an equal and opposite reaction
Case Details for "Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Wachovia "
Nationwide probe of Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Wachovia alleging they insure the lives of their employees without their knowledge or consent.
Nationwide probe of Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Wachovia alleging they insure the lives of their employees without their knowledge or consent.
Many big banks are believed to have bought bank-owned life insurance ("BOLI") policies, including Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Wachovia. With BOLI, a bank names itself as the beneficiary of life insurance policies covering its employees. Nearly half of all U.S. banks have reported owning BOLI policies at an estimated value of $120 billion, according to the firm. Thousands of bank employees "have been laid off, and yet the banks still stand to benefit financially when those employees die, A bank buying a BOLI policy must provide the insurer with personal information of each covered employee, including his or her name, sex, age and Social Security number. The Social Security numbers are then used to conduct "death sweeps" where banks generally hire outside brokers to gather public records to see if an employee or former employee has died. In August 2006, the Pension Protection Act of 2006, a comprehensive pension-protection bill, was signed into law. While much of the act focused on revisions to the laws governing retirement plans, it also included a provision that effectively codifies into federal law best practices for the use of corporate-owned life insurance, commonly known as COLI, and the closely related BOLI product, as a method to fund employee benefits programs, according to an A.M. Best report (BestWire, Jan. 8, 2007).
Posted on:01/20/2009
Company: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Wachovia
Affected Class:
Scope: Nationwide
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