Business Ethics Essay Example for Free

Business Ethics showIn a narrative format, discuss the key facts and critical issues presented in the case. Word count 158 nationwide fiscal began in 1969 and by 2000 was one of the nations largest lenders (Ferrell, 2010). In the late 1990s and early 2000s, nationwide Financial offered subprime mortgage loans. Subprime mortgage loans were loans that were offered to slew who would not ordinarily be sufficient to qualify for customary loans because of Income, leave out of credit or low credit score.Because of the structure of these mortgage loans, passel found It hard to fill payments when the economy slowed down. The real commonwealth market and the economy was negatively affected by the large egress of people who were unable to make payments on their mortgages. Countrywide Financials earnings were posltlve until 2007, when the economy slowed and real estate prices dropped. In 2008, Bank of America bought Countrywide Financial.Bank of America had more assets that coul d handle the crisis, and Bank of America would be able to handle the ethical investigations involving Countrywides questionable lending practices. Reference Ferrell, O. C. (2010). Business Ethics Ethical conclusion Making and Cases, 8th Ed.. Cengage Learning What were the incentives for Countrywide to write so many subprime loans? Word count 168 Countrywide Financial benefited financially from offering subprime mortgage loans.Since the interest rate, fees and terms of subprime mortgages are typically higher than conventional loans, the lenders are able to profit from this type of loan (Moulton Bozeman, 2011). Between 1982 and 2003, Countrywide reported substantial earnings, and the offered gainful returns on stock investors. By offering mortgages and loans to borrowers who would not ordinarily qualify, the ees and interest were collected from thousands of borrowers with this type of loan.They similarly extended loan privileges to a large amount of the population who would not or dinarily be able to own homes. I feel that Countrywide Financials Incentive for offering subprime mortgage loans was for financial benefit. I accept that they should have known the effects these types of loans would have If the economy took a downturn. They were too Interested In the bread to be made and continued the practice despite the negative effects It would have on people and the country as a whole. Moulton, S. , Bozeman, B. (2011).The Pulicness of Policy Environments An Evaluation of Subprime Mortgage Lending. Journal of Public Administration Reseach Theory, 21(1), 87-115. disseminate10. 1093/jopart/muq005 Ferrell, O. C. (2010). Business Ethics Ethical Decision Making and Cases, 8th Ed. , What was Countrywides logic in thinking that originating loans for people with poor credit ratings would result in positive outcomes? Word count 182 Before the real estate crisis, the subprime mortgage industry was praised for helping people attain homeownership (Ferrell, 2010).Subprim e mortgages helped minorities and lower income people be able to tolerate to own a home. At the time, it was thought of as a positive financial tool. Since there were more people being able to attain loans to own a home, other industries benefited from the effects of the subprime mortgage practice. Contractors, the make supply industry and real estate agencies were all profiting from these lending practices. It seemed that these types of loans were helping many industries. In a speech given by Govenor Edward Gramlich in May, 2004 (www. federalreserve. v), he spoke of these lending practices and said the increased handiness of subprime mortgage credit has created new opportunities for homeownership and has allowed previously credit-constrained homeowners to borrow against the equity in their homes to meet a diversity of needs.