This morning, more bad PR for America's biggest banks:
"Banks are using a little-known tactic to help pay bonuses, deferred pay and pensions they owe executives: They're holding life-insurance policies on hundreds of thousands of their workers, with themselves as the beneficiaries....The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die."
Okay, so this practice has been around for a while and it might be kind of unfair for the Journal to bring it up now when "America hates us," as a friend of ours who works for Bank of America (the company with the most life insurance on employees, $17.3 billion, according to the Journal) announced the other night, glumly, as if she were someone loosely affiliated with Al Qaeda and was expecting to soon have to take cover in a cave or something. And in reality this is more nuanced than it sounds. But, still, we have to laugh at how ludicrously, hilariously bad this looks. Even the headline: BANKS USE LIFE INSURANCE TO FUND BONUSES. What next? Will we find out that the bulk of Ken Lewis's 2008 salary was largely financed with the proceeds of puppy mills?