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Mortgage fraud is said to occur when fabrication or omission of important facts on the part of prospective homebuyers, lenders or sellers results in the approval of mortgage loans or terms applicants would usually not be entitled to enjoy. Mortgage fraud constitutes a major transgression, potentially prosecutable and resulting in incarceration for those found guilty. According to American state and federal regulations, mortgage fraud may cause an individual to end up paying as much as a million dollars in penalty, and as many as thirty years as a federal prison inmate (Robbins, 2005).
Mortgage fraud can take place outside as well as inside financial organizations, apparently only limited by criminals’ inventiveness and cunning. Third parties like real-estate brokers, agents, settlement agents, appraisers and others involved in mortgage origination largely contribute to mortgage fraud. Further, mortgage frauds are aided by insiders seeking benefits from diverse mortgage scams. Thus, mortgage fraud may manifest in multiple forms (Reich, 2006).
Of…… [Read More]
This is one of the biggest causes that contributed to the financial crisis. Where, the lack of ethical standards within the industry, helped to cause a number of executives from: loan officers to real estate appraisers, to engage in predatory and illegal lending tactics. Where, many would falsify the income, credit histories or out right lie to borrows about the mortgages they were receiving, along with the terms. This perpetuated the crisis as millions of bad loans were given to borrowers who did not qualify or could not afford the mortgage, if there was a change in interest rates or the economic landscape. ("Financial Reform") to prevent this situation in the future, the regulation of the entire real estate industry should fall under the jurisdiction of the federal government. Where, the SEC or the Federal Reserve could oversea the proper training standards in the industry. Under this kind of system,…… [Read More]
My student loan payments of $609.07 are scheduled to begin May 1, 2009. I do not have the resources to make these payments and Chapter 7 Bankruptcy does not affect student loans.
Since I have been stretched beyond my financial capacity, I am now consistently behind in my mortgage payments and am not in a situation to rectify this problem. I am paid on the 15th and 30th of each month and because I am so overextended, I can only make my payment on the 30th of each month. Due to my now chronically late payments, I am now subject to $136.44 in late fees every month, which I can ill afford. I am facing eminent foreclosure if I am unable to change the terms of my mortgage.
I believe my circumstances make me an excellent candidate for the Hope for Homeowners Act. The Affordabilty vs. Value portion of this…… [Read More]
Fraud and the Elderly
Elderly Fraud Victimization
Prevalence and Predictors of Fraud Victimization among the Elderly
Prevalence and Predictors of Fraud Victimization among the Elderly
Applied esearch and Consulting (AC, 2013) conducted a recent national online survey for the FINA Investor Education Foundation, with the goal of quantifying the prevalence of fraud victimization among the American adult population. Any American over the age of 40 was invited to participate, but for the purposes of meeting the 2010 Census distribution for age, ethnicity, and geographic location the sample was limited to 2,364. The primary focus of the study was financial fraud, including red flag persuasion tactics, cold calls, free lunch seminars, oil and gas scams, promissory note scams, pump and dump, pre-IPO scams, multi-level marketing, digital currency, lottery scams, and affinity (relatives) fraud. On a scale of one to ten, with one representing the most risk averse, persons over the age…… [Read More]
Financial Fraud Fannie Mae
eview of Fraud Schemes within Fannie Mae 1998-2004
The agency found the fraud understatements of earnings and illegal gratuities that led to accounting violations and inability to meet Wall Street goals.
The investigation of Lee Frakas, executive of a major mortgage company which had dealings with Fannie Mae with hundreds of fake mortgages. The Securities Exchange Commission cited that Fannie Mae had to repay earnings and correct their books for the period 2001 through 2004. This major undertaking will cost the company over $11 billion by SEC estimates. In addition the Department of Justice has conducted a criminal investigation on the board members.
The top executive managing Fannie Mae were found guilty of illegally reporting accounting information that led to their receiving million dollar payments. Under Fraudulent Financial Statement Schemes this case is one of corruption and financial fraud. The specific areas include Illegal…… [Read More]
ite Aid Fraud
Over the years, there have been numerous cases of financial fraud perpetuated within the organizational mainstream of major companies. Financial fraud is often a well-coordinated sort of white-collar crime that often -- but not always - requires complicity and collusion amongst financial accountants, top management and auditors. ite Aid came to the limelight after the U.S. Securities and Exchange Commission announced that it would be filing accounting fraud charges against the company in 2002
Meanwhile, the United States Attorney for the Middle District of Pennsylvania leveled similar criminal charges accusing former CFO Frank Bergonzi, former CEO Martin Grass and former Vice Chairman Franklin Brown of perpetuating an immense accounting fraud scheme
. Compounding the crisis, according to former ite Aid COO, Timothy Noonan, were years of legal coaching amongst staff and mid-level employees. As investigations ensued, evidence of fraudulent manipulation of accounts, corporate malfeasance, and financial overstatement…… [Read More]
Evaluate the factors that add to corporate fraud
The business fraud can be credited to conditions emerging from deceptive monetary reporting and misappropriation of possessions. These conditions are 3 and all 3 features of the fraud triangle have to exist for fraud to take place. Management or staff members have to have the reward or pressure to dedicate fraud, see the opportunity emerge and have the ability to justify the occasion.
Management or perhaps others in the workforce will have benefits or conditions of pressure to carry out fraud. If the choice is made by management to publish illegal monetary statements, the most typical reason for this will be threat by financial, market or entity operating conditions to the monetary security and productivity of the business. Extreme pressure is put on management to satisfy the projection made by industry experts, internal company projections or to pay back…… [Read More]
The term "adjustable-rate mortgage" describes any mortgage with an interest rate and payments that adjust according to some formula agreed upon by the borrower and lender. ARMs have been generally available to borrowers for about three decades on prime mortgages, but variants have been common to subprime mortgages over the past 10 years. The traditional ARM linked the mortgage's interest rate to the LIOR plus several percentage points." (Utt,2008)
Alt -- a Mortgages. Sometimes referred to as a "low-doc" mortgage, an Alt -- a mortgage is structured like the other mortgages described in this section but is made available only to prime borrowers or those with FICO scores above 660. However, these prime borrowers were required to offer only limited documentation on their qualifications, so many may not have been as "prime" as they represented themselves to be, as subsequent default rates indicate." (Utt, 2008)
Extremely Low- or No-Down-Payment Mortgages.…… [Read More]
ethical and legal issues regarding sub-prime mortgage lenders. Unfortunately, the focus has been inordinately upon the poor individuals who were exploited by accepting these predatory and exploitive loans o highlight & copy (Goolsbee, 2007) . Simplistically, they have been blamed for the recent U.S. financial meltdown. The emphasis needs to be focused upon the mortgage lenders themselves. hile exploitation of such individuals is bad enough, to make matters worse, they are having the entire economic collapse based upon them. This is not only unfair, but inaccurate. The holders of subprime loans did not come up with the system of bundling whereby their loans were wrapped with other regular loans and with risky no-mortgage products. Needless to say, the regular mortgage loans camouflaged the risky assets. However, worst of all, the victims of subprime loan exploitation who lost their homes and their jobs will now have their government benefits taken away…… [Read More]
Worldcom financial disaster provided many substantial learning points while helping expose the importance of accuracy and integrity in accounting procedures and standards. Eight years ago, when the true nature of the rise and fall of this telecommunications giant became public, many in the financial sectors of the world demonstrated shock and disbelief at the remarkable scope of corruption seemingly stemming from this agency. The purpose of this essay is to highlight worthwhile lessons of the Worldcom accounting scandal occurring at the early part of this century in an attempt to gain understanding of the temptations, consequences and regulations of the ever changing world of finance and its accounting procedures.
Understanding and defining fraud is helpful in understanding the events of the Worldcom situation. My personal definition of fraud states that fraud is an intentional act to deceive another in order to gain a competitive advantage over that targeted person or…… [Read More]
hy Did Mortgage Lenders Lend to Subprime Customers?
The growth of the subprime market owes itself to an influx of international and hedge fund investors who were increasingly separated from the final mortgagees. Banks and savings and loan institutions generally knew their borrowers, because they lived and worked in the same communities. hen banks and S&L's held the mortgages, they were making a bet on the creditworthiness of people they knew well. This started to break down in the late 1980's, when the federal government stepped in to the "S&L Crisis" and created the RFC -- Reconstruction Finance Corporation -- to buy assets and close down S&L's which had made imprudent loans.
Loan securitization was thus slowed down by the S&L crisis, but was built slowly over the 1990's as money center investment banks developed ways to evaluate and package the mortgages into understandable assets which could be judged as…… [Read More]
Bailing out the American economy: Banks vs. mortgage-Holders
In 2008, the United States teetered on the brink of an economic crisis. If the United States were to suffer a financial meltdown, the global economy could spiral downward in a manner unprecedented since the Great Depression. The crisis had begun in the U.S. subprime mortgage market but had rapidly spread to other sectors of the economy. The remedy of the U.S. government was the creation of the TARP (Troubled Asset Relief Fund) ("Troubled Asset Relief," Investopedia, 2012). Almost every major banking institution, deemed in the infamous phrase 'too big to fail' was given some form of relief. However, homeowners who were behind on their mortgages were angry that they received relatively little support from the government even though they perceived themselves as far less culpable than the banks. Even the plan proposed by Jeffrey Fuhrer (Foote et al. 2009) on the…… [Read More]
Fannie Mae Scandal
Fannie Mae is the second largest government sponsored U.S. financial institution engaged in mortgage finance after Citigroup Inc. An investigation lasting for eight long months by the Office of Federal Housing Enterprise Oversight or OFHEO revealed massive manipulation of earnings that have been engineered to fulfill Wall Street expectations and smooth volatility in earnings from one quarter to next quarter. The revelations deserve quick corrective action announced by the Director of the Agency in a letter to the Board members of Fannie Mae. The Securities and Exchange Commission is also inspecting the books of accounts of Fannie Mae. However, a statement issued by Fannie Mae states that the company has modified its employment contracts with the three top ranking executives i.e. The Chairman and Chief Executive, Franklin aines, Chief Operating Officer Daniel Mudd and Chief Financial Officer, Timothy Howard to make sure that in the event their…… [Read More]
Over the last several years, the total amounts of spending for the federal government has been continually brought to the forefront. This is because of the high trade deficits and national debt is having an impact on how various services are delivered. In the case of Justice Department, they have been facing drastic cuts. The reason why is from officials using the funds they are receiving to provide generous benefits for employees. ("Budget Cuts Should Start with DOJ," 2011)
A good example of this can be seen by looking no further than a DOJ Inspector General's report. They found that there is rampant waste inside the agency (with them spending $16 per muffin for a breakfast gathering and $600 thousand for event planning services). ("Budget Cuts Should Start with DOJ," 2011) These elements are illustrating how these kinds of reports are leading to a reduction in spending and…… [Read More]
Throughout most of the 20th Century, organized crime accounted for a tremendous economic costs passed along to consumers, particularly (but hardly exclusively) in large cities like New York, and Chicago, among many others. Originally formed in this country during the Prohibition years in the 1920s, the criminal enterprises that exploited the black market for illegal liquor subsequently branched out to infiltrate other large industries, such as construction, food and liquor distribution, interstate trucking, waste disposal, and the garment industry.
Primarily by penetrating into the leadership organization of unionized industries, organized crime managed to siphon off public funds, "skim" illegal profits from large corporations, and control entire otherwise legitimate industries through intimidation, including labor strikes initiated via its control of labor unions. The result increased the cost of almost everything sold to consumers in the form of goods and services throughout much of the country. In recent years, increased federal law…… [Read More]
Clearly the Secret Service is expanding it's investigative arm; in 2010 the Service established it's second overseas Electronic Crimes Task Force (ECTF), this one in London (in 2009 the Service established an ECTF in Rome, Italy). The point of the ECTF is to provide an avenue through which European and American law enforcement agencies -- along with private sector and academia -- can work together to investigate, suppress and prevent computer-related criminal activity (USSS).
Again and again in the 72-page Fiscal Year 2010 Report readers are reminded of one of the main missions of the Secret Service -- to hunt down and arrest counterfeiters. In 2010 the Secret Service -- along with local authorities -- arrested four Colombian counterfeiters (in Bogota Colombia) that had been printing U.S. currency and distributing it in the United States. Columbia is one of the most prolific producers of counterfeit American money, the report explains,…… [Read More]
Marketing Plan for a KW Service Designed to Generate New Clients
The product idea for this marketing plan is a service that Keller Williams could provide to potential home buyers/investors that no other competitor is currently offering: that is, free educational classes for the public about the process of buying, investing, owning, keeping up or rehabbing houses. The purpose of this service would be that it draws potential clients into the office and generates leads for agents working within the office.
Keller Williams is a national real estate brokerage with offices in districts around the U.S. The office branch of Keller Williams for this marketing plan is located in Houston, Texas, which is the "home" of Keller Williams -- the place where the brokerage began.
The problem that this service would target is the problem that a lot of new home buyers often experience, which is that they…… [Read More]
There is little information with respect to the fees that the buyer might face.
The Fannie Mae site also offers very little advice with respect to when to buy a home. From this, one can interpret that Fannie Mae's constituents do not view home ownership as an investment. The financial ramifications of home ownership, therefore, are less a concern since the home will be owned long-term. The underlying assumption appears to be that everybody should own a home, since no effort is taken to discuss the issue of when to buy.
The Freddie Mac site, in contrast, provides good advice to the house hunter. It begins with the assumption that you have spoken to a banker and know how much you can spend. Freddie Mac advises caution at that point. While the temptation is to go out and spend the money right away, this is not the right move. Instead,…… [Read More]
I would like to work for Keller Williams ealty Services. Keller Williams has the best training program in the world and is the number one realty services provider in North America in terms of agents attached to the franchise (Larcker, Tayan, 2015). The business model of Keller Williams is based on the motto "God, Family, Business" in that order and the entire organization is run like a big family, with individual agents teaching the Ignite class (designed to "ignite" one's business right out of the gate) and always helping any facet of the business that one might be struggling with. The organizational culture of Keller Williams is one that focuses on the agent rather than the broker and supports the idea that every agent is CEO of his own company. To that end, Keller Williams also has a profit sharing system in place in which profits from transactions…… [Read More]
Enron could engage in their derivative trading strategy with no fear of government intervention because derivative trading was specifically exempted from government regulation. Due in part to a ruling by the Commodity Futures Trading Commission's (CFTC) chairwoman, Wendy Graham, derivatives remained free of regulatory oversight. Ms. Graham, wife of Texas senator Phil Graham, made this ruling 5 weeks before resigning as chairwoman of the CFTC and joining the Enron oard of Directors in 1993.
Derivative accounting is further complicated because there is no consistent way to fairly report their value and risk in a company's financial report. In 1998 Rule No. 133, "Accounting for Derivative Instruments and Hedging Activities" was developed by the Financial Accounting Standards oard (FAS), an independent agency that sets guidelines for corporate auditors. Rule 133 contains more than 800 pages, which further complicates its adoption and consistent interpretation by various companies. SFAS No. 133 was subsequently…… [Read More]
4. I did not obtain my current mortgage under any materially false pretenses.
As part of the Hope for Homeowners program, I would be able to attain a new affordable mortgage based on a current appraisal value. I would retain 10% equity in the property, and would be sharing the equity and future appreciation with the Federal government, which would prohibit me from taking out any additional loans against the property except for direct repairs and/or maintenance. There are also up front insurance premiums for this type of loan, which I am aware of.
If you would please consider one of these two options, I believe we can come up with a mutually satisfying solution to help avoid foreclosure on my home. I am writing this hardship letter to plead with your company to review my loan information, take into account my current financial situation, my excellent payment history prior…… [Read More]
The Bank CEO's ole in Defining Ethical Integrity
Based on a thorough review of existing literature of the role of ethics in the banking industry, the role of the CEO as the ethical leader of their organization is next discussion. Based on the concepts presented in the paper to this point as the foundation, these key points provide insights into how CEOs and senior management actively shape the ethical standards of the organizations they manage on behalf of shareholders.
isk Management Is a CEOs' Ethical esponsibility combination of forces -- changing regulatory expectations that open companies up to intense levels of examination, heightened stakeholder sensitivity to and scrutiny of corporate behavior, and the severity of punishment by financial markets for corporate missteps -- push reputation and ethics management onto the CEOs' and senior managements' agenda. The paradox CEOs face is when to risk the reputation and brand of the company…… [Read More]
Many subprime mortgages were made with little documentation of income or ability to repay, or other elements that typically safeguard loans of all types and mortgages especially. There have even been cases of widespread fraud, where documents were falsified in order to approve loans. The reason many lenders were so eager to make these bad loans is that they weren't ultimately going to be responsible for them -- the loans were bundled into groups and sold as "mortgage backed securities," so instead of dealing with many individual loans worth an average of a few hundred thousand dollars, banks and other institutions were dealing with bundled groups of these bad loans worth millions of dollars apiece. Companies like AIG made money in the short-term by providing insurance policies for these mortgage backed securities, as well. Eventually, however, people with loans they couldn't really afford began to default, either because they simply…… [Read More]
The market size for AAA Software based on PC usage can be estimated by the total number of new PC sales and the level of antivirus usage on them. The total PC usage during the corresponding year is shown in the figure.
C3: Competitive Analysis- Describe your company's current competition.
Number of Users
More than 150mn users
Home Users - Antivirus (Free, Pro and Internet Security), Products available for Mobile and Mac, Business Users -- Small or Home Office, Enterprise and Server needs
Home Users - AVG Antivirus Free, Antivirus, Internet Security, PC Tuneup, Secure Search, Business Users -- Antivirus, Internet Security, Email Server, File Server, Linux Server, escue CD, emote Administration, Mobile Users -- Antivirus Free/Pro
Home Users, Business Users -- Microsoft System Center Endpoint Protection (only…… [Read More]
Subprime loans are said to be among the biggest reasons for the most recent financial crisis which hit the world economy at the end of year 2008. Had the lenders considered the level of income and repaying abilities of the borrowers before lending them money, the World's financial sector would not have seen such critical circumstances. The consequences of subprime loans have not ended yet; economists and researchers in the field of International Finance are of the view that they may further get worsen in the coming five to ten years period. Beside the criticism regarding the approval of subprime loans to low income borrowers, the lenders have also been strongly criticized for using unethical business practices in their customer dealings and transactions (Mandal, 2010).
This paper investigates the consequences and risks that were caused by subprime loans in the World's financial sector and their impact on the lenders, borrowers,…… [Read More]
blow the whistle" on what you heard in the garden? If so, how will you blow the whistle? If you decide to blow the whistle, what are your reasons for doing so? Your discussion should reflect knowledge of what Boatright says about issues, problems and justifications for whistle-blowing. Also, in discussing the answers to these questions you should include the following: 1) you should evaluate real and potential conflicts of interests that confront you in your decision 2) you should explain how your reasoning is consistent or inconsistent with the three following moral theories: Kantian moral theory, utilitarian moral theory and virtue theory.
Our MBA is not really aware of what is going on; all he has is assumptions, guesses. He has no actual proof. In the first case, he has had suspicions of several transactions -- their accounting practices seem suspect - and he has pointed out…… [Read More]
Though the director claimed to have no knowledge of the accounting fraud, analysts wonder what other than his silence could possibly warrant such a high compensation package (English 2002). This is yet another company where slews of jobs were lost, pensions and benefits disappeared, and yet many top executives received lucrative compensation and severance packages, five years before any TAP funds were available to provide them.
There is some hope that the situation might change, however. In the wake of the financial scandal, and even in the years leading up to it, many CEOs signed deals agreeing to limit their own pay should their companies hit troubled waters (Penttila 2009). Congress has also been considering legislation that would either directly limit executive compensation in public companies, or allow for direct shareholder say in the compensation of company officers, but often this type of "consideration" is really political double-speak for seeming…… [Read More]
Judgment in Managerial Decision Making: The Ponzi Scheme
Everyone makes decisions, both good and bad, throughout their lives. ecently, there has been quite a bit of talk about the bad decisions that businesses and their executives have made. Issues like the stock market and sub-prime mortgage issues have financially devastated some people, as have Ponzi schemes. These types of schemes create fraudulent investments that seen to offer great rates of return (Dunn, 2004). Instead of investing, though, the person running the scheme is using the investment money from new investors to pay the "dividends" of previous investors. More and more money is needed to sustain the scheme, but by the time everything collapses the original person running the scheme has pocketed and/or spent a huge amount of money (Dunn, 2004). Many people have been jailed for Ponzi schemes, as most people do not get away with them for very long…… [Read More]
Ethics in Marketing
Ethics of Marketing
Ethics in Marketing
In order to realize themselves as socially responsible corporate entities, business organizations have to maintain a sound ethical track record in every aspect of their business (Arnold 2009). They have to formulate their business policies and strategies in such a fashion that no societal values are exploited and no human being is harmed in any way (Crane & Matten 2007). It is essential for organizations to keep themselves on the safest ethical path in their marketing, promotional, and general operational activities (Lamb, Hair, & McDaniel 2012). It cannot only save them from severe criticism by their stakeholders, but also contribute towards a sustainable future in their industry. especting the ethical values and social norms of a society helps an organization in standing on competitive grounds among its competitors and strengthening its public image (Abela & Murphy 2008).
This paper…… [Read More]
ecent Developments in the Barry Minnow Case: Ongoing Implications and Lessons of the ZZZ Best Company
This article outlines three different past cases of significant accounting issues that led to collapses of various levels, from single companies (and some of their investors) to (potentially, at least in part) the entire global economy. The first of these cases is that of Barry Minkow, beginning with his ZZZZ Best carpet cleaning company, which Minkow founded when he was only 16 years old and quickly took public at a valuation of over $200 million. As time wore on, however, it quickly became clear that the business was largely a fraud, an in fact Minkow had been running a Ponzi scheme for quite some time with the business largely a shell (though it did actually make some profit from cleaning carpets, as well).
Eventually arrested and sentenced to twenty-five years in prison…… [Read More]
Today, even the local gas station and supermarket use computer technology and applications that are much more advanced in their capability than the computer systems used to launch and recover the first generation of spacecraft (Evans, 2004; Kaku, 1997).
Modern computer applications perform calculations and allow analyses of very high volumes of information that far exceed the capacity of direct monitoring by human operators (Larsen, 2007; Nocera, 2009). That is not necessarily inherently problematic; in fact, it is incredibly beneficial in too many ways to count. Today, international manufacturers and shippers can pinpoint the location of goods thousands of miles away in real time; supply chain managers in one office can monitor stock throughout hundreds of retail and wholesale outlets electronically and automatically adjust output and shipping schedules to match their rates of sale at the local level (Evans, 2004; Larsen, 2007). However, the interdependence of modern life in general…… [Read More]
Third is a series of passwords and personal information chosen by the customer. On top of this they guarantee customers that if they are victims of fraudulent activity on their Egg accounts, any losses are covered in full. "This has never happened," says Andrew. "There has never been any breach of internet security." ("- -- : Safety Net for" 2001:44)
Again internet and bank security are largely overexagertated yet they are occurring more frequently all banks and many other institutions are taking daily active precautions to reduce risk to customers and they are largely successful in doing so Electronic banking can take many forms. A recent trend that is a direct threat to banks is the development of e-money which takes the jurisdiction of stored financial value away from banks. The trend is growing as an alternative way in which to do online commerce transactions without utilizing bank systems including…… [Read More]
Real Estate Ethics and Fraud
Good ethics is a key necessity in any given profession. Ethics takes into account a system of moral guidelines governing the suitable conduct and actions of an individual or a group. Notably, ethical standards are centered on an individual’s belief of what is right and what is wrong versus the legal benchmark, which is basically, what is written down in law. In essence, ethics can be explained as the moral principles and criteria that steer individuals on what they ought to do and ought not to do. Chiefly, the law orders what persons is and is not permitted to do. Sustaining good ethics is being in line with the principles of correct moral conduct in an incessant manner (Walker and Ivanhoe, 2007).
In spite of the requirement for all real estate professionals to be ethical, real estate fraud is a reality. Real estate fraud…… [Read More]
Edgar Hoover, makes public its continuing investigation into the activities of black nationalist organizations, singling out the Black Panther Party in particular, Hoover viewing the group as a national security threat.
January 05, 1970
Blacks Move Out of Inner Cities: The Bureau of Census statistics show as the quality of life in poverty-stricken urban communities worsens, a continuous stream of middle-class blacks escape to higher-income neighborhoods and suburbs.
February 13, 1970
First Black Member of the New York Stock Exchange: Joseph L. Searles III becomes the first African-American to become a member of the New York Stock Exchange, starting his training as a floor partner with the firm of Newberger, Leob & Company.
June 16, 1970
Gibson Elected Mayor of Newark, New Jersey: Kenneth A. Gibson was elected mayor of Newark, New Jersey on this date. He also became the first Black president of the Conference of U.S. Mayors during…… [Read More]
Toward the end of the decade, Wall Street investment firms began hiring PhDs in mathematics and physics to create incredibly complex algorithms capable of modeling elements of the stock and futures markets. In most cases, the creators of these algorithms knew next to nothing about the financial industry, and the executives who employed them knew (literally) nothing about the mechanisms their firms had begun to rely on for their trading strategy. Destabilization of the Home Mortgage Industry:
In the early 1970s, stock analysts at Salomon Brothers, another Wall Street investment firm, developed a new kind of security based on home mortgages, called mortgage-backed securities. In principle, this allowed the conversion of illiquid (i.e. non- tradable) assets like the debt represented by home mortgages to be converted into a tradable commodity for profit. This new form of commercial transaction evolved into incredible levels of complexity after the widespread incorporation of mathematical…… [Read More]
ethical issues have been increasingly brought to the forefront. This is because a variety of challenges are impacting the way executives and employees are behaving inside the workplace. A good example of this can be seen by looking no further than Tyco. What happened is Dennis Kozlowski was the CEO of the company from the early 1990s until 2002. This is when a wide scale fraud was reported, as he used the company's funds to live a lavish lifestyle. (Hitt, 2009)
To help support the fraud he encouraged some of his closet executives to participate in covering up these issues. At the same time, he had a seat on the board of directors and was effective at preventing them from independently investigating these events. This helped him to live a celebrity lifestyle by showing to the world how he was new generation of CEOs. They were focused on creating large…… [Read More]
Ethics, Values, Social esponsibility
Bailout of Banking Industry in United States
Ethical Compliance by Banking Industry
It is quite common in American history that government comes for the rescue of companies and organization in the time of financial crisis. General motors' acquisition was one such example where saving GM meant saving the nation. When Government takes measure for the welfare of any segment of the economy, it then becomes responsibility of the organizations that they comply with social responsibility and ethical standards so that it should respond to its social character and use the benefits provided by the government in the honest fashion. The recent bailout of banking sector by U.S. government, and the misappropriation and misuse of these funds, have raised a big question mark on the compliance to ethical standards by the bank.
United States government has a long history of bailing out its financial institutions. Some of…… [Read More]
The proliferation of the internet has threatened to undermine the capacity of real estate agents and brokers to control the dissemination of information in the real estate market. Prior to the inception of the internet and the adoption of its use by the real estate industry, details relative to real property was largely within the exclusive province of the agents and brokers. Multiple listing services, property transfer information, existing liens and mortgages, etc. were, until the proliferation of the internet difficult, if not impossible, for potential buyers to obtain. The internet changed all that but many real estate professionals have attempted to hold on to their control of such information which has precipitated considerable litigation (Darlin). The battle that is raging is between a real estate industry attempting to remain competitive in the market place and consumers demanding more autonomy and more information.
B. Marketing and Customer Demand
There is…… [Read More]
Resurrection of the American Dream
The American Dream is a concept that has been a part of American culture for many decades. The American Dream is a deeply held conviction that an individual can reach his or her fullest potential if they apply themselves appropriately. This concept is built on the idea that there are no limiting conditions that can keep someone from fulfilling their potential such as age, race, sex, disabilities, or other factors that are beyond an individual's control. The idea is centered on the concept that there exists the opportunity for social mobility that can be achieved through the application of one's efforts.
Through hard work and determination an American has the potential to improve their circumstances at all times. However, the vitality of the American Dream has been compromised in recent decades with many macroeconomic developments that have negatively impacted the economic opportunities for Americans. Furthermore,…… [Read More]
The second purpose of the $700 purchase of troubled assets is to create a market for the securitized versions of these assets. As a result of the crisis, the market for these assets became illiquid. The value of securitized debt obligations became near zero, which severely impacted the balance sheet of all banks that held these assets. By creating a secondary market for these products, the government hopes to increase their value. This will improve the balance sheets of the banks.
The second key clause in TARP is that banks selling troubled assets to the government are required to give the government warrants. This, in theory, protects the government from losses. The theory is that the banks will see an increase in value as a result of the government's efforts, allowing the government to profit from the warrants.
Ancillary to TARP was the FDIC's excusing of troubled assets in its…… [Read More]
Small usiness' Need for a CPA
One of the critical investments a small business can make to mitigate loss and risk is hiring a CPA and putting that CPA on the 'management team.' As Wells notes in his groundbreaking research, "Denise, a bookkeeper for a small trucking firm in irmingham, Alabama, wishes she had never heard of Ralph Summerford, CPA. ecause of his thoroughness, Denise is facing several years in prison for embezzling $550,000 from her employer. At least she will look good standing before the sentencing judge: Denise spent a great deal of her illegal loot on head-to-toe cosmetic surgery. She blew the rest on a shiny new Lexus, luxury vacations, clothing and jewelry. And, of course, Denise had to have a big house to store all of her finery." (Wells, 2003)
Surprisingly, it was not at all the fancy standard of living that made her employer suspicious. "The…… [Read More]
finance and financial entrepreneurship. The basis of the article is on a discussion that was held on this subject among four leading lights of financial entrepreneurship in the United States - Michael Milken, Lewis Ranieri, Richard Sandor and Myron Scholes. These people are famous in their own right and have had a sizeable role in financial entrepreneurship in the U.S. over the last 20 years. We have first discussed their achievements to get a clear idea about their personal achievements. This would certainly give a clear idea of what is possible in the U.S. today. They are of course interesting characters and one has to remember that the ideal entrepreneur of the 21st century cannot be thought of as an updated version of Henry Ford. After the discussion of the people, the meeting and the discussions held there are summarized. ased on the total information collected, we have come to…… [Read More]
Estimation Techniques of Financial Crisis
The unquestionable ethical conducts within the corporate circle had been the major factor that led to 2008/2009 financial crisis. By studying the root causes of the crisis, it has been revealed that bad conducts among the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial have been the primary factors leading to 2008/2009 financial crisis.
Objective of this paper is to argue that the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial did not take the interest of the companies into a consideration leading to frictions between the CEO and the shareholders
In 2007, the financial markets were shaken by a serious financial crisis because of a dryness in liquidity associated with a subprime mortgage business where people with doubtful credit reports were offered mortgage loans leading to a rise of loan default. Moreover, lack of transparency, greediness and excessive desire for…… [Read More]
They also helped wealthier buyers qualify for larger loans than they could really have qualified for, to purchase larger homes or to take equity out of the property in a booming housing market. When many of the unqualified and under-qualified borrowers began defaulting, the entire industry collapsed. The situation threatened the entire national economy because the wealth of some of the nation's largest banks and investment firms depended on the quality of those mortgage loans. Billions of dollars in stock value were based on complex mortgage-backed securities based on those bad mortgages sold by Countrywide and others.
3. What are the ethical issues that need to be addressed (be specific; cite examples)?
Countrywide violated ethical rules and the law almost every time they sold a mortgage in the years leading up to the housing market collapse. They knew that many of the buyers would probably end up defaulting and they…… [Read More]
The history of business and government excesses and the subsequent public, legal and political reaction is quite a long one and the response to criminal misconduct has led to governance practices, legal sanctions, compliance standards and different cultural transformations. Over the last forty years there have been major events within the American Business society leading to subsequent legislations and regulations that have shaped up how organizations carry out their business operations. These legislations that came about are such as the Federal Sentencing Guidelines for Organizations (FSGO), Sarbanes-Oxley Act (SOX), and the Consumer Financial Protection Bureau (CFPB). There are various events that paved way for the creation of each of these regulatory measures.
In 1984, the sentencing eform Act was enacted and it contained a set of mandatory federal sentencing guidelines. The United States sentencing commission was formed as part of the act and it was charged with the…… [Read More]
This researcher rejects the existence of online communities because computer mediated group discussions cannot possibly meet this definition. Weinreich's view is that anyone with even a basic knowledge of sociology understands that information exchange in no way constitutes a community.
For a cyber-place with an associated computer mediated group to be labeled as a virtual settlement it is necessary for it to meet a minimum set of conditions. These are: (1) a minimum level of interactivity; (2) a variety of communicators; (3) a minimum level of sustained membership; and (4) a virtual common-public-space where a significant portion of interactive computer mediated groups occur (Weinreich, 1997). The notion of interactivity will be shown to be central to virtual settlements. Further, it will be shown that virtual settlements can be defined as a cyber-place that is symbolically delineated by topic of interest and within which a significant proportion of interrelated interactive computer…… [Read More]
Because lending institutions stood to lose anytime borrowers defaulted on a loan, lenders always engaged in a very careful process of ensuring that loan applicants were capable of repaying any debts they sought to take on (Phillips, 2008).
Deregulation shortly before the turn of the century eliminated the self-interest basis of rejecting risky debtors, leaving only legal and ethical obligations to exercise due diligence in good faith (Phillips, 2008). Unfortunately, mortgage lenders throughout the nation began issuing loans irresponsibly and often without any collateral or interest due on the loan. Since they intended to sell off the obligation anyway, they had little concern for what might happen subsequently. Likewise, home realtors and mortgage brokers began aggressively soliciting business from customers unethically, often by exploiting their ignorance about variable-rate mortgage loans. Unfortunately, this process also triggered an artificial housing bubble based largely on inflated property value statements and those overvalued but…… [Read More]
Duty and public notice in the UK, PLC
The audited financial statement prepared by Bumble & Co, on behalf of Horizon PLC 'made public' the performance of the corporation: reporting earnings of £10 million. Where published, shareholders and other stakeholders may 'assume' official and final writing according to the Statute of Frauds, which stipulates that public notice of the company's profit and loss constitutes reliability to the shareholders and other stakeholders, and assumes that those parties are in agreement to those activities. Analysis of Horizon, Plc v. Bumble & Co. will be subject to decision based on UK laws on Misrepresentation and unfair commercial practices under the Unfair Commercial Practices Directive 2005/29/EC ("UCPD") which came into force 26 May 2008. The 2008 law on misrepresentation is preceded by the UK Misrepresentation Act of 1967 (OPSI, 1991).
Preface to the discussion is what rule elements are not at play…… [Read More]
real or hypothetical situation?
The context of the report is based on the real world implications of the financial crisis on the banking industry and society as a whole. The report details the need for reform within the sector overall. Particular emphasis is placed on Bank of America, as it was a large component of the subprime-lending crisis.
Why did you choose this topic, and does it relate to you in any way?
I chose this topic because it has impacted both society and the world at large. Nearly $1 trillion in asset values were erased in 1 year due to the financial crisis. People were foreclosed on and subsequently lost their homes. Taxpayers were forced to pay large sums of money to bailout a corrupt and greedy system. This topic not only resonates with me personally, but with the entire developed world. We nearly were on the brink of…… [Read More]
In definition, a whistleblower can be an employee or a former employee of a corporation who provides proof and evidence that substantiates the fraudulence and ethical behavior within the entity or activities that are not in the best interests of the general public or stakeholders. Customarily, whistleblowers reveal classified data and information concerning their workplace, which is in violation of the laws and regulations in place, and also that can be disparaging to the well-being of the employees. Whistleblowers have various characteristics. One of the key individualities of whistleblowers is credibility. A whistleblower has to have the character of being trusted, depended upon and have integrity. This is because the information provided by the whistleblower has to be truthful and reliable. Another characteristic of a whistleblower is believing in their behavior and being in changing their beliefs. A whistleblower should maintain their stance in being honest about the fraudulent…… [Read More]
The stock was trading on pink sheets at $0.165 per share at the end of April 2003" (8).
As noted above, one of the key factors involved in what happened at HealthSouth was the enormous pressure to perform in the increasingly competitive for-profit healthcare industry, pressure that directly affected the decisions that were made concerning the types of accounting practices that were needed to "deliver the goods," at least on paper. Although absent from the foregoing list, Scrushy's name appears time and again in the investigation that followed. According to Jennings, "Like Enron, orldCom, and Tyco, HealthSouth placed tremendous pressure on employees to 'meet the numbers.' In April 1998, CEO Richard Scrushy told analysts that HealthSouth had matched or beat earnings estimates for 47 quarters in a row" (8). The role played by Scrushy in engineering the corporate culture that would allow these estimates to be reported with a straight…… [Read More]
Dropping the interest rates and doing other things to make consumers breathe a little easier when they make a purchase shows that the country is pulling together, which is something that the recession is teaching almost everyone in America - that people are all alike in many ways, and they need to help each other out as much as possible.
Is the fiscal policy maneuvering a good idea? Many people think that using fiscal policy is not a good idea to try to stimulate the economy. The reason for this is that fiscal policy has a built-in system of checks and balances. For example, when the unemployment rate rises, the amount paid out in unemployment benefits also rises. It is just the way the system works. Many think that people mess with that system at their own peril. The concern is that the whole thing will get out of balance…… [Read More]
function of any responsible business is to take risks. Risks lead to profits and ensure that the company continues growing. In order to properly mitigate risks, business owners enter into contracts. Contracts are enforceable agreements between parties that specify to the best of each party's ability the expectations and requirements that each party must fulfill.
Not everything is a contract and not all contracts are valid. The basic definition of a contract is an agreement between two parties wherein there contains instructions for an exchange of goods or services for compensation. In other words, contracts must always be payment based. If only one party is acting and no one is paying, then there is not a vaild contract.
In order to protect those entering into contracts, current law requires that certain contracts are always placed into writing. This document is called the Statute of Frauds. As stated in the Restatement…… [Read More]
As Taibbi shows, it is not easy: "I'm going to say something radical about the Tea Partiers. They're not all crazy. They're not even always wrong. hat they are, and they don't realize it, is an anachronism. They're fighting a 1960s battle in a world run by twenty-first-century crooks" (Griftopia 16-17). Taibbi makes clear that the Tea Party is not even homogenous: it is made up of a broad spectrum of individuals (some of whom do not even want to be called Tea Partiers) who are angry and looking for someway to focus their anger.
In conclusion, recouping the losses is not an easy thing to do. hen a company like Lehman Brothers can be allowed to collapse while their competition (Goldman Sachs) can be bailed out by tax payer dollars, citizens are going to start wondering how their country got to such a point in the first place. Taibbi…… [Read More]
From a project management standpoint, delegating these funds is a
significant concern. The recent history of government financial
mismanagement, has caused the public some rightful wariness as these
massive bailout plans come to fruition. The Obama Administration must
devise a strategy which ensures that these bailout funds are designed to
protect American homes, stimulate job creation and help to improve the
infrastructural stability of the nation. The administration has the
unenviable task of prioritizing the countless areas of civil life in which
the U.S. is currently struggling with debt and the erosion of resource.
This requires a management approach that is informed by crisis planning and
Another way to successfully plan the delegation of funds and resources
as yielded by the bailout is through information systems management.
Modern IT Systems such as the Enterprise Resource Planning (ERP) system
allow users to enter in a complex…… [Read More]
Economic crash can be viewed from a number of perspectives ranging from causes and effects to the 2008 Crash's resemblance to the Crash of 1929, which began the Great Depression. This paper will consider the 2008 recession from the standpoint of the financial banking industry, which, according to economic journalists like Matt Taibbi (2010), played a major and significant role in the crumbling of the nation's economy -- just like it did in the Lawless Decade also known as the oaring Twenties.
Big Banking Meets Big Government
What has now become known as the Era of De-egulation actually had its beginnings in the 80s decade known just as much for its rampant excess as the early 20s were known for their unbridled lawlessness. Yet, while the latter enjoyed the snubs-to-the-law bootlegging speakeasies, the former enjoyed the merging of the financial sector with the political -- which began during eagan's tenure…… [Read More]
" The code also states when communicating investment information care must be taken to ensure that it is fair, accurate and complete as well as make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer.
Evidence indicates Lehman's senior financial executives knew of the Repo 105 transactions and certified the accuracy of Lehman's financial statements and disclosures despite having full knowledge that the company had engaged in the use of these transactions to hide their toxic assets and make their financial statements appear to be in good health when, in reality, they were not. These executives were fully aware that the financial statements were misleading and did not fairly present the true position of the company.
Hiding toxic assets and releasing favorable financial statements to investors each quarter clearly…… [Read More]
"hy do you think they are called for-profit colleges:"
The big business of (not) educating students 'You need a college degree.' This is the conventional wisdom articulated in today's society, where job prospects remain scarce, despite the softening economy. On average, "unemployment is still far lower for the college-educated than for high school graduates (10%) and those without high school diplomas (15.7%)," and the most severe effects of the recession were felt in the manufacturing and construction sectors, typically the areas of the economy which offer the brightest prospects to non-college degree holders (Davidson 2010). orries about one's viability in the job market have driven many workers to seek out higher education in nontraditional formats. Few adults have the ability to afford a traditional four-year school and balance the needs of home and work. Online, for-profit colleges or nighttime schools may seem the ideal solution. On the surface,…… [Read More]
Corporate Social Responsibility (CSR) in this article discusses the fact that corporate responsibility is fledgling in protecting employees at Ealing Hospital. The case discusses instances when professionals lost their jobs when stepping forward to report others fur unethical conduct. There is evidence that the hospital has covered up several instances of fraud and attempted to remove those that reported wrongdoing. The Health Secretary, Stephen Dorrell has reported that an investigation will be conducted to review the actions against whistleblowers (Lakhani, 2011).
There are many health colleagues who have come to the aid of those facing unemployment and blacklisting as a result of stepping up. These health professionals are adamant in getting compensation and protection through NHS or the Strategic Health Alliance for histleblowers. That is health professionals willing to put themselves on the line to protect patients and expose gross neglect and waste of taxpayers money (Lakhani, 2011). One…… [Read More]
With software and technological oversight, many of the errors experienced by Insight Enterprises could have been avoided. Furthermore, the duration that these errors occurred suggests that proper oversight of accounting was not in the company. With technology, proper oversight can help reduce the duration, and the subsequent damage of accounting errors (Elliot, 2004).
Technology also allows accountants be more efficient in regard to their labor. Technology helps to reduce much or the redundant and routine tasks associated with accounting. Accountants no longer need to count specific line items or add all the ledgers together by hand. They simply input the required numbers into the system, which will do the computations itself, free from human error. The oversight system within technology can also help diminish the intentional errors of unethical accountants attempting to steal or input incorrect data into the system. As such, technology helps abate the influence of fraud within…… [Read More]