Ethics and Financial Industry meltdown

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.

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