Corporate And Individual Greed
Greed was the major reason behind the global financial crisis. Not only the corporate got affected by the greed but also the other individual parties involved like the consumers, legislators,economists got affected by the greed and looked for the short term and quick gains rather than thinking about the repercussions of their unethical behavior on the financial system of the country and the global economy. The corporate as well as the individuals knew about the consequences that the manner in which they are working will lead to collapse of the whole economy but they chose to ignore it and kept continuing pursuing their greed. Ethically both the corporate and the individuals should have abstained from such greed to have more wealth when they knew that what they were doing was not correct and this could lead to a mega crisis like global financial crisis, but the greed made them not to look at the result of what they were doing.
The corporate involved in the financial system of the time prior to the global financial crisis didn’t behave ethically and behaved in a highly greedy manner during this period leading to the global financial crisis. With the rise of demand for the housing, the banks came up with highly risky products like CDOs which were backed only by the mortgages and loans of the consumers.The investment banks knew that these instruments are very risky and they are doomed to fail in next few years but in order to have immediate gains they continued selling them to the investors.There can be no better example of the corporate greed shown by the investment banks than the example of how they promoted CDOs, kept selling them and fooling the investors. By indulging in such financial practices, the banks showed a wrong picture of their financial performance to the market till 2007. The top management of the banks like Goldman Sachs, Merrill Lynch and others made a huge sum from the rewards and the heavy paychecks as they were able to portray that the banks were doing exceptionally well and doing a great business which was not true at all in reality. Instead the banks were pushing themselves and the whole financial system towards a huge problem which manifested in the form of global financial crisis. In attempt to be ahead of the competition and show a very rosy quarter on quarter performance to the market, the banks kept offering loans to consumers who were not financially capable to repay the loan and later also came up with instruments like CDOs which were hollow since they were based on the repaying capacity of the consumers which was very less as compared to the amount of the loans offered to them. This was a highly unethical behavior by the banks as they endangered the whole economy just for their own greed and to become wealthier than others.