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Life is already designed with its natural ups and downs, twists and turns and these are over whelming for most of us to cope with. Market economy as a model was built upon “the promise of gain and the threat of hunger” (Watkins, 2011, p. 365). In business world, greed is good because it drives you to do even more, or is it? Unabated, greed conceals what you already have and only flashes out what you could have, therefore, very destructive. What we are calling greed is actually the fundamental foundation of the market economy: thirst for gains (more of material wealth) and fear of not having (the material wealth). The world is still reeling from the effects of the recent global financial crises that it has seen since the great depression, what was the main catalyst in the midst of all the cause we could point to? Greed. What lit the fire of the crises? Subprime mortgages, but what are subprime mortgages? They are home financing loans sold at higher-than prime rate, and are targeted at the less sophisticated mortgage-seekers (Phillips, 2011: Gilbert, 2011: Fishbein & Woodall, 2006); those borrowers who lack the knowledge and resources to understand mortgage contracts, there popularity skyrocketed from mid-2003 to mid-2006 as shown by the following chart. From the get go banks intentions in designing the mortgages are to force refinancing frequently because once the teaser rates expire and the higher rates starts they know that the borrowers would not be able to keep-up with the payments (Gordon, 2008 in Watkins). Subprime mortgage originations as a percent of total originations (Smith & Hevener, 2014, p. 323) In contrast to the traditional lending model of the lenders approving th... ... middle of paper ... ... and misguided and misplaced at worst. As Veblen (1953) foresaw, the bailouts protected or shielded the big banks from the effects of the environments that everyone else were living in and adjusting, and as we are witnessing, those banks and executives were and are still too slow to adjust to the new normal of market economy and as has already been seen, they are back into their old habits before the societies recover from the last one. The Dodd-Frank Act failed to address fully the core problems: the too-big-to-fail, the sizes and reaches of individual banks (concentration of power and controls), and the Chief Executive’s pay structures. Besides, because of the globalization of financial transactions between banks and their affiliates around the world, if the ground shakes under one bank in one corner of the planet, the tremor would be felt far across the oceans.
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