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The Economic Ramifications of the Recent Recession

Ethical Issue Perspective

A bank finds that a certain area within a city contains many a risky investments and therefore refuses to give loans to people who live and work in the area. Do you feel it is ethical for government to step in and ban such a practice? Why or why not? Explain.

The Economy and Society

Few things are more stressful than financial hardship, unemployment, and foreclosure of ones home. The financial crisis in the U.S. that began (or became painfully well-known) in 2008 has had devastating effects on many people. Who do you think was responsible for the recession and the crash of Wall Street? Which segments of the population do you think suffered most? How have you, or those you know been affected?

Solution Preview

In this particular instance, I do not believe that is warranted for the government to step in and ban this practice. Banks and other businesses usually base their investment, and other financial decisions on risk criteria, which they refer to in order to decide if it will be profitable for them to invest in a particular area. Due to the fact that there are various risk factors that would indicate that it would be a bad business decision to invest in this area of the city, it would not be wise for this bank to take the risk of providing loans to residents in this area, due to the fact that providing loans to citizens of this area would be the same as investing in this area, and it has already been ascertained that investing in this area would be a bad business decision. It would also be unethical to provide loans for people to invest in such a risky area, ...

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