Ten Legal and Ethical Issues with “Too Big To Fail”. 1. The administrative agencies didn’t do their jobs and protect the economy or the consumers? Congress has created the Securities and Exchange Commission (SEC) to enforce federal securities laws and the Federal Trade Commission (FTC) to enforce consumer protection statutes. Administrative agencies are created by the legislative and executive branches of government. They may adopt rules and regulations that regulate the conduct of covered parties as well as issue orders. However the various agencies that were formed to regulation our economy and financial system failed to regulate the fraudulent lenders, causing the financial crisis. If all of the parties involved in the fraudulent lending …show more content…
All of these banks should have class action lawsuits pending. If certain requirements are met, a lawsuit can be brought as a class action. A class action occurs when a group of plaintiffs collectively bring a lawsuit against a defendant. Usually, one or several named plaintiffs file a lawsuit against a defendant on behalf of her- or himself, or themselves and other similarly situated alleged aggrieved parties. The people whom did business with these banks and lost everything should all ban together, file class action suits to try to receive compensation for their unscrupulous business practices. 4. The states are just as responsible for the financial crisis, as the federal government is. If the federal government has chosen not to regulate an area of interstate commerce that it has the power to regulate under its Commerce Clause powers, this area of commerce is subject to what is referred to as the Dormant Commerce Clause. A state, under its police power, can enact laws to regulate that area of commerce. The states could have enforced and regulated lending laws under the Dormant Commerce Clause to protect its citizens and its state economy. There were so many people that had the power to inforce lending guidelines and failed to do so. This is a great American tragedy, where everyone wants to be in charge for the prestige but refuses to take responsibility for the things that really …show more content…
The banks involved were guilty of fraud and should have been forced to shut down not rewarded by making them even bigger to do more damage in the future. Which is called scienter, refers to intentional conduct. It also includes situations in which the wrongdoer recklessly disregards the truth in making a representation that is false. One of the most pervasive business torts is intentional misrepresentation. This tort is also known as fraud or deceit. It occurs when a wrongdoer deceives another person out of money, property, or something else of value. A person who has been injured by intentional misrepresentation can recover damages from the wrongdoer. Four elements are required to find fraud: 1. The wrongdoer made a false representation of a material fact. 2. The wrongdoer had knowledge that the representation was false and intended to deceive the innocent party. 3. The innocent party justifiably relied on the misrepresentation. 4. The innocent party was injured. Intent or recklessness can be inferred from the circumstances. In hundreds of cases buyers were told that they were qualified to buy homes so far out of their budget that it caused financial distress and even told that it was ok to falsify assets on the loan application to purchases homes far beyond their means. The homeowners believed the leaders and rely on the prequalification process to tell them how much they can afford to spend on a