall Street looked for new large-scale ideas as «make money». Bankers plans to buy a life insurance contract that are sick or elderly people sell for money - roughly the price of $ 400 thousand for every $ 1 million insurance policy on the expected lifetime of the insured person. Then the banks plan to securitize these policies, that is to release a package of hundreds or thousands of such policies and bonds place them among investors, such as large pension funds, who will receive payments after the death of the insured person informs «Interfax», with reference to The New York Times .

The sooner the insured dies, the more banks will profit. However, if a man live longer than expected, investors may lose money. In any case, the bankers would receive a substantial profit at the expense of the commission from issuing bonds and then reselling them to trade. But experts warn that insurers can increase premiums in the short term, if they have to pay more insurance claims for death than they expected.
After the financial crisis of exotic investments, invented by Wall Street, have come under fire. Mortgage securities, credit default swaps (CDS), structured investment funds (SIV), as well as collateralized debt obligations (CDO), proved to be more risky than expected.

According to experts, the various financial innovations can be a good way to reduce costs by giving consumers more freedom of choice for investment, and in a broader sense - helping the economy grow. In particular, the alleged purchase of life insurance policies allow people to get money from their policies, while they are still alive. However, some experts believe that Wall Street so quickly revert to earlier times and will give chase for profits through the issuance of new sophisticated products.

Recall: A considerable share of responsibility for the emergence of the crisis on Wall Street puts the public in America and abroad. A recession in most major economies in the world was a result of the global financial crisis, which, experts believe, began with the mortgage crisis in the USA. In August 2007, the mortgage into a financial crisis, when banks around the world have begun to write off mortgage assets unreliable. This led to a drop in demand for commodities and a decline in most countries of the world.
Wednesday

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)