Sub-prime mortgage crisis GAO Historical Data Based on the assumption that sub-prime lending precipitated the crisis, some[ who? Securities and Exchange Commission SEC to relax the net capital rulewhich encouraged the largest five investment banks to dramatically increase their financial leverage and aggressively expand their issuance of mortgage-backed securities.
Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Determine which moral philosophies as discussed in chapter 6 is most applicable to an understanding of the banking industry meltdown.
There is a distinction between moral philosophies and business ethics. Moral philosophies also guide businesspeople in formulating business strategies as well as offering guidelines for resolving ethical issues.
Basically, teleology is in place to assess the moral value or worth of a behavior by examining the consequences. There are two theories that fall under the teleology umbrella that can also guide individuals in their business decision-making and those are egoism and utilitarianism.
Individuals who conform to egoism believe that they should be able to make decisions to benefit their own self-interest and each individual defines their self-interest differently.
When confronted with an ethical issue or decision, the egoist is most likely to choose the option that best benefits them. Utilitarians have the belief that the decsiiosn should be made that will benefit or result in the greatest total utility and that will result in the greatest benefit for all individuals affected.
The second moral philosophy, deontology, derives from the Greek term for ethics. Deontology is based on the idea that all individuals must be given equal respect.
Deontology can be separated into two groups: Relativist perspective is used to help one understand how people make ethical decisions. The relativist perspective is based on the belief that ethical behavior is defined from the experiences of people.
The moral philosophy of virtue ethics is an approach that places the focus on the kind of person who is doing the act. The moral philosophy that is most applicable to the banking industry meltdown would be teleology.
In the case, the actions of the indviduals were a direct correlation to egoism, which is a teleological philosophy. Egoism determines that right or acceptable behavior is defined by the consequences for the individual.
Nick Leeson, former chief trader for Barings Bank is a prime example of egoism. Leeson caused the firm billions of dollars as a result of his risky behavior.
Lesson established an error account for his losses to disguise any bad bets. No one at Barings Bank had access to see that account and as a result, Leeson was recognized widely as a brilliant trader.
The managers at Barings Bank had been assured by Leeson that he was not using company money to do his tradings and that it was risk free. Leeson had the advantage because the managers at Barings Bank had very little knowledge in trading.
Leeson eventually quit his job in after the Kobe earthquake hit, which caused the Japanese stock market to crash. Leeson still continued the risky behavior and tried to cover those losses through other risky investments but only caused more losses.
Leeson was concerned with making money and making himself look good, no matter the risk. According to the Federal Bureau of Investigations, white collar crime costs the United States approximately three hundred billion dollars a year.
That factor alone is what separates white collar crime from blue collar crime. Blue collar crimininals are charged as individuals whereas white collar criminals involve indivudials as well as the organizations that employ them.
Organizations can also be fined when any of its employees are charged and found guilty of a white collar crime. White collar crime is also difficult to prosecute because the offenders use sophisticated ways to hide their activities.
Blue collar crimes are not as difficult to prosecute once evidence, usually physical, has been gathered against the offenders. Blue collar crime does not cost nearly as much to prevent or prosecute as white collar crimes.
Determine and discuss the role that corporate culture played in the banking industy scenario.
Support your response with specific examples. The corporate culture of an organization is very crucial to how employees conduct themselves. If an organization has a strong ethical culture, then employees are less likely to commit acts that are considered unethical.
Lehman Brothers was the fourth-largest investment bank in the United States, but in filed for bankruptcy.Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the.
How to answer Why investment banking? For students and graduates, besides the technical questions, CVs, questions and brainteasers, this is a question you WILL get during asked at interviews: "Why investment banking?" There is no engineered answer for this, but, based on our experience of interviewing candidates, the best answers are.
Banking Industry Meltdown Essay Sample. 1. Determine which moral philosophies (as discussed in chapter 6) is most applicable to an understanding of . Topic: Banking Industry Meltdown Read Case “Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives.”Write a four to six () page paper that answers the following questions.
Type the question, and then follow with the answer. 1. Determine which moral philosophy (as discussed in Chapter 6) is most applicable to . The banking industries near complete collapse can be closely linked to the mortgage crisis that has hit the United States but there are deeper issues that have lead to the banking industry meltdown.
The banks acted with an egoism moral philosophy which has sometimes been described like a loan sharking operation, just legal.
Banking Industry Meltdown: The Ethical Financial Risk Derivatives Words Jan 31st, 6 Pages The case study will be analyzed and white-collar crimes considered as to whether they are different in any substantive manner from other more blue-collar crimes.