Ethics And Financial Services
Author:
Genre: Finance

1.Research the background of the global financial crisis and discuss what the factors were that attributed to the crisis?
2.Identify three ethical dilemmas highlighted in the movie and discuss using the AAA American Accounting Association ethical model

About the Book

Ethics And Financial Services

The movie “Inside Job” examines the root causes of Global Financial Crisis by giving a very detailed description of the events and activities which led to the crisis. It is a very engrossing lesson on economics and ethics and how greed and lack of ethics led to a crisis that reverberated across the globe. It emphasizes the relationship between economics and ethics.

There have been various reasons for the downfall of the financial system worldwide, but lack of disclosure that is insufficient disclosure, or lack of information can be termed as one of the primary reasons of this crisis. The financial engineering which was a fad during that time, led to creation of various instruments like credit derivatives etc. Their meaning and information was not properly explained or disclosed to the public, but they were selling like hot cakes because they were cheap and lucrative (Curtis, 2008). Mortgage loans were made to thousands of people who wanted to buy homes and their information was not clearly disclosed to the people. The risks involved in these loans were very high but disclosure was not ample.

The unethical behavior was in the whole chain of this subprime crisis. Everywhere lack of information or not having the intention to do proper disclosure was quite evident (Avgouleas,2009). Here the mortgage loans were sold to the public through mortgage brokers, who did not really care who they were selling the loans to, whether they were credit worthy and were only bothered about the number of loans they are able to sell. Obviously, there was a clear lack of disclosure here which was unethical on the part of the brokers.

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