Cause of the Gfc Essay

Submitted By DaryVasiljkovic1
Words: 561
Pages: 3

Corporate Greed is an issue that heavily contributed to the recent Global Financial Crisis and draws on the important of Ethics in Business concerning the recent crisis (Froud 2009). It is believed that Corporate Greed Mortgage Brokers and Executives to ignore relevant responsibilities for self gains fuelled by reward systems that rewarded short term success (Froud, 2009).The irresponsibility and short term success are described by Froud (2009) to have incurred in the form of Adjustable mortgage loans, where the initial low interest rate would adjust to amounts unaffordable to low income households (Froud 2009). Froud criticizes this unethical irresponsibility by stating ‘senior political figures were in an agreement that irresponsibility or greed was at the heart of unacceptable risk-taking’ (2009, p. 77), alluding to the fact Business ethics was a one of the major issue that Caused the Global financial crisis. In relation to this irresponsibility fuelled by greed, the issue is further critiqued by political leader Kevin Rudd (2009), who states ‘Lenders confused non-English speaking families and first time borrowers with hidden fees, ratchet interest rates and confusing repayment terms’ (2009 P. 1), thus portraying Mortgage Brokers as unethical due to their Greed, irresponsibility and willingness of Bankers to persuade the ill informed to take out risky loans which will impact the people negatively. ) further emphasizes the belief that corporate Greed has played a major role in seeding the Recent Global financial crisis, and Short term rewards blinded Bankers of the long term dangers and implication (Wallis, 2008). On the other hand it could be argued that Government Regulation and policy is of greater importance to the cause of the Global Financial Crisis, and not that of Business ethics (Wallison, 2009). However it’s argued that Government Policy and legislation led to the Global Financial crisis, particularly introduction of the Housing policy by the United States Government (Wallison, 2009). According to Wallison (2009) housing policies promoted the creation of Subprime loans and poor quality loans from which up to almost 50 Percent were defaulting at the time of the Global financial crisis, suggesting Housing policies were of greater responsibility for Mortgage crisis then that of business ethics (Wallison, 2009). Wallison (2009) supported the Argument against blaming Ethics by stating ‘Blaming huge numbers of