General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forums"They truly can't help themselves. Give them a suit with rubber pockets and they'd steal soup."
Learning from the sweet -- and largely unprosecuted -- techniques of their pals in the financial-services industry, it appears that the moguls, poobahs, and panjandrums in the insurance industry are finding their own special ways to game the entire system into the poorhouse.
These complex private deals allow the companies to describe themselves as richer and stronger than they otherwise could in their communications with regulators, stockholders, the ratings agencies and customers, who often rely on ratings to buy insurance. Benjamin M. Lawsky, New York's superintendent of financial services, said that life insurers based in New York had alone burnished their books by $48 billion, using what he called "shadow insurance," according to an investigation conducted by his department. He issued a report about the investigation late Tuesday. The transactions are so opaque that Mr. Lawsky said it took his team of investigators nearly a year to follow the paper trail, even though they had the power to subpoena documents.
Here's a thought experiment. But on your best suit, shine up your best shoes, walk into your local neighborhood auto dealership and sign to buy a Turbo Porsche by describing yourself "as richer and stronger" than you could say otherwise to, say, the bank holding the mortgage on your condo. Tell you what. You can tell us what happened when you get out of the joint in seven to 10 years.
Mr. Lawsky said that because the transactions made companies look richer than they otherwise would, some were diverting reserves to other uses, like executive compensation or stockholder dividends. The most frequent use, he said, was to artificially increase companies' risk-based capital ratios, an important measurement of solvency that was instituted after a series of life-insurance failures and near misses in the 1980s.Mr. Lawsky said he was struck by similarities between what the life insurers were doing now and the issuing of structured mortgage securities in the run-up to the financial crisis of 2008. "Those practices were used to water down capital buffers, as well as temporarily boost quarterly profits and stock prices," Mr. Lawsky said. "And ultimately, those practices left those very same companies on the hook for hundreds of billions of dollars in losses from risks hidden in the shadows, and led to a multitrillion-dollar taxpayer bailout."
You think any of these guys looked at what happened in 2008 and thought, "Boy, those guys really were crooks and bought the country a helluva catastrophe. We should learn from them and not do that ourselves." Nope, I guarantee you the first thoughts among the people who thought up this scam for the insurance companies was, "Holy crap, look at the dough those guys made!" And I guarantee you those same people all got raises. The upper levels of American capitalism is so rotten with amorality, so utterly devoid of any conventional sense of ethics, let alone social responsibility, that it hardly seems worth pointing it out any more. Congratulations to America's graduate schools of business. You have bred three generations of vampires to feed on the rest of us. It's as though every medical school in the country adopted the basic approach to thoracic surgery of Sweeney Todd and married it to the economic philosophy of Bialystock And Bloom.
http://www.esquire.com/blogs/politics/insurers-inflating-books-061313
Laelth
(32,017 posts)-Laelth
phantom power
(25,966 posts)ctsnowman
(1,903 posts)will invite them to write the new regulations and call them financial experts.
malaise
(268,980 posts)Congratulations to America's graduate schools of business. You have bred three generations of vampires to feed on the rest of us.
THE TRUTH!
The Magistrate
(95,247 posts)That is a wonderful line.
reformist2
(9,841 posts)bluedigger
(17,086 posts)He nails it. Once again.
Egalitarian Thug
(12,448 posts)Why on earth would they change?
Manifestor_of_Light
(21,046 posts)My undergrad college has a grad school for Health Care Admin, formerly called Hospital Admin.
I'm sure I could have had a great career in that, if I wanted to get a Master's, and most importantly, if I had no moral scruples.
WovenGems
(776 posts)If we ever want to gather up all the sociopaths we know where they are.
calimary
(81,238 posts)That's EXACTLY what they thought, followed immediately by "and look how they got away with it. Come. Let us study, and learn, and follow suit!"
Spitfire of ATJ
(32,723 posts)That was the easy part.
ut oh
(895 posts)until we can get private money out of politics...
Rebellious Republican
(5,029 posts)Cleita
(75,480 posts)thieves and should be outlawed. We could use the premium money for non-profit disaster funds, whether they are done by governments at any level, federal, state municipal, depending on the needs of each geographic areas or associations like unions for the needs of their group. For instance, health care should be national single payer. Auto accident funds could be administered statewide and if we have specific needs like for floods, fires or storms, those disaster funds could be regional with federal help. Just MHO. What we have is stupid and counterproductive. We need something that works.
Lizzie Poppet
(10,164 posts)So. Fucking. This.
The "quarterly report mentality" that's pervaded American business culture for decades is pure poison. It starts in university MBA programs and is reinforced by far too many companies' compensation structures. It's a huge part of why we now have trillions of dollars in capital resources sheltered offshore (and made useless to the rest of society).