Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, today announced that the Subcommittee will hold a hearing to examine innovations in securitization, especially those related to life insurance settlements.  Such settlements offer individuals the opportunity to sell their existing life insurance contracts and collect a cash disbursement considerably more than an insurer would typically pay for surrendering a policy.

“The securitization of complex financial instruments that few people understood helped lead to the current economic crisis,” said Chairman Kanjorski.  “It therefore astounds me that financiers are eager to return to the casino culture before they have even settled up the bad bets they made on subprime mortgage-backed securities.  The players in our financial system need to refocus their energies and get back to basics.  They need to direct resources to growing our economy.  As such, I have a great deal of difficulty understanding how some new-fangled securities products, such as those involving the securitization of life insurance settlements, will contribute to economic growth.  Securitization can play an important role in our financial system.  The American people, however, have limited patience left for Wall Street wizards’ complex schemes aimed at generating big profits for a select few.”

Chairman Kanjorski added, “There may be a legitimate need for life insurance settlements, and I look forward to an explanation of how they can provide a benefit to people.  Then again, many once recognized that there may be a legitimate need for subprime mortgages under certain, limited circumstances.  Ultimately, the unrestrained securitization of subprime mortgages helped to transfer risk to unwary investors, put people in homes they could not afford, and contributed to the housing bubble and economic crisis from which we are still recovering.  As we work to reform the rules by which the financial industry operates, let us remain cognizant of the dangers of excess that securitization can cause.  Too much of anything is just too much.”
 
Who:               Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
What:              Subcommittee hearing entitled “Recent Innovations in Securitization”
When:              September 24, 2009, 2:30 p.m.
Where:            2128 Rayburn House Office Building

Witness List:

• Ms. Paula Dubberly, Associate Director, Division of Corporation Finance, U.S. Securities and Exchange Commission
• The Honorable Susan E. Voss, Commissioner, Iowa Department of Insurance on behalf of the National Association of Insurance Commissioners
• Mr. J. Russel Dorsett, Co-Managing Director of Veris Settlement Partners on behalf of the Life Insurance Settlement Association
• Mr. Brian Pardo, Chief Executive Officer, Life Partners Holdings, Inc.
• Mr. Jack Kelly, Director of Government Relations, Institutional Life Markets Association
• Mr. Kurt Gearhart, Global Head of Regulatory and Execution Risk, Life Finance Group, Credit Suisse
• Mr. Steven H. Strongin, Managing Director and Head of Global Investment Research, Goldman, Sachs & Co.
• Mr. Daniel Curry, President, DBRS, Inc.

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