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Sub-prime mortgage crisis in the united states
Cultural Values in International Business
Subprime mortgage crisis of 2008
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Introduction
Financial organizations and the banking industry have supported their customers for centuries. Their purpose is to assist their customers in increasing and securing their wealth, provide services such as loans to business and customers, and provide their stockholders profits. While being a very mature industry, somehow things went very wrong in the mid to late 2000’s, what was a very active housing market in the United States came to a screeching halt and the global economy began to collapse. The readily available lending practices faltered when consumers began defaulting on their subprime mortgages and banks and investors losses mounted and home values fell dramatically. The banking industry understood that the subprime loans came with higher risks and they packaged the subprime loans with less risky investments to protect themselves from the risky investments. While it made sense to package the subprime loans and spread the risks, what the industry did not take in consideration was the unethical behavior of the financial industry. Financial institutes misrepresented the loans when they packaged them and sell; therefore relieving them of the risky loans. However the losses were much greater than anyone expected and created the banking industry meltdown. The subprime mortgage crisis and resulting foreclosure fallout has caused dissension among consumers, lenders and caused frustration with legislators and created a furious debate over the causes and possible fixes to the subprime mortgages and financial industry risky and greedy behavior. The paper is based on the case study on Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives and will determine the most applicable moral philosophy followed by...
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...ake wise decision whether it is a product or service they want to invest in or purchase. This is what investors and customers expect and desire.
Works Cited
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Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business ethics: Ethical decision making and cases: 2011 custom edition (8th ed.). Mason, OH: South-Western Cengage Learning.
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Unattributed, (2014). White-Collar Crime: Lying, Cheating, and Stealing, Retrieved February 27, 2014 from internet site http://www.fbi.gov/about-us/investigate/white_collar
Jake Clawson Ethical Communication Assignment 2/13/2014. JPMorgan Chase, Bailouts, and Ethics “Too big to fail” is a theory that suggests some financial institutions are so large and so powerful that their failure would be disastrous to the local and global economy, and therefore must be assisted by the government when struggles arise. Supporters of this idea argue that there are some institutions that are so important that they should be the recipients of beneficial financial and economic policies from government. On the other hand, opponents express that one of the main problems that may arise is moral hazard, where a firm that receives gains from these advantageous policies will seek to profit by it, purposely taking positions that are high-risk, high-return, because they are able to leverage these risks based on their given policy. Critics see the theory as counter-productive, and that banks and financial institutions should be left to fail if their risk management is not effective.
Cohen, S., Grace, D. (2010). Business ethics: Canadian edition. Don Mills, Ontario: Oxford University Press.
The Sub-Prime Mortgage Crisis of 2008 has been the largest financial crisis to take place since the end of the Great Depression. It was the actions of individuals and companies that caused this crisis. For although it could have been adverted, too much money was being made by too many people in place of authority to think deeply on the situation. As such, by the time actions were taken to attempt to rectify the situation, it was already too late. Trillions of dollar of tax payers’ money was spent trying to repair the situation that was caused by the breakdown of ethics and accountability in the private sector. And despite the government’s actions to attempt to contain the crisis, hundreds of thousands lives were negatively affected before, during, and after this crisis.
Trevino, L. K., & Nelson, K. A. (2011). Managing business ethics: Straight talk about how to do it right. New York: John Wiley.
• Once more, the ordinary science’ proves itself as the master of classification, inventing and defining the various categories of Egoism. Per example, psychological egoism, which defines doctrine that an individual is always motivated by self-interest, then rational egoism which unquestionably advocates acting in self-interest. Ethical egoism as diametrically opposite of ethical altruism which obliges a moral agent to assist the other first, even if sacrifices own interest. Also, ethical egoism differs from both rational and psychological egoism in ‘defending’ doctrine which considers all actions with contributive beneficial effects for an acting individual
Egoism is a teleological theory of ethics that sets the ultimate criterion of morality in some nonmoral value (i.e. happiness or welfare) that results from acts (Pojman 276). It is contrasted with altruism, which is the view that one's actions ought to further the interests or good of other people, ideally to the exclusion of one's own interests (Pojman 272). This essay will explain the relation between psychological egoism and ethical egoism. It will examine how someone who believes in psychological egoism explains the apparent instances of altruism. And it will discuss some arguments in favor of universal ethical egoism, and exam Pojman's critque of arguments for and against universal ethical egoism.
Trevino, L., & Nelson, K. (2011). Managing business ethics - straight talk about how to
Eight years ago, the world economy crashed. Jobs were lost, families misplaced, hundreds of thousands of people left shocked and confused as they watched the security of their world fall to pieces around them. In, “The Big Short,” a film directed by Adam McKay and based on the book written by Michael Lewis, viewers get an inside perspective on how the financial crisis of 2008 really happened. Viewers learn the truth about the unethical actions and irrational justifications made by those who unwittingly set the world up for failure. Two main ethically tied decisions are brought into question when watching the film: how could anyone conscionably make the decision to mislead investors by misrepresenting mortgage backed securities (MBS), and why
Seawell, Buie 2010, ‘The Content and Practice of Business Ethics’, Good Business, pp. 2-18, viewed 22 October 2013, .
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases: 2011 custom edition (9th ed.). Mason, OH: South-Western Cengage Learning.
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
Treviño, L. K., & Nelson, K. A. (2007). Managing business ethics: Straight talk about how to do it right Fourth ed., Retrieved on July 30, 2010 from www.ecampus.phoenix.edu
Ethical egoism can be a well-debated topic about the true intention of an individual when he or she makes an ethical decision. Max Stirner brings up a very intriguing perspective in writing, The Ego and its Own, regarding ethical egoism. After reading his writing some questions are posed. For example, are human beings at the bottom? Following Wiggins and Putnam, can we rise above our egoism and truly be altruistic? And finally, if we are something, do we have the capacity to rise to a level that we can criticize and transcend our nature? These questions try to establish whether or not we are simple humans, bound to our intrinsic nature, or far more intellectually advanced than we allow ourselves to be.
Feinberg, J. (1998). Psychological Egoism in Ethics: History, Theory, and Contemporary Issues. Oxford: Oxford University Press.
Shaw, W. H., & Barry, V. (2011). Moral Issues in Business (Eleventh ed., pp. 230-244).