Was the 2008 financial crisis caused by a lack of corporate ethics
The 2008 financial crisis was likely caused by a lack of corporate ethics in the lending and financial industries. Major lending institutions made risky sub-prime mortgages at the height of the US housing bubble that violated traditional underwriting standards, prioritizing greed over good judgment. These bad loans were then packaged and leveraged by Wall Street firms and sold to unwitting investors, exacerbating the problems. When the housing market collapsed, it triggered the downfall of major banks and a stock market plunge, resulting in the worst financial crisis since the Great Depression. The paper will examine the questionable practices that led to the crisis and discuss government efforts to prevent a similar disaster in the future.
![Article
Was the 2008 Financial Crisis Caused by a Lack of Corporate Ethics?
Victor Lewis, Kenneth D. Kay, Chandrika Kelso, James Larson
01/2010;
ABSTRACT During the second halfof 2008, the United States financial markets,and eventually all major world
markets,were devastated by the aftermath of unethical lending practices bymajor lending institutions.These bad
loans were made atthe heightof a real estate bubble in the United States. Aggressive lenders engaged in loans
called sub-prime mortgages. These mortgages were extremelyhigh risk and mostofthem violated traditional
underwriting standards for the industry. Prudence and ethics were pushed aside as greed overcame good judgment
among mortgage lenders nationwide.The problem was exacerbated by the packaging,and leveraging, of these loans
by Wall Street financial companies.These companies leveraged these bad loans,and sold them to unsuspecting
buyers as bundled investments in the secondarymarkets.When the overheated United States real estate market
finally began a severe and protracted correction of fair marketvalues due to these bad sub-prime loans made to
questionable borrowers,notonly did the real estate markets collapse butitresulted in a domino effect causing the
collapse ofmajor banks and a precipitous and protracted marketdrop in stock values, financial companies,insurers,
and eventually the biggestfinancial crisis since the greatdepression.This paper will review the 2008 collapse,and
evaluate the questionable practices among the various corporate and financial participants thatcaused a worldwide
collapse ofshareholder values.This paper will also explore and review the United States governments various
attempts to solve this great crisis including whatproper ethical and legal safeguards are being cons idered to prevent
a repeatof this disaster in the future.
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Was the 2008 financial crisis caused by a lack of corporate ethics
- 1. Article Was the 2008 Financial Crisis Caused by a Lack of Corporate Ethics? Victor Lewis, Kenneth D. Kay, Chandrika Kelso, James Larson 01/2010; ABSTRACT During the second halfof 2008, the United States financial markets,and eventually all major world markets,were devastated by the aftermath of unethical lending practices bymajor lending institutions.These bad loans were made atthe heightof a real estate bubble in the United States. Aggressive lenders engaged in loans called sub-prime mortgages. These mortgages were extremelyhigh risk and mostofthem violated traditional underwriting standards for the industry. Prudence and ethics were pushed aside as greed overcame good judgment among mortgage lenders nationwide.The problem was exacerbated by the packaging,and leveraging, of these loans by Wall Street financial companies.These companies leveraged these bad loans,and sold them to unsuspecting buyers as bundled investments in the secondarymarkets.When the overheated United States real estate market finally began a severe and protracted correction of fair marketvalues due to these bad sub-prime loans made to questionable borrowers,notonly did the real estate markets collapse butitresulted in a domino effect causing the collapse ofmajor banks and a precipitous and protracted marketdrop in stock values, financial companies,insurers, and eventually the biggestfinancial crisis since the greatdepression.This paper will review the 2008 collapse,and evaluate the questionable practices among the various corporate and financial participants thatcaused a worldwide collapse ofshareholder values.This paper will also explore and review the United States governments various attempts to solve this great crisis including whatproper ethical and legal safeguards are being cons idered to prevent a repeatof this disaster in the future. [less] 0 0 揃 1 BOOKMARK 揃 142 VIEWS