Wall Street Journal

May 20, 2009

Controversial Policies on Employees Pay for Executive Benefits, Help Companies With Taxes

By ELLEN E. SCHULTZ

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.

Banks took out much of this life insurance during the mortgage bubble, when executives’ pay — and the IOUs for their deferred compensation — surged, and banking regulators affirmed the use of life insurance as a way to finance executive pay and benefits.

Bank of America Corp. has the most life insurance on employees: $17.3 billion at the end of the first quarter, according to bank filings. Wachovia Corp. has $12 billion, J.P. Morgan Chase & Co. has $11.1 billion and Wells Fargo & Co. has $5.7 billion. (Wells Fargo acquired Wachovia at the end of last year.)

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. Source Article

If I understand this correctly, these companies have life insurance policies on their employees, past or present. Does this mean even the ones that have been laid off? Hmmmmm……..

~Susan~

While most governments’ eyes are on the banking crisis, a much bigger issue – the environmental crisis – is passing them by, says Andrew Simms. In the Green Room this week, he argues that failure to organise a bailout for ecological debt will have dire consequences for humanity.

“Nature Doesn’t Do Bailouts!” said the banner strung across Bishopsgate in the City of London.

Civilisation’s biggest problem was outlined in five words over the entrance to the small, parallel reality of the peaceful climate camp. Their tents bloomed on the morning of 1 April faster than daisies in spring, and faster than the police could stop them.

Across the city, where the world’s most powerful people met simultaneously at the G20 summit, the same problem was almost completely ignored, meriting only a single, afterthought mention in a long communique.

World leaders dropped everything to tackle the financial debt crisis that spilled from collapsing banks.

Gripped by a panic so complete, there was no policy dogma too deeply engrained to be dug out and instantly discarded. We went from triumphant, finance-driven free market capitalism, to bank nationalisation and moving the decimal point on industry bailouts quicker than you can say sub-prime mortgage.

But the ecological debt crisis, which threatens much more than pension funds and car manufacturers, is left to languish.

It is like having a Commission on Household Renovation agonise over which expensive designer wallpaper to use for papering over plaster cracks whilst ignoring the fact that the walls themselves are collapsing on subsiding foundations.

Beyond our means

Each year, humanity’s ecological overdraft gets larger, and the day that the world as a whole goes into ecological debt – consuming more resources and producing more waste than the biosphere can provide and absorb – moves ever earlier in the year.

The same picture emerges for individual countries like the UK – which now starts living beyond its own environmental means in mid-April.

-Article  continued here, courtesy BBC News.