Question

Chapter 2 of our text deals with ethics. Please provide an example of a situation in which you believe an organization acted unethically, or with surprisingly GOOD ethics. Then describe what you believe to be the reason for their action (ex. organizational culture, or the specific individual's ethics)

Answer 1

Answer:

Ethics refers to a system of moral rules or principles of behaviour which includes doing the right thing in the right approach.

For example: Between 2008 and 2013 the banking industry as a whole has been fined nearly $150 billion for unethical and fraudulent activities. The unethical behaviour of the large US banks were at the epicenter of the financial crisis of 2008. The high risk mortgage loans by commercial banks of United States were the fuel that ignited the financial crisis. Rating agencies were paid by investment banks, however had no liabilities if their ratings are proven incorrect

The financial crisis that was fuelled by the housing boom in America was mainly due to an unregulated shadow banking system that was growing out of proportion and also overtaking the traditional banking sector in size. At that time the majority of these institutions did not fall under the supervision of the Federal Reserve. The sequence of events in a U.S. financial crisis is increased interest rates leading to a bank panic leading to debt deflation. When 2008 crisis was at peak, many large financial institutions failed to manage their risks. Because of the unethical behaviour of banks the creditors and investors lost trust in these institutions and had primarily concerns over their liquidity and ability to meet short-term liabilities. The ethical behaviour of credit score setting, down payment and proof of income requirements that lenders need to adhere to could have prevented the credit crisis of 2008