Countrywide Financial Consumer Protection And Research Paper

Length: 10 pages Sources: 4 Subject: Economics Type: Research Paper Paper: #96079879 Related Topics: Consumer Protection, Consumer Rights, Ethical Egoism, Financial Institution
Excerpt from Research Paper :

He defined the ideals that people share about how people ought to behave a "categorical imperative" - a transcendent concept of "rightness of action." No one would want to be taken advantage of the way Countrywide did, and under no circumstances did they themselves believe their actions were "right."

Egoism or self-interest ethics may explain the Countrywide rationale, after all, they were acting to advance own interests, over all else. Although some conduct is "right" when it advances personal interests, Countrywide's motive was actual "greed" because greed includes "excess" -- demanding more than one is entitled to. Egoism assumes that there is no "entitlement," others also have interests, and interests can and should compete. No one is "more deserving" than another. This also is Adam Smith's view of the market: buyers and suppliers with opposing interests (buyers want the lowest price and suppliers want the highest price) seek a transaction, to buy or to sell. Countrywide so skewed the negotiations in their own best interests that Mr. Smith would have been appalled.

Pursuant to the ethics of social group relativism, we assess Countrywide's conduct by understanding what our social group expects of us. While the term "relativism" has been misunderstood to imply that "anything goes," here the term simply means that standards of conduct in business are governed by the expectations of others on our behavior. "We conform." Countrywide obviously did not.

Each of these categories identifies a different kind of standard for making choices, and refers to some interest that is valued or preferred. We may not share the same interest or preference, but this is not an argument for what some call "situational" ethics -- ethical behavior that may, or may not, differ with circumstances.

Questions

What aspects of the situation (actions by any stakeholder) demonstrate ethically sound behavior and which illustrate unethical behavior?

Sadly, until the Attorneys General pursued Countrywide for consumer fraud, securing an $8.68 Billion settlement for defrauded borrowers, no one acted ethically. Not Countrywide, and in some instances, not the homeowners either, where they acquiesced in the lies.

Analyze how the company's corporate culture that may have helped to minimize the unethical behavior or actually contributed to/caused the unethical behavior.

The corporate culture at Countrywide included a "Friends of Angelo" scheme that gave low interest loans to members of congress. The order of the day was profit, from any action, and the profits were divvied up in the billions.

Analyze how the company's corporate governance (overall guidelines, strategic decisions/actions) may have helped to minimize the unethical behavior or actually contributed to/caused the unethical behavior.

Few situations are as saturated in misconduct as the Countrywide debacle. In short, there was no governance whatsoever. Now that Bank of America bought the company, their guidelines and rules will apply as necessary to wholly alter the previous absence of law or ethics. All new personnel are necessary.

Based on the ethical perspectives...

...

The primary lesson here is that self-regulation does not work, where so much money can be made. The only resolution was the loss of millions of homes, and breaking of our banks.

Recommend corrective actions for each of the legal/ethical issues outlined above.

Provide supporting rationale for each recommendations or industry examples of the use of your recommendations as "best practices."

Full disclosure -- retrain brokers and edit the paperwork to ensure all facts are revealed. Consider standard DVD that borrower views with lender, raising all issues clearly

Incomplete, irregular forms -- prohibit anyone from processing blank forms, as in banking.

Pre-qualification -- Require online process with advance written loan amount qualification in writing, as with car buyers.

Misrepresentation -- Prohibit alterations in terms at closing, period. Make it escrow company's responsibility.

Fees -- mandate a Good Faith Estimate, listing all fees and charges in advance, like with auto repair.

Timeliness -- Adhere to schedule, or suffer commission penalty. An ethical lender works in a timely manner, and does his best to close the loan quickly.

Recommend approaches or policies that the company can take to help prevent these issues in the future.

1. Require professional licensing of all broker reps, with an exam, like attorneys.

2. Require professional liability insurance for all broker reps.

3. Establish review processes at all lenders to inspect loan origination documents.

4. Pass criminal bans on steering, and securing loan above buyer's creditworthyness.

5. Monitor secondary market to remove profit and kickbacks from subprime market.

Provide supporting rationale for each recommendations or industry examples of the use of your recommendations as "best practices."

1. Licensing is required for barbers, why not mortgage reps? An exam would improve the professional competence of lenders and this exams could include an ethics section, like the bar exam.

2. Insurance would cover victim's of fraud, when they avoid recovery. MDs and Attys have to be insured, same here.

3. Internal reviews would screen improper loan apps rather than just try and process them.

4. Criminal sanctions would get the industry's attention, and deter fraud.

5. Congress is about to regulate that secondary market for the first time, after it nearly brought the economy down.

References

Michaelson, Adam (2009) "The Foreclosure of America: The Inside Story of the Rise

and Fall of Countrywide Home Loans, the Mortgage Crisis, and the Default of the American Dream," Berkley Publishers

Kirchick, James The Irresponsiblity Of Countrywide, Wall Street Journal, December 6, 2007.

Staff, Countrywide Settles Predatory Lending Charges for $8.68 Billion, Business Week,

October 6, 2008

http://www.consumeraffairs.com/news04/2008/10/countrywide_settlement.html#ixzz0jLd2JXT6

PRNEWSWIRE, Bank of America Agrees to Purchase Countrywide Financial Corp.…

Sources Used in Documents:

References

Michaelson, Adam (2009) "The Foreclosure of America: The Inside Story of the Rise

and Fall of Countrywide Home Loans, the Mortgage Crisis, and the Default of the American Dream," Berkley Publishers

Kirchick, James The Irresponsiblity Of Countrywide, Wall Street Journal, December 6, 2007.

Staff, Countrywide Settles Predatory Lending Charges for $8.68 Billion, Business Week,
http://www.consumeraffairs.com/news04/2008/10/countrywide_settlement.html#ixzz0jLd2JXT6
Jan. 11, 2009 http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b)


Cite this Document:

"Countrywide Financial Consumer Protection And" (2010, March 27) Retrieved December 8, 2021, from
https://www.paperdue.com/essay/countrywide-financial-consumer-protection-1064

"Countrywide Financial Consumer Protection And" 27 March 2010. Web.8 December. 2021. <
https://www.paperdue.com/essay/countrywide-financial-consumer-protection-1064>

"Countrywide Financial Consumer Protection And", 27 March 2010, Accessed.8 December. 2021,
https://www.paperdue.com/essay/countrywide-financial-consumer-protection-1064

Related Documents
Improvements in Integrity, Financial Accountability, Ethical Conduct...
Words: 1568 Length: 5 Pages Topic: Business Paper #: 64221091

Improvements in Integrity, Financial Accountability, Ethical Conduct and Corporate Responsibilities under the Sarbanes-Oxley Act of 2002 We passed Sarbanes-Oxley in the wake of the Enron scandal to try to root out financial and accounting irregularities. How could similar irregularities occur at Lehman Brothers? History has a way of constantly repeating itself. -- Joseph Grant 2010 The high-profile corporate shenanigans by Enron and Lehman Brothers have made it clear that tough legislation was

Customer Value Countrywide: Delivering Customer
Words: 7185 Length: 22 Pages Topic: Business Paper #: 76794530

The real estate concept is very different in Great Britain. It consists of a system of bidding and auction. Still this obstacle did not stop Countrywide's management from seeing a wave of change. Many other companies had already seen Great Britain as an entry point into the rest of Europe. These success stories are Safeway, Wal-Mart and Pizza Hut to name a few. The means to acquiring a ready-made

Correlation Between Liquidity and Loan Quality and Its Impact on...
Words: 12490 Length: 40 Pages Topic: Economics Paper #: 28795626

Liquidity and Loan Quality: the Impact it is having on Bank Health Since the 1980's, there has been an emphasis on deregulation within the banking industry. Part of the reason for this, is because of shifts in the economy (thanks in part to globalization) as the markets and products have changed. This has forced many different governments around the world to reduce regulations to include: liquidity and loan quality standards.

Entry Strategy Into the German Market
Words: 7600 Length: 20 Pages Topic: Business Paper #: 90928049

Strategic Planning for Market Entry Barriers to Entry Market Challenges Trade Barriers Standards EU Regulations Conformity Assessment Product Certification Accreditation Market Entry Strategy Selection Franchising Joint Ventures/Licensing Licensing Agents, Distributors and Trading Houses Agents Distribution and Sales Channels E-Commerce Germany EU Regulations Strategic Alliances, Licensing and Franchising Joint Ventures Foreign Direct Investment Finding the Right Partner Negotiating a Partnership Agreement The Agreement Checklist Have the salient points of the agreement been agreed upon in principle? Participants and their Roles Negotiation Baselines Section 10: Managing International Business Operations Exit Strategies Conclusion Introduction In this work, the case study of Tesla Motors has

Vertical Farming-Opportunities and Challenges for Singapore There
Words: 10804 Length: 33 Pages Topic: Agriculture Paper #: 85032312

Vertical Farming-Opportunities and Challenges for Singapore There has been much talk surrounding the environmental issues of food production, with many now suggesting the city is the ideal place for growing food to cater for rapidly expanding urban populations. In Singapore, small-scale examples of this are emerging, such as Changi General Hospital and the Tanjong Pagar apartment complex. This dissertation will examine the Vertical Farming movement, and look at the opportunities and

HITECH Act Policy Communication
Words: 1897 Length: 6 Pages Topic: Sports Paper #: 96544464

Policy Communication: HITECH ACT Health policy communication: HITECH Act Policy description Part of the 2009 U.S. Recovery and Reinvestment Act (ARRA) are the provisions of HITECH (Health Information Technology for Economic and Clinical Health), a major overhaul of the 1996 Health Insurance Portability and Accountability Act (HIPAA). Under HITECH, monetary incentives are delivered to healthcare providers and schemes, for employing electronic health records (EHRs); the target is to ensure EHR implementation in every