Trustworthiness promotes candidness and this virtue is the basis of all relations, whether commercial or otherwise.
WaMu agreed to be truthful to the shareholders when they invested their savings into enterprises. However, Washington Mutual could not keep this shade of the character as promised to its investors. The company had to file bankruptcy, as it could not be truthful to its stakeholders. “In June 2008 Washington Mutual Bank had assets in excess of $300 billion with over 2200 branch offices in 15 states. On September 15, 2008, the holding company received a credit agency rating downgrade creating a run on deposits of its bank, resulting in withdrawal over $16 billion in 10days period. On September 25, 2008 Washington Mutual bank was seized by office of Thrift Supervision and placed in receivership with FDIC, representing the largest bank failure in American history.”(Jerry Evans, 2009). This sequence of events is enough display of distrustfulness of Washington Mutual with its investors and other stakeholders.
Respect is next pillar of character that has not been incorporated while framing the reorganization scheme of takeover of Washington Mutual by J P Morgan Chase & Co. It has been reported by Robert Sorbo (2010, May 24) that a group of senior bondholders of Washington Mutual Inc opposed the group settlement reached with Federal Deposit Insurance Corporation over the thrift’s September 2008 failure. There appears to be partiality in repayment to bond holders. As per the representative of senior bondholders, “it was unfair that note holders of holding company would be paid in full, while senior note holders at the bank unit level would not receive anything close to full payment.” This reflects that...
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...o happen; but during the course, the equity capital and non-deposit loan funds vanished from the kitty of the bank. Ethical evaluation of the takeover has revealed that there were no other alternative before FDIC except to recommend takeover of the bank. The decision, judged from the point of view of framework of ethical decision-making, was the right course of action as the responsibilities of bank failure lie with unscrupulous and unethical business practices that remained unchecked for a long time. The bank should have acted professionally and checked unscrupulous and fraudulent banking activities; but that never happened. These findings are the results of critical assessment of the takeover decision in the light of basic principles called six pillars of a character. The takeover decision was the only way out even though it harmed many stakeholders.
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