Unfortunately, this meant that mortgage lenders no longer had to worry at all about whether or not their borrowers were good or bad risks, since their mortgage debts were sold off to other institutions. That situation triggered widespread ethical violations throughout the mortgage lending industry because lenders now profited whether or not borrowers defaulted on their loans and because property brokers began colluding with unqualified borrowers by helping them apply for mortgages they could never afford to pay off. Eventually, many of them defaulted triggering the collapse of all of the mortgage-backed securities that had been sold and invested into large pension funds and other complex securities (Phillips, 2008).
Another example of unethical conduct pertains to the continual ability of health insurance industry lobbyists to promote political opposition to necessary healthcare reform throughout the period preceding its eventual passing in 2009 (Kennedy, 2006; Reid, 2009). Specifically, large health insurance companies funded tremendous campaigns involving five or six lobbyists for every single Washington legislator for the sole purpose of derailing crucial healthcare reform in the U.S. Because so many politicians (particularly Republicans) were beholden to those interests, they engaged in outright lies and deliberate misrepresentations designed to make meaningful healthcare impossible to achieve so that health insurance companies could continue to make large profits (Kennedy, 2006; Reid, 2009). Those tactics included publicizing ridiculous lies about "death panels" and "socialist government takeover" of healthcare. In principle, this is only one example of the fundamental ethical problem...
That is the reason that societies need formal laws and legal systems to punish violators: unethical business practices usually increase profit. From the perspective of the individual, adhering to legal requirements and industry-specific ethical rules may limit the maximum possible "success" in the narrowest (and short-term) respect. Dishonest salesmen can earn more profit in the short-term, but they do so at the expense of society and also at considerable professional risk. Ultimately, adhering to ethical business practices is a much more respectable, socially productive, and safe long-term approach to any professional career.
References
Halbert, T. And Ingulli, E. (2008). Law & Ethics in the Business Environment.
Cincinnati: West Legal Studies.
Kennedy, E. (2006). America: Back on Track. Viking: New York.
Phillips, K. (2008). Bad Money: Reckless Finance, Failed Politics, and the Global Crisis
of American Capitalism. New York: Viking.
Reid, T. (2009). The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. New York: Penguin Group.
Zimbardo, P. (2007). The Lucifer Effect: Understanding How Good People Turn Evil. New York: Random House.
