Tag Archives: Decision-Making

Scrutinizing the Part of Leadership in the Subprime Credit Money Related Disaster

20 Jun

In all endeavors part of the role of leadership in decision-making is applying their ethics. Yes, these leaders should ensure that the enterprise make money, but not at the expense of their clients. In terms of the financial crisis of 2007, leaders had a responsibility to protect client investors and the client borrowers. Instead they seemed more focused on their fees and lining their own pockets.

Gilbert (2011) believed that the motive behind the subprime loaning chaos can be linked to choices made by individual home loan agents and loaning officers. These people had moral or moral obligations due to their positions. Funds provided to the borrowers are made by an organization, not by a person. However, the power to choose whether or not to provide the funds to the borrower is determined by an officer or advisory group. This means that a number of persons have the make certain key choices related to funds being provided. Each time someone has to make a choice morals come into play, especially about the interpersonal qualities displayed by those decisions when managing others. Leaders who choose that their organizations will make credits to clients who present considerable danger of default may rationalize their choices on the premise of sufficient security and higher interest. However, the destructive results of defaults after both the organization and the defaulting borrower.

Watkins (2011) supposed that lending orgnisations would more inclinded to act immorally if there was a high likelihood of loss of potential gain. Free enterprise strategies encourage a view that people and instituatuions may seek after monetary gains without limitation. For people lacking moral contemplations there is no tradeoff. They found issuing subprime products too enticing to scrutinise the accounts adequately and remove the unncessary risks.

Sternberg (2013) further noted that funds issued to borrowers with deficient credit quality which at a high likelihood of not being repaid. To the degree that money related organisations made such advances, they did in reality act unscrupulously. What was unscrupulous, was that they disregarded the prerequisite to ensure longevity for the borrower’s investment.

 

References

 

FreeDigitalPhotos. (2016). Leadership Stock Photo. Image courtesy of Master isolated images at FreeDigitalPhotos.net. [Website]. Retrieved from http://www.freedigitalphotos.net/images/leadership-photo-p279464

 

Gilbert, J. (2011). Moral duties in business and their societal impacts: The case of the subprime lending mess. Business & Society Review (00453609). Vol. 116 Issue 1, p87-107. 21p. Retrieved from http://proxy1.ncu.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=59161773&site=ehost-live

 

Sternberg, E. (2013). Ethical Misconduct and the Global Financial Crisis. Economic Affairs. Vol. 33 Issue 1, p18-33. 16p. Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/detail/detail?sid=09de7a34-c59f-4686-892f-2c815dae65a3%40sessionmgr105&vid=0&hid=121&bdata=JnNpdGU9ZWRzLWxpdmU%3d#AN=85317472&db=bth

 

Watkins, J. P. (2011). Banking Ethics and the Goldman Rule. Journal of Economic Issues (M.E. Sharpe Inc.). Vol. 45 Issue 2, p363-372. Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/ehost/detail/detail?sid=ee9a82d8-8919-4106-b174-5b1821767295%40sessionmgr104&vid=0&hid=119&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=60808385&db=bth

 

 

 

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