On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley Financial Services Modernization Act, which repealed the Glass-Steagall Act. This allowed securities firms and insurance companies to purchase banks and commercial banks to underwrite insurance and securities. From this repeal, the financial services industry has undergone a consolidating phase of commercial banks and investment banks becoming one. However, this has not always proved beneficial for these companies. My hypothesis is that the culture clash stemming from the different risk tolerance levels between investment banks and commercial banks is the main reason why such mergers and acquisitions have not resulted in the expected synergies the financial markets were anticipating.
The stock prices of WorldCom began to fall in 2000 and in order to prevent the price from falling further WorldCom made mass loans to Ebbers to stop him from selling his stock. He initiated the fraud and false reporting. He did not give accounting details as to how the false reporting should occur but he did repeatedly say it was important to “make the numbers.” Scott Sullivan was the CFO and on the board of directors of WorldCom. He oversaw the conspiracy to hide operating expenses in order to improve reported profits of the company. He advised Bernie Ebbers to inform the public of the WorldCom’s deteriorating situation but Sullivan’s advice was not taken.
Tyco’s former CEO Dennis Kozlowski and ex-CFO Mark Swartz sold stocks without investors’ approval and misrepresented the company’s financial position to investors to increase its stock prices (Crawford, 2005). The auditors (PricewaterhouseCoopers) helped cover the executives’ acts by not revealing their findings to the authorities as it is believed they must have known about the fraud taking place. Another example would be the Olympus scandal. The Japanese company, which manufactures cameras and medical equipment, used venture capital funds to cover up their losses (Aubin & Uranaka, 2011). Allegedly, thei... ... middle of paper ... ...tial information not pertinent to their work and use such information to their advantage.
The Bank of the United States The Bank of the United States is a symbol of the long held American fear of centralization and government control. The bank was an attempt to bring some stability and control and was successful at doing this. However, both times the bank was chartered, forces within the economy ultimately destroyed it. The fear of centralization and control was ultimately detrimental to the U.S. economy. During the Revolutionary War there was much need for a strong centralized government that would have been able to collect taxes.
For instance, what can be included in revenue and when to realise them is decided by accounting professionals, whereas ordinary people will accept this as they view the professionals as a legitimate body in the field. By reading his paper, I can conclude that there is no such thing as the true profit since there is no truth in accounting. Adding non-financial measures may give a better picture of an organisation, but there is no full picture as this is subjective (ibid.). Accountants will make sure that they are operating within what is acceptable by the society to maintain their legitimacy in the profession and preserve the power they have, as in the legitimacy theory (Deegan and Unerman, 2011). It is important to note that being legitimate does not mean that someone is doing the right thing but he is doing what is perceived to be socially right (Suchman, 1995).
Enron plotted with auditor Arthur Anderson kept debt off its balance sheet to hide the true condition of the company. Their loans were treated as “income from partnerships and not as liabilities” (Sims & Brinkmann 2003). In fact, Enron scandal seems to have been a foreseeable failure (Gordan N 2002). “Enron CEO Jeffrey K. Skilling and exEnron CFO Andrew S. Fastow created and implemented business ideas that led to major problems” (Fusaro and Miller 2002), which could not be legally or ethically secure, resulting in their collapse (Petrick & Scherer 2003). In this way, they generated wealth for investors and themselves.
Showing that he makes personal decisions instead of political ones. He violated the McCulloh v. Maryland, showing that he did not follow interpretation of the law, ruled by Supreme Court. Jackson violated separation of powers through the destruction of the national bank. Although Jackson believed he would help the poor by terminating the national bank; he did violate the separation of powers. As stated in the McCulloh v. Maryland “the necessary and proper clause gave Congress the right to charter the bank and that if the states could tax the bank, they could also destroy it.” Jackson ultimately disregarded this court decision made by the Supreme Court that the national bank was constitutional.
This scandal has had an enormous impact on the United States by putting them into a position of immoral leadership. The Bill Clinton scandal undermined the American public’s trust in government and politics. He undermined the trust that America had in government and politics by breaking his promise to have good moral conduct (“The Clinton Impeachment Trial” 1-2). After being elected in 1992 to serve as the President of the U.S, Clinton told the public that he would give “the most ethical administration in history” (“The Clinton Impeachment Trial” 1-2). Obviously, he broke this promise.
In the case, Scott Sullivan-the CFOs of WorldCom transferred normal operating lease expense to the balance sheet as an asset. Scott could not assure the accuracy of the financial statement and violated the requirements. Once Cynthia exposed the issue to the audit committee, Scott faced the indictment by a grand jury in August 2002. In order to avoid t... ... middle of paper ... ...revention, it also leads to the negative aspects. The principal disadvantage of the Act is the Accounting and Auditing costs issue.
He also decimated the traditional committee system, and reduced the power of the committee chairman. When he stepped down and the other Republic... ... middle of paper ... ...ous statements it can be inferred that in some ways the Obama administration was like the Bush Administration in terms of foreign national policies. Obama also made poor choices by expanding on Bush policies that were already a dangerous jaunt from constitutional practices. Another thing Obama did was increase our expenditures by the billions, which can cause harm in his domestic reform agendas, and might lead to divisive and expensive foreign wars. In closing, this book informs us on how the Republicans went crazy and Democrats became useless, and how it’s become a problem.