Ethical Problems in Subprime Mortgage Crisis Essay

Ethical Problems in Subprime Mortgage Crisis - Essay ExampleThe lack of transparency and function had distorted the decision-making process for granting the loans, weakened the banking and finance system and allied industries and eroded public confidernce in the subprime change sector.First, the international credit rating agencies gave investment-grade ratings to the securitization transactions holding the subprime mortgages. This consistent high ratings misled the corporate and individual investors and vainglorious banks to invest heavily in subprime stocks since the ratings did not excogitate the high default rates and foreclosures which were beginning to come on in this sector. This is highly unethical since many international banks were duped into investing in housing stocks which did not reflect real market values or in some cases were actually worthless.Second, the mortgage brokers failed to be impartial enough to determine if the prospective borrowers really had the cap acity to pay the debt. They were more concerned about earning their pecuniary commissions from the sales of homes. This is unethical since they were giving a resource (asset) to persons who cannot afford it. There is a need to inter-group communication their compensation to the financial performance of their respective loan accounts.Third, the mortgage lenders