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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]
Subprime Mortgage Crisis -- 4 Questions
hat is "leverage"? How does leverage magnify a bank's profit and losses?
The term leverage refers to the use of someone else's money to create financial gain. In the mortgage industry, homeowners typically put down a small amount of money on a home, and borrow the rest in the form of a mortgage. This use of borrowed money for a large purchase is referred to as leverage. hile the homeowner has only put down a small amount of money and has borrowed a fixed amount from a bank, he may gain money in the form of home equity as a result of having used leverage to buy his home, because in the meantime, his home has gone up in value. hen a bank uses leverage, it can either gain money as its leveraged assets go up in value, or lose money as they go…… [Read More]
Subprime Mortgage Crisis
A major issue for today's economy in the U.S. is the subprime mortgage crisis. The mortgage crisis has sent the U.S. economy into a recession with greater impact than the Great Depression of the 1920s. One will discover some important terms that will allow the reader to better understand this topic. Additionally, this paper will examine some background information and events that led to the housing market crash and examine the causes and impact on the U.S. economy and current housing market. Also reviewed will be the role of Fanny May and Freddie Mack. This work will additionally make recommendations of what it is that might possibly be done that would serve to improve the current situation.
Sub-Prime Mortgage and Housing Market Crisis
Many factors contributed to the subprime mortgage crisis, which began approximately ten years ago when the expansion of the housing market was increased…… [Read More]
What caused the subprime mortgage crisis and what was the result of the Treasury's and Federal Reserve's response to that crisis? Most people are familiar with the overall story of events leading up to 2008. They may have seen the film The Big Short, which helped the public to learn about collateralized debt obligations (CDOs) and credit default swaps (CDSs). However, there is a lot more to the story than that one movie could tell. This paper will explain. The reality is that the subprime mortgage crisis was caused by a complex variety of systemic factors, and the response—rather than address the systemic issues—ensured that a similar crisis would occur again down the road; and that crisis has been seen in 2020.
Overview of Causes
The Financial Accounting Standards Board (FASB) was a big reason the crisis occurred in the first place. What did the FASB do? It had the…… [Read More]
Enter the Fed, Yet Again
Unable to understand that rapid interest rate moves create shocks to the market, resulting in distortions in supply and demand, the Fed dealt with the bursting of the housing bubble by lowering interest rates rapidly, this time to next to nothing. This response was intended to stimulate the economy. In 2001, the rate decreases were also intended to stimulate the economy, but they mainly stimulated one sector. The Fed's goal with the most recent round of drastic rate cuts is to stimulate lending. The rate cuts came when the scope of the crisis was just becoming apparent. The rapid reaction this time was met with skepticism from markets. here before there was at least one strong sector in which to invest excess capital, this time there were none. orse, the mistakes of the past few years had put banks in a position where they could…… [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]
Another significant factor that affected the financial crisis of 2008 was role that Wall Street played in worsening the impact of the financial disaster that was to come. Specifically, a number of prominent Wall Street companies effectively "bought in" to the housing shortage by investing in securities that are financially supported by loans of a dubious nature. A recent report compiled by the Financial Crisis Inquiry Commission alludes to the fact that such investors were well aware of the substantial risk that these investments represented, yet pursued them anyway due to avaricious tendencies (Chan, 2011).
The involvement of banks in the financial crisis goes well beyond issuing loans that were of a suspect nature to people who required subprime loans. To that extent, this degree of culpability on the part of banks can actually be traced to the Securities and Exchange Commission, another federal government entity, that was decidedly lax…… [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]
nd we must take into consideration what would happen if, somewhere down the line, we encountered the very real possibility of changed financial circumstances.
The financial knots we're tying ourselves into now, as we scramble to purchase homes and wind up owning less of them, can have serious long-term ramifications. Because today's overall tighter finances often necessitate putting off major purchases, many adults don't buy their first home until they're well into their thirties or even forties.
s a result, those thirty-year mortgage payments follow us right into retirement, hanging around even as rising health care and tuition expenses for college-aged children begin to spike. s a result, we discover too late that the asset we gambled everything to acquire because it was going to see us through retirement is instead pushing that retirement further and further away. lready, an increasing number of seniors are borrowing against their homes, accumulating…… [Read More]
shadow banking system, its role in the subprime mortgage crisis, and failures of regulation within the shadow banking system. The term "shadow banking system" was coined by PIMCO's Paul McCulley in 2007 (Spanos, 2012) and refers to a banking system that includes financial intermediaries that are involved in creating credit across the global financial system, whose functions are not subject to regulatory oversight (Investopedia, 2012). The question has been debated as to whether shadow banking meets the definition of true banking. Given that the two systems perform similar functions, including credit intermediation and maturity transformation, the two should be considered parallel systems (Noeth and Sengupta, 2011).
The term shadow banking is used to describe any provision of credit taking place outside of the traditional deposit-funded lending system. This definition includes institutions that range from pawnbrokers and consumer finance companies to securities dealers as well as firms that issue corporate bonds.…… [Read More]
Improper Foreclosure and Mortgage Practices in the Banking Industry
Efficient Market Hypothesis
Real Estate Bubble
Overview on the Value of Banks
Arguments against Financial Intermediaries
This research paper aims to shed light into what led to the global financial collapse that, for the most part, began in the U.S. housing market and the ethical implications that followed. Many researchers agree that the primary drivers that led to the real estate crisis was the lifting of the Glass Steagall Act, the fostering of sub-prime lending, and the creation of derivatives and credit default swaps which were used as complex financial instruments. This offered the big five banks an entire new range of operating opportunities. All of these financial tools were justified by the efficient market hypothesis and as a consequence provide evidence for the lack of a truly efficient market. As a result of the financial…… [Read More]
The article that was written by Conley (2011) discusses the impact that collateralized debt obligations (CDO's) would have upon the subprime loans. These were created in 1987, by the Wall Street firm Drexel urnham. In this product, the investment bankers would take a number of different articles and combine them together as one investment. The various assets that were used included: junk bonds, mortgages and other high yielding investments from the debt. The idea with these different products is that the investment bank could offer customers a stated return on their investment. The way it worked is the brokerage firm would distribute each investor, the stated amount of returns that they would make off of the tranche (the CDO investment). This was derived using a complex mathematical formula that would divide the total amount of interest that was received, from the various high yielding products that were inside the CDO.…… [Read More]
2007 Economic Crisis on American Car market
Effect of the 2008 global economic crisis on automotive industries
Crisis in the United States
Crisis in Canada
Crisis in ussia
Crisis in European markets
Crisis in Asian markets
Effects by other related crisis events
In this paper, we will review the effects of 2008 global automotive crisis. Our main focus will be on the American car manufacturers and the negative impact they suffered due to the crisis. We will also have a look at how this crisis had affected car manufacturers in other major markets around the world notably Europe, Canada and the prominent Asian markets such as China and India. Finally, we will look at some of the other factors which were important to this event namely the energy crisis since the cost of fuel is directly related to the car industry.
The automobile industry is a very important part…… [Read More]
Conclusions -- Was TAP Necessary -- A five member Congressional committee echoed a number of criticisms regarding TAP that many consumers, academics, and fiscal analysts were considering. What exactly was the Treasury's strategy with the $700 billion dollars for the supposed bail out? How can Treasury explain the significant gaps in their ability to find hundreds of billions of taxpayer money? In a nutshell, it appears that the departments that control the money given by the Congress (from the American people) have no ability to ensure that the bailed out banks will do what was needed and lend money; have no real standards of measuring success of failure of the program; and for ignoring pointed and specific questions from Congress about their performance (M. Crittenden).
The fact that many of the institutions bailed out with TAP funds, funds from the American taxpayer, did not distribute these funds back into the…… [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]
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]
If asset bubbles can be leading indicators of recession, that begs the question what assets are the most important? Several studies have shown that housing prices are critical. They were important in Japan and in 2008 in the United States. Babecky (2012) showed that housing prices consistently predict asset bubbles, minus the occasional false positive. Intuitively this makes sense since any sort of bubble will result in more investment in real estate.
There is a further question that is raised in light of the contagion of the 2008-2009 crisis. Prior to that, as Evanoff (2013) notes, several asset bubbles were effectively contained by monetary policy and did little damage. Most bubbles that cause damage do so in the developing world -- Southeast Asia and Russia in the late 1990s for example -- but in the developed world the damage is usually contained. Frankel and Saravelos (2011) examined the indicators that…… [Read More]
pproximately 2 million Subprime borrowers and 80% of them will have their mortgages reset to higher interest rates before the end of 2008.
pproximately 3 million Subprime borrowers and 90% of them will have their mortgages reset to higher interest rates before the end of 2008.
pproximately 4 million Subprime borrowers and 75% of them will have their mortgages reset to higher interest rates before the end of 2008.
pproximately 4.5 million Subprime borrowers and 85% of them will…… [Read More]
The U.S. is a property owning civilization and a number of the people wanted land and housing. Americans however scarcely ever create savings. "The country itself lives on other countries' savings by issuing bonds to finance its excessive consumption. The current crisis began with cheap housing loans offered by banks. Banks provided loans but instead of holding the loan in their books, they packaged them into collateralized debt obligations (CDOs) and sold them to other agencies. These agencies passed them on to others and spread them globally as assets" (the Current Economic Crisis, its causes, its impact and possible alternatives, 2009).
Interest rates were lowered and housing loans went up with construction activities leading to land prices increasing. The real estate was booming, generating employment and incomes. But as the rate of interest on housing loans came down, banks started to compete to get more business. Because of low interest…… [Read More]
The revelation of the financial crisis that unfolded in United States in 2008 is considered to be the worst economic crisis since the Great Depression, 1929. The distinctive causative factors that have contributed to the U.S. economic crisis 2008- 2009 are differentiated by aggravated financial control, higher risks in capital investment, the housing bubble phenomena in relation to the brisk credit expansion. The aggregation of these factors in the U.S. economy directed the economy towards the de- leverage and credit crunches as the bubble burst. The following paper shall be discussing about the degree of correlation between the tax implications policies with respect to the financial crisis in U.S.. The precise review of strong linkages between the taxation and economic crises is the explicit explanation of the crisis that shook America. The paper also highlights the key factors that demonstrated their abilities and rescued U.S. In the economic…… [Read More]
But amid the celebration, crucial opportunities have been lost: In September 2009, the "inspector general for the Troubled Asset Relief Program, a k a, the bank bailout fund, released his report on the 2008 rescue of the American International Group, the insurer. The gist of the report is that government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. And more than money was lost. By making what was in effect a multibillion-dollar gift to all Street, policy makers undermined their own credibility -- and put the broader economy at risk" (Krugman 2009). Many banks have given back their TARP funds, in exchange for the ability to once again engage in risky activities, to pay traders the bonuses they desire, and to pay executives what seems to be overinflated compensation. In June ten of the largest recipients of aid,…… [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]
The facts that are relevant to Benner’s spot delivery claim are (Session 6: Buying a Car):
1) On January 13, 2016, Plaintiff bought a 2012 Chrysler 300 (“the vehicle”) from Defendant
2) When Plaintiff bought the vehicle, she signed a retail purchase agreement and a retail installment sale contract. See Exhibit 1, “Contract.”
3) According to the contract, the Plaintiff agreed to a total sale price of $29.860.80. 10. Of the $29,860.80, $300.00 was a dealer processing charge.
4) The interest rate on the contract was 23.25 percent.
5) On January 13, 2016, Defendant told Plaintiff that Americredit Financial Services Inc. (“Americredit”) would be financing her vehicle.
6) As part of the retail installment sale contract Defendant assigned his interest in the vehicle to Americredit.
7) That same day, Plaintiff and Defendant signed an “Agreement to Provide Insurance” that indicated that Americredit required
the Plaintiff to…… [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]
International Lending and Financial Crisis
One of the major global financial crises is the financial crisis of 2007-2009. The financial recession that occurred between 2007 and 2009, encompasses the housing bubble that instigated the financial crisis, federal expenditure, and foreign exchange rates. Also, referred to as the 'Great recession', this global financial crisis had adverse impacts not only on the financial markets but also on the economies of nations across the globe, being the worst financial crisis in history. The financial crisis emanating from the U.S. affected other nations owing to financial globalization and led to discussions regarding restructuring of the international financial system (Ozkan, 2012). In particular, the global financial crisis originally started in and adversely impacted the financial sector of developed nations, especially in the United States, and subsequently had a detrimental impact of the real sector of affected nations as the financial institutions in the United States…… [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]
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]
Subprime mortgages were not by any means a major component of the total market, yet when they crashed, the high degree of market interdependency led to sharp declines in the value of many companies, not just banks that happened to be burdened with toxic assets. The methodology will therefore begin by comparing the interdependence of different markets over time. This will reveal whether or not sectors and global markets have become increasingly correlated over time. It is hypothesized that they have, which in turn has contributed to an increase in systemic risk as such interdependence reduces the value of diversification.
The second component of the paper will examine what is being done with respect to reducing systemic risk. This component will include an overview of the traditional theory and a review of the current literature on systemic risk. The crisis has spurred new work on systemic risk, including work specific…… [Read More]
The United States banking system has been around for quite a while. Indeed, the Bank of New York was founded in 1784, a scant eight years after the United States was created. The banking system has two major functions. First, they operate an overall payments system. Second, they facilitate and allow for financial intermediation. There was no formal financial system in the colonial states prior to the formation of the United States. The modern form of the banking system has only really been around since the early 1900's. The nascent form of the banks as they exist today was created by Alexander Hamilton. As of the inauguration of George Washington in 1789, only three banks existed in all of the colonies. Generally speaking, banks are typically financial institutions that are chartered and regulated mostly by the state in which the bank or banks operate. The banking system of…… [Read More]
The second recommendation I would make with respect to external communications is that Liddy adopt more stringent measures than the government has insisted upon with respect to spending controls. The government has set out some measures, but AIG should be tougher than that. This would demonstrate a sense of culpability on the part of the company for the fact that the situation it is in is of its own making. A major component of the public's offense is that it feels cheated in the deal. Taxpayers, many of whom are feeling the sting of economic hardship themselves, are insulted that they have been called upon to bailout a company that then pays six and seven-figure bonuses to its executives. Most of the people contributing tax dollars to those bonuses will never see money like that in their lives. Liddy has the luxurious advantage of not being directly responsible for the…… [Read More]
institutional economics. When attachment proposal guidelines; I a 1,5-2-page proposal 3-page essay. I minimum 4 book resources. Maybe subject "effects oil cryisis 1973 institutions" "effects subprime mortgage crisis istitutions."
Institutional economics -- Essay proposal
The internationalized economic crisis is now the buzzword across the globe. The impacts it has generated are complex and dramatic, to include corporate bankruptcies or the loss of the population's savings. But aside from these generally accepted dimensions of the crisis, fact remains that the topics pegged to the crisis are more multifaceted and go beyond the impacts on the population and the economic agents. The impacts are as such also felt at the level of the institutions.
The proposal is then that of assessing the subprime mortgage crisis through different lenses -- those of the effects generated upon the institutions. Most of the effects are expected to be felt by the lending institutions -- both…… [Read More]
If AIG would not have been helped by the Federal eserve, it is more
than obvious that the financial group would have declared bankruptcy.
Although the bailout reached an enormous sum, the action was justified.
Given the current market conditions, an eventual collapse of AIG would
contribute even more to the fragility of the financial market. Also, it
would have led to a reduction of public wealth, and it would have reduced
The opinion of U.S. taxpayers is that the AIG bailout was not
justified. For them, it did not seem fair that they should pay for the
mistakes made by financial corporations' CEOs and by the defective policies
and strategies practiced by financial groups.
There are two sides to this issue, one opposing the other. U.S.
citizens have strongly declared themselves against the bailout. Their
pressure determined the country's officials to reject financial saving
plans initially.…… [Read More]
Predictably, adjustable rate mortgages had a higher rate of default than non-adjustable rate mortgages, given the increase in interest rates in the years before the crisis, after many borrowers took out loans during an era of unusually low, near-zero rates. But another puzzling finding was that loans below $100, 000 and loan amounts in the $250,000 to half-million range had higher interest rates than loans of a half-million and above, once again suggesting that while middle-income individuals who might otherwise appear to be 'good' risks had been targeted for loans that were not advantageous to them.
"The finding that blacks and Latinos tended to borrow more helps explain why they received a disproportionately high share of high-cost loans, but the larger amounts borrowed by Asians contradicts the hypothesis that loan amount explains the rate spread differentials the best predictor that a borrower would default is the amount borrowed" as Asians…… [Read More]
"Forecasts by Moody's Economy.com now use a 20 percent drop in median
existing-home prices from their 2005 peak as a baseline, with prices
weakening through at least mid-2009" (Shinkle, 2008, p. 44). Moody's
director of housing economics Celia Chen, states in the same report that
the 20% decline is the good news and that the bad news is that it could
easily be more than that. The worst-case scenario is a lot more than that.
"You want the darkest? Forty percent, she says. There's your apocalypse"
(Shinkle, p. 45).
Websites that track foreclosures indicate that "the US-wide total of
loans foreclosing was running at 2.5 million in 2007, up by 70% from about
1.5 million in 2006" (Dumas, 2008, p. 23). The problem is that the teaser
rates that were initially set in 2006 will reach their peak in 2008,
ultimately affecting another approximate 1.5 million mortgages, with
another round…… [Read More]
The Depression of 1893
Following hard on the heels of the depression that had taken place just two decades previously, the precise causes for this economic downturn remain unclear. In this regard, Steeples and Whitten (1998) advise, "There is no adequate account of the causes of the depression of 1893 -- 1897 or, by implication, of the crisis itself" (p. 6). These authors, though, cite fundamental shifts in demographics in the U.S., as well as innovations in technology and manufacturing that caused a reevaluation of traditional institutions and the role that the U.S. was going to play in the economic affairs of the world in the 20th century as contributing to this depression (Steeples & Whitten, 1998).
The "Great Depression" of 1929-1939
The stock market crash in 1929 is frequently cited as the precipitating factor for the Great Depression, but othermund (1996) emphasizes that there were other economic forces…… [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]
This is a short review of literature that discusses the subprime mortgage crisis which many believe had a significant impact on the financial crisis that began in 2008. The discussion will range from how the crisis started and what the banks knew might happen because of faulty legislation and greedy lenders prior to the crash, to how the crash has impacted families and how some entities have tried to mitigate it with little success.
The financial crisis that began in earnest in 2008 followed many decisions which, in retrospect, were not wise. Legislation can be traced back to the 1960s that began allowing lending companies (banks) and hedge funds to buy large numbers of mortgages and leverage them as if they were real assets (Block-Lieb & Janger, 2011). Other laws followed such as the Community einvestment Act first passed in 1977 and amended with much stronger language in 1995…… [Read More]
The second key impact is that it protects unemployed homeowners in the event that their bank becomes insolvent. ithout this additional protection, such homeowners could find their mortgage with a collection agency. By reducing the negative consequences to consumers of bank failure, the FDIC encourages faith in the system.
There are critics of the FDIC loss-share plan, however. The plan essentially limits the downside for purchasers of failed banks, while allowing them to retain the upside. The critics point to this as bearing too high a risk for the taxpayer (Paletta, 2009). This risk must also be taken into account when assessing the FDIC's performance in the financial crisis. hile it has maintained the stability of the banking system in the face of over 100 bank failures, the FDIC has also deferred much of the risk associated with this failures in exchange of expediency in redistributing these assets.
From the…… [Read More]
Antecedents and Outcome of Russia's Currency Crisis
Although the former Soviet Union has collapsed, losing much of its territorial possessions, Russia is still the largest country in the world and what happens to the Russian economy can have a profound effect on the rest of the world as witnessed during its currency crisis in 1998. This paper reviews the relevant literature to identify the antecedents of this most recent financial crisis compared to previous financial crisis in the country to identify similarities and differences. Finally, a summary of the research and important findings concerning these issues are presented in the conclusion.
The most recent currency crisis that Russia experienced occurred beginning in August 1998 (Robison 246). In this regard, Chiodo and Owyang report that, "A currency crisis can be defined as a speculative attack on a country's currency that can result in a forced devaluation and possible debt…… [Read More]
Significance of the Study
This study is significant because it sheds light on a very important contributor to local and international trade. Trade fairs have a long history in providing a meeting place for buyers and sellers. They are an important channel of communication for B2B buyers and sellers. This is a significant area for study because there are limited channels of communication between B2B buyers and sellers. The previous sections have diversified the importance of communication to trade. B2B buyers and sellers cannot use mass channels of communication such as television advertising or newspaper advertising. In this market usage of personal visits and demonstrations are the common channels of marketing and communication. The B2B selling and marketing activities are less highlighted in research than B2C activities. Therefore, this study is significant because it explores a very important channel of marketing and communication in the B2B market.
The study is…… [Read More]
These can include the stimulus package, though, because the Obama Administration is still offering stimulus dollars to banks and other companies that need help and cannot take care of their customers in the way that they used to and preferred to.
Figure 1: How Severe is the Subprime Mess?
Obviously, the subprime mess is a serious concern for everyone. The stimulus package was designed to help the banks and the people who borrowed from them with the fact that they could not pay for the debts that they had created for themselves. That was true for the people who had mortgages, and also true for the banks that loaned money to these people. The stimulus package was designed to help them both out so that they could take care of their debts and move forward again. However, the economic stimulus package has not fixed everything that was hoped. There are…… [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]
This draws a pattern of the land price model, concentric as one moves away from CBD.
An interesting element of the Japanese housing market system that is worth considering in terms of its impact on the housing market is the savings rate and savings behavior in Japan. Traditionally, the savings rate in Japan is high, with a population that is risk averse and tends to invest in instruments that have lower returns, but are also less risky. With that in mind, Noguchi and Poterba (1994) tend to support the idea, first of all, that the conditions of owned houses differ from those of rented houses, in that they are especially more spacious and with overall better amenities.
Second to that, there appears to be a clear relationship between geographical location and wealth accumulation, as determined by the savings levels in different regions. Households in larger conurbations, such as Tokyo, accumulated…… [Read More]
It is vital that information is gathered, and then competently analyzed. I believe that I can do this, because this exercise has illustrated to me some of the tools and steps required to think critically about the market. I believe that this exercise has also highlighted the value of thinking creatively about the market as well. The market has a wide range of instruments available for investing. Stocks may be the most obvious, but they are not necessarily the most appropriate. Even blue chip stocks are not safe, so creative thinking is a must, in order to build the most appropriate portfolio for my needs and my timeframe.
No author. (2008) History and Timeline Allstate.com. Retrieved October 30, 2008 at http://media.allstate.com/categories/19/releases/4028 other Allstate pages used in the production of this paper include the following:
Our Shared Vision. Retrieved October 30, 2008 at http://www.allstate.com/about/our-shared-vision.aspx
Stock price, financials, analyst information…… [Read More]
Meanwhile, it is the high-earning but consumption-oriented under accumulators of wealth (UAWs) who patronize luxury car dealerships, high-end country clubs, and so- called "high fashion" clothing manufacturers. In this regard, one of the most powerful influences motivating such irresponsible consumption is the concentration of media attention on relatively few wealthy celebrities whose model of ostentatious consumption is simply not representative of the habits of most Americans with equally high net worth (Stanley & Danko 1996).
Whereas many PAWs earn substantially less than some of their UAW counterparts, they invest a substantial portion of their salaries into long-term stable investments that translate into a secure financial future. Conversely, the typical UAW, many of whom are so-called "successful professionals" earning very high salaries, increases spending to match any increase in income. As a result of continually "trading up" to the most expensive car, home, and clothing they can afford at any given…… [Read More]
Because so many mortgage companies and lending institutions pass of the debts represented by their loans to third parties, there is little incentive to ensure that borrowers actually qualify for loans based on their income and credit history the way might where the original lending institution must absorb the cost of eventual default. Throughout the mortgage industry, practices evolved where realtors and mortgage brokers actively encouraged borrowers to misrepresent their financial circumstances to qualify for much more expensive properties than they could actually afford. Brokers who objected to this practice were subject to reprimand and even to dismissal from their positions, precisely because the moral rules within that vocational environment conflicted with objective values, not to mention federal law. Faced with similar circumstances, I would have no choice but to voice my objection, even at the expense of my position.
Similarly, my moral perspective does not permit rigid adherence to…… [Read More]
HSBC: An Outlook
BNP Paribas: A Helicopter View
Comparison Between HSBC and BNP Paribas in the Banking Field
SWOT Analysis and the Bank's Operations in Middle East Especially in Dubai & Bahrain
PEST Analysis And the Bank's Operations in Middle East Especially in Dubai & Bahrain
External Analysis of HSBC and BNP
Competitive Profile Matrix (CPM)
Example of HSBC and BNP Around the World
Customer Values Analysis
Value Chain Analysis of the Banks
The current corporate world and environment can be referred as the resolution of administration. Way backed in which bread-and-butter development depends entirely on accurate and automated inventions. However, in the avant-garde apple acceptable administration is all-important for able and able alive of organization, forth with abstruse advancement. Administration is all the added significant between the ambience of the enterprises of the business, neither a business can run on itself nor…… [Read More]
Smoking rates do seem to be down, as a result of sin taxes and smoking bans in public areas like restaurants.
However, although this might be an example of when Bentham's moral science might seem to work (although it is controversial how helpful mandatory sentences may be) it is hard not to think of a familiar phrase: "one man's meat is another man's poison" -- in short, what gives pleasure to some might not give pleasure to all. A good example of this might be a child who is starving for parental attention. The child begins to 'act out' and is punished. The parents think they are acting to deter the behavior, but in reality, rather than experiencing an intense and swift punishment, the child experiences the punishment as a kind of reward, because it is at least feels like some kind of attention. Another example might be that of…… [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]
However, the new House will "provide capital to lenders as a last resort if students are unable to get loans otherwise" (Tomsho & Boyles 2008).
Investing in student loans and education is an investment in America's future. The students seeking to secure loans today had no role in the current subprime mortgage crisis that created the lack of available lending capital. Although this may hurt some students who use private lenders, giving FEEL added support helps the majority of students and the most financially needy of students secure loans to begin or to finish their education. The fact that "under the legislation, the Secretary of Education could purchase student loans from private lenders on an interim basis to provide emergency liquidity to markets," will give students, their parents, and banks added comfort that there will not be a crisis of students fleeing the schools, even if the credit…… [Read More]
Technology and America's Global Power:
America is considered as the cradle of contemporary anti-imperialism and the pioneer of a mighty empire across the globe. The country's global position in the 21st Century is defined by tensions in its policies and public discourse (Hay, 2004). Consequently, the role of the United States as a sponsor of worldwide stability continues to raise concerns on whether an empire can function effectively on the basis of anti-imperialism. However, the United States has also played a significant role in addressing and solving international order problems such as distant conflicts and grievances. During this process, America has continued to expand its global power to the extent of being viewed as the world's super-power. Technological advances have been critical elements with which the country has expanded its power through
Information technology has been the main element behind America's military system which supports in global military…… [Read More]
Kaizen is so engrained in the Toyota culture and the corresponding House of Quality that internally when planned results are not achieved it is considered more of a failure of process and execution (Gong, Wang, Lai, 2009). This is where the TPS varies significantly from American-based approaches to managing variation in results and failure to attain results as well. The Kaizen approach systematically analyzes why a process did not result in the intended goal being attained, and often there is Six Sigma and root cause analyses performed to understand the factors that led to the process not delivering the planned for results (Harrington, 2003).
All of these factors that comprise the TPS are often duplicated by competitors (Dyer, Nobeoka, 2000) so much so that there are often attempts to emulate down to the use of continuous flow, production leveling, pull systems, quick changeover, takt time, and production leveling (Kotani, Ito,…… [Read More]
Balance of trade is being more impacted by currency re-valuations in China, the declining value of the British pound and the reconsideration of indexing the Euro (Altman, 2009). What emerges as a result of these conditions that the decision on the part of the G-20, or ministers and central bank governors of the world's largest economies is to continually increase the International Monetary Fund (IMF) over time (Altman, 2009). This is going to have an immediate effect of increasing inflation globally and also fuel more of an unstable region in Pakistan and Afghanistan (Altman, 2009). Never before has the balance of trade had direct implications on the relative political stability of nations as they do today (Altman, 2009). This tight link of international trade and political stability is projected to become more prevalent through African nations whose economies were just beginning to gains stability as well. In summary, the current…… [Read More]
Globalization profoundly alters relationship global North South
The international exchange and integration of economies, societies, cultures, and governing policies play host to the worldwide phenomenon known as globalization. Countries interact through transportation, trade, and communication; inherently influencing the respective realms of economy and political agenda. Traditionally, globalization is highlighted by this integration of economic and political systems across the globe, however this exchange transcends into societies, ethics, cultures, industry, ecological effects, and a myriad of other global influences. Globalization is a process perceived as "good" or "bad" depending on geography, profession, and how one relates globalization in terms of values (othernberg 2002). A person in Los Angeles, London, io de Janeiro, and Hong Kong would identify differently with the concept of globalization, just as opinions vary between business leaders, elected officials, and the unemployed. Some understand globalization to be the Americanization of world culture and a source of United States…… [Read More]
The TEEMS program would allow me to merge the higher-level knowledge I acquired as part of my discipline-specific undergraduate degree with the type of education-related knowledge I would gain through the Masters in Teaching, Social Studies Education program at Georgia State University. I seek further education in such elements of teaching practice as classroom management, lesson planning, and deploying a wide variety of pedagogical techniques, designed to address student's unique learning styles while still meeting standardized assessment goals.
I believe that I could be an asset to the TEEMS program because of my enthusiasm for teaching and my passion for expanding high school student's financial literacy. Students today have seen the impact a lack of financial knowledge can have upon the world in the wake of the recent subprime mortgage crisis. The recent recession that will continue to have an impact upon their future vocational lives.
I have lived in…… [Read More]
These impulses may result in compulsive behavior ultimately leading to financial ruin and family devastation; partly for this reason, most American states had prohibited games of chance and other forms of gambling under a paternalistic attempt to protect people from their own compulsions (Lears p. 193). Las Vegas benefited from a confluence of circumstances that brought in workers and tourists to partake of something other states outlawed, and in time, gambling became the most lucrative industry in the region, employing more local residents and generating more revenue from non-residents than any other industry. Later, the connection between legalized gambling and its revenue-generating potential attracted criminal influences that shaped much of Las Vegas politics for decades.
Partly because of the long-term association between gambling and criminal activity and partly because of age-old religious principles defining concepts like work, virtue, and sin, gambling was widely considered a blemish on society. The additional…… [Read More]
As banks faltered and default rates rose, rates of consumption and demand plummeted. Unemployment began to increase, and in a predictable Keynesian fashion, as individuals grew more insecure about their job prospects they began to spend less money. The United States has a particularly consumer-driven economy -- Americans are known for having historically low rates of savings and to engage in high rates of spending -- so this was particularly disruptive to the usual rhythms of the economy.
Young people graduating from college suffered some of the worst effects of the recession. "Unemployment rates for individuals younger than 25 are currently 21% in the euro area and 19% in the U.S." (Branchflower 2010). They were competing with older, more experienced workers who had recently lost their jobs. The fear is that today's low starting salaries create a class of permanently low-earning graduates, many of whom have high levels of college…… [Read More]
Economic Crisis 2008-2009
This report focuses on the events that took place in the Great crash of 2008-2009. It aims to highlight the events that took place and what the basic factors and events were that eventually led to the economy crashing. It is also a point of focus to determine what effects came about and how different parties were to be blamed for the deregulation that led to the catastrophic events of the crash. It is linked with the policies present at that time i.e. The Monetary Policies outlining the control of money supply and interest rates as well as the Fiscal Policy that focus on the government spending and taxation policies.
The financial crisis refers to a situation whereby there is a contraction of money supply and the amount of wealth in the economy. This is also known as a "credit crunch" whereby participants of the economy lose…… [Read More]
Also contributing is the temporal immediacy -- although the reps had known changes were coming, the firings were immediate. The proximity level was high, since the changes had direct impacts on the sales reps and their staff, with a ripple effect throughout the organization. The concentration of the impact was high as well -- many others in the company had their jobs spared, and may even have benefited. The sales reps themselves were directly targeted. Each of these factors contributes to a high degree of ethical intensity.
4. Walsh and Mangel arrived at their decision in part by trial-and-error and in part by developing a strategy. Their first decision -- to transition with both salaried reps and commissioned ones -- was the trial and error component. While there was forethought, there was no research and no concrete decision-making process that lead to that decision. As a result, the decision was…… [Read More]
Thus if the taxation policy is shifted, it is possible to create a better situation. Taxes that are now current can be abolished if their contributions are minor. On the other hand taxes can be levied on things that are considered harmful like tobacco and drugs. This will be discussed when the remedies are sought to be established. (Edwards, 292)
"What should be done to resolve it most effectively?"
Tax cuts and abolishing some taxes can be effective with increased government spending. John Meynard Keynes advocated government spending as a method of getting over recession. Therefore a deep consideration of the federal government budget is in order. The budget uses the taxes, and spending by government to reach the desired equilibrium and thus the taxes, and spending are often beyond the general equilibrium and hence budgets are always unbalanced. To control inflation taxes are raised and spending reduced. Like wise…… [Read More]