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Business-Ethical Issues Leading To The 2008 Financial Crisis

1253 Words6 Pages

The financial crisis of 2008, after the housing boom, brought the worlds economy down by an estimated cost of about $20 trillion. The dilemma that caused the crisis was mainly due to the shortsightedness of various firms and the government, the lax regulatory bodies, and widespread corruption that prevailed between the banks, insurance companies, and the government. The greed for money was another factor that lead to the crisis. The root cause was the business-ethical issue that lead to the crisis was not complying with the moral rules of the industry; the disregard for the responsibility and integrity of the product that the firm was selling; the lack of mutual respect for the investors; not accessing the risk involved and not being transparent about their business. The investment banks and the other regulatory firms sought …show more content…

Some of the above people who were blamed and deregulated were later appointed for high postings within the government team as they had better knowledge of the financial system and knew regulatory measures to be taken to end the crisis. This talks about the culture of the U.S. government who concentrated more on improving the economy over punishing what has already happened. There are many proposed lessons to be implemented to avoid another crisis. However, what I feel the best ways to avoid any future crisis is to bring supervision to the banking/investment sector by improving capital, liquidity and manage risk better. The supervision should address risks of the complete financial system to enhance overall stability and this system should monitor, access and consider any potential risks within the finance system. Another solution is for consumers and various shareholders to demand transparency so that banks stop betting against the people who have invested in them. The banks should portray more responsible behavior and return the trust to their

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