Prof. Koob
Values, Ethics and Sustainability
Case Study
4-22-13

The problem at hand is that the housing bubble burst and home prices began falling acriss the United States, billions of dollars worth of securities backed by their mortgages had plummeted in value, straining the balance sheets of venerable Wall Street investments baks. Moodys, who had the job of evaluating bonds issued by governments, companies, and investment banks had rated thousands of bonds made up of bundles of subprime mrtgages—home loans to people with low incomes and poor credit histories, who were buying houses they probably could not afford. Many of these buyers were failing to make their monthly payments. The stakeholders in this case are the people who worked for Moodys, the people who go to Moodys for financial advice or services, and people everywhere who are affected by the financial crisis of 2008. Ethically the company misjugded the risk inherent in the mortgages that were so frequently gave out. Millions of investors rely on them for independent objective assessments. The rating agencies broke this bond of trust, and federal regulators ingnored the warning signs and did nothing to protect the public. The outcome of the problem at hand is that the world faced what many believed was the deepest financial crisis since the Great Depression of the 1930s. Everyone eas affected by the financial crisis that took place in 2008. A couple things could have been done to prevent the crisis. First would be the regulation of mortgages brokers, who made the bad loans, and hedge funds, who used too much leverage. The second would be recognition early on that is was a credibiilty problem, and that the government would have to buy the bad loans. I feel if there more regulations out there to prenvent the mortgage brokers from giving out these loans to people who obviously could not afford them the crisis may have not been as bad as it turned out to be.