Ethical dilemmas of market players and involved issues.
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Identify one ethical dilemma of a specific market player (mortgage companies - in general as a major market player, with examples).
- How did this dilemma start? What contributed to this?
- What role did incentives, regulation and other relevant factors play in the emergence of the housing crisis for this particular player?
- What steps need to be undertaken to prevent a repeat of the outcome?
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Solution Summary
This solution provides detailed discussion and answers to the following questions:
Identify one ethical dilemma of a specific market player (mortgage companies - in general as a major market player, with examples).
- How did this dilemma start? What contributed to this?
- What role did incentives, regulation and other relevant factors play in the emergence of the housing crisis for this particular player?
- What steps need to be undertaken to prevent a repeat of the outcome?
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detakleIdentify one ethical dilemma of a specific market player (mortgage companies - in general as a major market player, with examples). How did this dilemma start? What contributed to this?
-- Basically, one major ethical dilemma of the mortgage companies during the housing bubbles was if they (the mortgage companies) should extend home loans to individuals after the terms for acceptance were changed. Let's look back at how this started and what contributed to this, to further explain. The economy was picking up. People had money in their pockets, times were going good. People had jobs, food to feed their kids, money for the car payment. Money was coming into the economy and going back out of the economy in a continual cycle without a great deal of restriction, which is what we want. To make a good situation better, because economic conditions were favorable and due to other economic circumstances that further added to it, interest rates began to drop. This encouraged home purchases, because interest rates were low. People could now afford a home - they could pay less to get the home and their payments would be very low, so now we've got an economy that is encouraging home ownership - great. However, when things are going great and people, especially companies, get a taste of good money streams flowing in, they oftentimes want more, and this is even more so the case when we've got people that are unethical running these companies. Here comes our bombshell that contributed to what was eventually the demise --
A major home loan company named Countrywide came along and decided that since things were going "so great" in the economy and with interest rates, they'd make things ...
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