Ethics Assistance

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1. Are subprime loans an unethical financial instrument, or are they ethical but misused in a way that created ethical issues?

In regard to subprime loans, they are not inherently unethical financial instruments as they have enabled tens of millions of people to accomplish the dream of owning a home regardless of not having good credit histories.. Therefore, they have provided these citizens with access to otherwise unattainable credit while providing these citizens with the ability to achieve the "American Dream". Nevertheless, when used in an unethical way, that become predatory financial instruments that were used to take advantage of these same citizens while also facilitating the fall of the financial market and representing the catalyst for the 2008 Great Recession. When used inappropriately, lenders such as Countrywide systematically targeted those who they knew were financially illiterate, minorities, and the elderly to engage in unethical behavior that was more about the systematic corruption in Wall Street and home lending institutions than the subprime loans themselves.

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2. Discuss the ethical issues that caused the downfall of Countrywide Financial.

According to former employees who were fired for reporting the fraudulent culture at Countrywide Financial, the company had systematically cultivated a mortgage-origination engine that was based upon fraud and unethical practices by lenders within the institution. The leaders, who were aware of this fraudulent activity failed to inform investors about this systemic issue within their organization, which made the company susceptible to incurring massive losses as a result of risks associated with their mortgages, was another fraudulent attempt by the top leaders of the company to scam the system. Therefore, the lack of will to comply with regulations, the intent to engage in fraudulent activities to deceive investors and borrowers as well as regulators, and the focus on monetary gains for the company instead of truthful actions were all the ...