Business Ethics in the Banking Industry Analytical Essay by Nicky

Business Ethics in the Banking Industry
An analysis of the unethical behavior of banks and mortgage companies in the subprime mortgage crisis.
# 128110 | 2,605 words | 15 sources | APA | 2010 | US
Published on Jun 29, 2010 in Business (Finance, Investment and Banking) , Business (Management) , Ethics (General)


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Description:

The paper analyzes how banks and mortgage companies, specifically subprime lenders, lost their ethical judgment in their lending practices. The paper then focuses on the role of the CEO as the ethical leader of the organization and as the one who establishes the culture of ethics and integrity. The paper clearly shows how the cultures of these banking organizations, nurtured and rewarded by their CEOs and senior management teams, served as the catalyst for the defrauding of investors that led to the financial turmoil in many world economies. The paper then discusses how regulations will eventually be needed to ensure that ethical violations in the subprime mortgage industry are not repeated.

Outline:
Introduction
Analyzing How Banks and Mortgage Companies Lost Their Ethical Judgment
Ethics of Financial Services Leaders and CEOs: The Catalyst of the Chaos
The Bank CEO's Role In Defining Ethical Integrity
Risk Management Is a CEOs' Ethical Responsibility
CEOs in Banks and Subprime Mortgage Lenders Share No Common Definition of RiskThe Future of Banking and Mortgage Lending Includes Compliance Management Officers
Summary

From the Paper:

"The foundation of the American financial system is home ownership. Spending on the construction of a home, furnishing it, maintaining and reselling it is the most valuable asset the majority of Americans have in their investment portfolios, in addition to being an essential catalyst of the American economy. The meteoric rise of subprime mortgages based on lower interest rates and loan programs that were based on adjustable financing, negative amortization, and other financial transactions that were designed to ensnare consumers into more debt than they could afford (Verschoor, 2007). From an ethical standpoint the debate of who is primarily responsible for the subprime mortgage crisis continues, yet there is no clear answer. From a purely financial perspective the bundling of known high-risk loans into loan investment packages or bonds, then resold to investors globally is the primary culprit (Rutberg, 2008)."

Sample of Sources Used:

  • John Bond (2007). A safety culture with justice: A way to improve financial performance. Loss Prevention Bulletin,(196), 31-39. Retrieved October 20, 2008, from ABI/INFORM Global database. (Document ID: 1333256011).
  • Donald R Cassling (2008). Poehl v. Countrywide Home Loans, Inc. The Banking Law Journal, 125(9), 865. Retrieved October 21, 2008, from ABI/INFORM Global database. (Document ID: 1571291211).
  • Chris Churchill (2007). State targets lender ethics: Mortgage brokers must get training, undergo criminal checks starting next year. Knight Ridder Tribune Business News. Retrieved October 21, 2008, from ABI/INFORM Dateline database. (Document ID: 1335614991).
  • Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden cost of pay cuts. Journal of Applied Psychology, 75, 561-569.
  • Radi Khasawneh (2008). Ratings, regulation and risk. Risk, 21(7), 69. Retrieved October 22, 2008, from ABI/INFORM Global database. (Document ID: 1528216011).

Cite this Analytical Essay:

APA Format

Business Ethics in the Banking Industry (2010, June 29) Retrieved March 24, 2023, from https://www.academon.com/analytical-essay/business-ethics-in-the-banking-industry-128110/

MLA Format

"Business Ethics in the Banking Industry" 29 June 2010. Web. 24 March. 2023. <https://www.academon.com/analytical-essay/business-ethics-in-the-banking-industry-128110/>

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