Boswell Urges SEC Chair To Review The Consequences Of Purchasing Life Insurance Policies To Bundle And Trade On Wall Street

Press Release

Today, Congressman Leonard Boswell asked SEC Chair Mary Schapiro to engage the Commission in a thorough review of life insurance securitization, or the purchasing of life insurance policies for the purpose of bundling them into bonds for resale and trade to investors.

Chairman Schapiro testified today before the House Committee on Agriculture in a hearing to review proposed legislation by the U.S. Department of Treasury regarding the regulation of over-the-counter derivatives markets. As Chairman of the Subcommittee on General Farm Commodities and Risk Management, Boswell expressed his concern over the consequences of life insurance securitization on policyholders, insurance companies, and the economy at-large.

"There is a huge amount of money in the life insurance industry -- trillions," said Boswell in today's hearing. "This deserves the attention of the SEC and I'm glad they have begun creation of a SEC task force to look into this issue. I look forward to working with them on this issue so we can work on finding solutions."

The SEC Chairman responded that she too was profoundly worried about the implications of life insurance securitization on a large scale and that it has already begun on a private basis.

Boswell further emphasized that the ability of investment bankers to purchase life insurance policies for the purpose of bundling them into bonds for resale and trade must be considered thoughtfully and analyzed for potential negative market impacts similar to those experienced during the subprime mortgage crisis.

Source