...15, 2015 The Untouchable As the of the financial core of the United States and even the world, the Wall Street always give public people a feeling that it is untouchable. After the financial crisis, not a single top Wall Street executive has been convicted and many people did not accept it. Why it happened? Should we blame weak laws, or did the U.S. Justice Department lack of effort? In public’s perspective, some leaders from Wall Street should take responsibility to this huge crisis. This Video “The Untouchable” is trying to investigated the inner reason of this phenomenon and let publics know more information behind this huge crisis. The video keeps asking the question again and again in the video: “why no criminal prosecution of Wall Street executives or major Wall Street firms for activities related to the financial crisis?” By listening the opinions from different groups such as due diligence, people from justice department or leaders in Wall Street, we can get deeper understanding of this crisis. Mistakes always give us chance to learn from it and we can learn a lot from this financial crisis, and there are three major learnings for me from this video. First, never loosen the standard of your company. This videos give us a bad example which is Countrywide Company. Greed driven them loosen their standard and give loan to every customer even they do not have ability to pay it back. The main reason of this huge financial crisis is many companies loosen their standard like...
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...| PGP-10-155 Inside Job is an exemplary recount of how administrator’s role when exploited to form risky administrative strategies by means of faulty processes lead to a crisis of the stature of the recession of 2008. It is a comprehensive documentary which narrates the history of the collapse, not only going into great, informative depth about the risk-based strategies that put the global economy on the line, but looks back to the rise of the financial industry. The biggest question which the documentary arouses is that knowing what happened, why are the miscreants not being punished? As the director, Charles Ferguson, himself stated while receiving the Oscar, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that's wrong.”1 Lets us first look at the prelude (context) of this financial crisis: ADMAP REVIEW OF THE MOVIE – INSIDE JOB The Clinton era (1990s) worked as a bridge between the Wall Street and the government. More and more Wall Street CEOs gained access to the government, taking up administrative positions like 2 • Robert Rubin On Wall Street: Chairman and COO of Goldman Sachs For the Government: Secretary of Treasury under Bill Clinton Laura Tyson On Wall Street: Board director of Stanley Morgan For the government: Chair of the US President's Council of Economic Advisers during the Clinton Administration. She also served as Director...
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...Enough is Enough From California to China, all over the world people have joined the Occupy Wall Street movement. This movement started last year of September, 2011, and by the looks of things it doesn’t look like protesters will stop fighting for what they believe in. All across the globe, people are saying “enough is enough” as they unleash their frustration on the following issues: unemployment, health care coast, and corporate greed. According to the members of Occupy Wall Street, the reason why the world is suffering from these issues are because of the banks and the super rich. More so than ever it is time for American to began to take more of an interest in the suffering economy that we live in. We must begin to investigate the true meaning of how our monetary and fiscal policy is supposed to work in our recessed economy. As expressed by the Occupy Wall Street protesters it is clear that greed has lead to our financial windfall. Leaving me to wonder do our elected officials really understand how our economics system works. Like the Occupy Wall Street protesters the American people have a wide range of complaints, demands, and goals. The American people along with cries around the world are tired of "the collapsing environment, labor standards, housing policy, government corruption, World Bank lending practices, unemployment, and the increasing wealth disparity of a poverty stricken nation"(Occupied America) Different people have been affected by different aspects...
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...Kelsey Moore Monday-Wednesday 11:00 Financial Meltdown It was only a few short years ago that Wall Street came to a halting stop. The world paused and watched as one of the greatest financial crisis of our time took place in front of our very own eyes. While some of us may have not seen this crisis upon us, but downfalls such as the one we experienced aren't built in a day. So we may ask, what could have caused this financial meltdown. According to frontline, "It all started one sunny afternoon in Florida while the employees of JPMorgan conducted meetings on how they can manage and lower risk. They concluded that separating the risk from the loan by credit default swaps would ultimately make the financial system safer for not only them but for everyone involved ("Money, Power and Wall Street")." JPMorgan was the first to execute this plan when the infamous Exxon crisis took place a few short years back. They decided to take Exxon under their wing and help them out of the crisis but instead of setting aside the capital needed they went and found a company in London to take on the risk of Exxon's loan. This event allowed companies to create more credit and allowed them to give out more and more loans. This marks only the beginning of the downfall to our financial system that occurred in 2008. While JPMorgan was the spark and brains behind the start of our crisis, who is really to blame in this situation? The bankers and regulators who lent out subprime mortgages to the American...
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...Pay Executive compensation at financial firms and other corporations began to soar in the 1990s. When the bottom dropped out of the economy in recent years, large pay packages became the focus of public fury—particularly when they were going to executives of companies receiving taxpayer funds. President Obama has said that executive pay packages encouraging excessive risk led to the practices responsible for the financial crisis, and his administration has looked for ways to curb executive pay. But in fact, bonuses have continued to rise at a significant rate. Overall compensation in financial services rose 5 percent in 2010, according to one survey, with employees in some businesses like asset management getting increases of 15 percent. In June 2010, the Federal Reserve, six months into a compensation review of the country’s 28 largest financial companies, found that many of the bonus and incentive programs that economists say contributed to the financial crisis remained in place. And in a report released in July 2010, Kenneth R. Feinberg, President Obama’s special master for executive compensation, said that nearly 80 percent of the $2 billion 2008 bonus pay was unmerited. An analysis by The Wall Street Journal found that pay and benefits at the top 25 publicly traded banks and security firms on Wall Street hit a record of $135.5 billion. But in March 2011, the New York State comptroller's office reported that cash bonuses on Wall Street dropped in 2010 while overall compensation...
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...has become the most contentious issue in corporate governments. Many critics claim that poorly designed executive compensation incentives helped caused the recent financial collapse, but disagree widely about what was wrong with those designs. Some also claim that many American executives are overpaid, that their pay reflects their own influence over their boards rather than a disinterested evaluation of their worth. Management and investors are wrestling over their roles in structuring executive compensation through sign on pay and the role of proxy advisory services. We will be addressing Executive Compensation in three parts. We will begin with where we have been, where are we presently and then where we need to be in the future. We will go back to October 23, 2008, which was the height of the financial crisis. The Federal Reserve had intervened to save BEAR-STEARNS from financial collapse. In the pervious month Merrill-Lynch had been sold to Bank of America and AIG had just received a $85 billion dollar bail-out from United States taxpayers. The 158-year-old Lehman Brothers financial firm had just collapsed and filed for bankruptcy. It was an uncertain and extremely precarious time. The then President Bush asked for an astonishing 700 billion dollars to prevent a contagion from spreading through the financial markets and it was approved by Congress. So, what went wrong? How did our nation go from record surpluses in the late 90’s to the most devastating economic collapse...
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...fifty minute documentary on the “F-bomb,” the word is fraud; it’s not to be used, in a film which shines the light on the number one suspects being Wall Street. Many of Wall Street’s top brokers and if not all top executives who have contributed to the next great recession will not face any chance of prosecution or be indicted on any criminal charges because the failure of the United States government including the efforts made by the Justice Department and the Federal Bureau of Investigation to bring about any credible evidence in which there was beyond a reasonable doubt. Based on the seemingly packaged and toxic mortgage loans to investors and the gambling on those securities and bonds to fail for even more financial succession of these institutions and top executives I really find it hard to believe with such credible evidence and the amount of it, that not one person to date can be held accountable for their actions especially in such times of economic distress for our nation where the top 1% of the population of the United States controls more money than the rest of almost 95 % combined, to me that is the atrocity. We can talk about starting from the bottom and working our way up but in this case I think the underwriters really have nothing to do with what is the core issue of what’s happening right now in our financial instructions. Should they have been more ethical who knows, should they have went to someone in charge in fact they did, should you always execute good...
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...13 Bankers: The Wall Street Takeover and the Next Financial Meltdown 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, by Simon Johnson and James Kwak, is an analysis of the banking system in America and how they contributed to the financial crisis of 2008. These banks were facing the possibility of bankruptcy, and in turn the American government had an increasing need for these banks as the means to fund the necessary investments in the economy. 13 bankers, breaks down the American banking industry in how they have grown so big, so profitable, that they have become resistant to regulations. The banks grown to the enormous that the stability of the economy was dependent, giving they a political influence by pouring money into campaigns of congressional candidates and congressmen, assuring investment banks to maintain influence and position in the White House and the Treasury department. Theses “megabanks” had balance sheet assets that accounted for more than 60 percent of the country’s gross domestic product. In March of 2009, the presidents of thirteen of these “Megabanks” met at the White House with the President, Obama that gave a message, “everybody has to pitch in. We’re all in this together” –President Obama (13 Bankers, page 4) this message giving a clear indicator the thirteen bankers needed the government and in turn, the government needed these 13 bankers to maintain stability of the economy. Thomas Jefferson was strongly suspicious of the...
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...Job” Movie review -Deepshikha Dubey SYBCOM (Hons) Roll number-1071 ‘I nside job’ true to its title, is an exasperating documentary about the actual causes and consequences of the financial crisis of 2008. Directed by Charles Ferguson and narrated by Matt Damon, the movie is not a piece of muckraking or breathless support. It rests its infuriation on proper reason, research, figures and careful argument. Several interviews of eminent personalities from political, financial and academic backgrounds, along with news clips and aerial shots of New York, Iceland, London and other disaster areas — are all in there! Though dealing with a very complex issue, the movie has beautifully dealt with the topic and made it much easier for common man to understand the reason behind the nerve wrecking recent financial crisis that hit USA and then the world’s economy. The film is divided into five main parts, covering a wide scope- Who, what, when, why, how… it is all answered! Unlike most other documentaries that have been released over the past several years, ‘inside job’ bases its arguments on numbers and facts and doesn't just emotions. The first part of the movie- “How we got here?” Takes the viewers back to history in the 1930s when US had a strong financial system. The regular banks were local businesses and were not allowed to mess around with the depositor’s money. The investment banks were private partnerships and thus did not make risky investments. The...
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...1) Throughout this class we have discussed the conduct of the major players at financial institutions and their role in leading their companies to the brink of failure, and in some cases have been successful (Bear Stearns, Lehman & AIG). With that as a starting point how important is character and ethics? What role(s) do you think boards of directors should play and did they exercise their fiduciary responsibilities to the shareholders and employees? Money is an important character in various financial institutions, but by itself is not necessarily evil. Rather, it is something that is used to trade goods and services. We call it "currency", and it allows us to do business between organizations. Unfortunately, that is the sterile dictionary-type definition but it does not capture all the issues that are involved with finances. In corporate life, just like in many other realms, money causes all sorts of problems. People make incredibly bad decisions because of money, and plenty of people have gone to prison because of their money-related behavior. This is why people always approach money with a certain amount of uneasiness. Here are a few thoughts on why financial management ethics are important. The numbers do not have a soul, so they cannot govern themselves. They must be managed by people. Ethics are important because finances make people do some strange things. The spreadsheet does not have a conscience, and the goal of working with spreadsheets is to make numbers add...
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...09-093 July 22, 2009 The Global Financial Crisis of 2008 – 2009: The Role of Greed, Fear and Oligarchs Cate Reavis Free enterprise is always the right answer. The problem with it is that it ignores the human element. It does not take into account the complexities of human behavior. 1 —Andrew Lo, Professor of Finance, MIT Sloan School of Management The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. 2 —Simon Johnson, Professor of Entrepreneurship, MIT Sloan School of Management, Former Chief Economist, IMF On October 9, 2007 the Dow Jones Industrial Average set a record by closing at 14,047. One year later, the Dow was just above 8,000, after dropping 21% in the first nine days of October 2008. Major stock markets in other countries had plunged alongside the Dow. Credit markets were nearing paralysis. Companies began to lay off workers in droves and were forced to put off capital investments. Individual consumers were being denied loans for mortgages and college tuitions. After the nine day U.S. stock market plunge, the head of the International Monetary Fund had some sobering words: “Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.” 3 1 2 3 Interview with the case writer...
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...Global Financial Crisis Impact and Challenges Shaikh Faisal. Assistant Professor Dr. Rafiq Zakaria Campus Millennium Institute of Management Aurangabad Introduction: The global financial system has undergone a period of unprecedented turmoil. Market confidence dwindled and has remained fragile, leading to the collapse or near-collapse of large, and in some cases systemically important, financial institutions, and calling forth public intervention in the financial system on a scale not seen for decades. The financial system has been severely weakened by mounting losses on impaired and illiquid assets, uncertainty regarding the availability and cost of funding, and further deterioration of loan portfolios as global economic growth slows. Finding a purely private sector resolution of financial market strains has become increasingly difficult, while case-by-case intervention by authorities has not alleviated market concerns. In response, more comprehensive approaches are now being considered or implemented to bring about a more orderly process of deleveraging and to break the adverse feedback loop between the financial system and the global economy. Such a comprehensive approach—if well coordinated among countries—should be sufficient to restore confidence and the proper functioning of markets and avert a more protracted downturn in the global economy. Significant writedowns have already been realized, but more may lie ahead. . . The estimate of aggregate write downs...
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...Running Head: CLEAN UP THE HOUSE 1 Clean Up the House: An Analysis of the Housing Crisis and the Endeavor to Lift the US Housing Market Neil Smith Wilmington University MBA 6400 Economic and Financial Environment of Business CLEAN UP THE HOUSE 2 ABSTRACT This is an inquiry of the Housing Crisis that culminated to the Great Recession of 2007-2009. A review of the aspects that led to the Housing Crisis will be considered. The causes that contributed to the Housing Crisis will range from the Community Reinvestment Act of 1977 to the greed and voracity that engulfed the Financial Markets. Such greed maligned the financial markets causing eventual bailouts and measures that the US Federal Government employed to avert a major financial depression. This paper will discuss definite recommendations that will improve the US Housing Market. CLEAN UP THE HOUSE 3 Clean Up the House: An Analysis of the Housing Crisis and the Endeavor to Lift the US Housing Market In today’s world it is generally accepted that a home is the most expensive thing that any American can buy. The idea of home ownership - a chance to own a home - is a dream fulfilled for many. To have a piece of property and call it your own is reflected...
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...No one outside of economists and financial philosophers predicted nor expected a financial crisis during 2008, the same year the Lehman Brothers Holding collapsed. As Americans, we are known to begin pointing fingers as the situation deteriorates and the U.S. State has come to quite a few conclusions as to who is rightfully at fault, although everything that occurs should be considered as a chain cycle rather than specific factors. Three common “narratives” as told to us by the six members of the Financial Crisis Inquiry Commission created by the Congress to investigate the causes of the financial crisis states that the financial crisis was as a result of “poor U.S. policy and supervision” (Hennessey, Holtz-Eakin), Wall Street’s influence in Washington, and having government intervention in the housing market. On the other hand, many economists including John Geanakoplos invented something called “The Leverage Cycle” which quite frankly, can simply explain the downfall of the United States’ financial crisis. The Leverage Cycle focuses on the causes and effects of each economic step and process and the outcome it produces. To start the cycle, banks are required to approve loans and they require collateral as a safety precaution for the debt which on average is the house. Because of the high pricing within the housing market, banks found other ways to receive and stretch collateral, using methods such as “double-duty” and lending against collaterals. Eventually, this leads...
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...Isabella Jendryka IT Audit The Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank for short, is a law that is aimed to transform the world of financial services, through more stringent, and industry specific regulation. The act was passed on July 21, 2010, under President Barack Obama's administration and now performs as a corrective control for the damage that was done during the 2008 financial crisis. At over two thousand pages long, Dodd-Frank serves as a regulatory guideline for businesses, in order to ensure that history does not repeat itself. The act is named after two of its strongest advocates, U.S. Senator Christopher J. Dodd and U.S. Representative Barney Frank. The Dodd-Frank Act aims to repair the financial...
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