Bank Bailouts Unethical/Ethical Issues
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I will be doing my week 3 paper on Bank of America and Citibank. They received government (taxpayer) bailout money and have been giving ceo bonuses, raises, using personal jets, etc. I have started the paper, but it needs more work and research. I still need to include the following:
A better history of how the problem started (with reference)
What are they doing now that is unethical (with reference)
Thank you for your help!!!!
A better history of how the problem started (with reference)
The article that clarifies this assignment is "Some bailout banks hold onto JET Perks." This was reported in the SF Gate by the associated press (AP) New York 11:42 am PDT time on June 19, 2009. Here is a quote from the article "A number of executives that received bailout money have continued to use corporate jets for personal use despite controversy over such perks, according to a report Friday."
www.sfgate.com/cgi-bn/article.cgi
The article goes on to question unethical procedures by Bank of America and Citibank. Other major finances were contacted for their policies but did not respond.
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Solution Summary
This assignment focused on the issue of ethcis with Bank of America and Citibank. Both of these companies are being scrutinized as to procedures that appear to be unethical to the Federal Reserve board and other government financial committees.
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A better history of how the problem started (with reference)
Bank of America
Bank of America has not had much history of large bad debts until recently when a decision was made to buy Merrill Lynch and Country-Wide Mortgage. Since the Country-Wide issue has died out, let's take a closer look at the ongoing issue with Merrill Lynch.
The issue has come about largely due to bonuses that were given to employees at Merrill Lynch prematurely. The bonuses were given before the 4th quarter earnings came out and subsequently made it look as if Bank of America approved of the bonuses. Bank of America CEO continues to deny any knowledge of the issue with Merrill Lynch. This article will help clear up some of the history behind the bailout.
Reference: Bank of America + Merrill Lynch = Federal Reserve??? June 25, 2009 The website is Ecommerce Journal http://www.ecommerce-journal.com/news/16436_fed_concealed_bofa_dealing_according_to_federal_officials
The referenced article discusses the issues behind non disclosure of certain information by the Federal Reserve and Ken Lewis in an effort to hide the true nature of Merrill Lynch's financial situation. "Top Republican on the House Oversight and Government Reform Committee said on Wednesday that Federal Reserve intended to hide its involvement in Boa's purchase of Merrill Lynch, which was in depression. As Representative Darrell Issa said the Fed "engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies."(Ecommerce)
Bank of America CEO Ken Lewis maintains his innocence regarding Merrill Lynch's decision to award bonuses prematurely. The situation continues to be investigated by the NY attorney general, Andrew Cuomo, and there has not been a resolution to the issue. Another important fact in the history of this issue has been the conduct of the Federal Reserve in pressuring Bank of America to go ahead with the sale. The Federal Reserve also denies any wrongdoing.
Below is a quote from the New York AG (attorney general) Andrew Cuomo:
"Merrill Lynch had never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth quarter earnings announcement and ...
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