Questions
1. How much and in which ways did unbridled self-interest contribute to the subprime lending crisis?
2. How could increased regulation improve the exercise of unbridled self-interest in decision making?
3. How could ethical considerations improve unbridled self-interest in ethical decision making?
4. Identify and explain five examples where executives or directors faced moral hazards and did not deal with them ethically.
5. How much should the exiting CEOs of Fannie Mae and Freddie Mac have received when they were replaced in September 2008?
6. The government bailout of the financial community included taking an equity interest in publicly traded companies such as MG. Is it right for the government to become an investor in publicly traded companies?
7. Should CEOs who made large bonuses by having their firms invest in mortgage-backed securities in the early years have to repay those bonuses in the later years when the firm records losses on those same securities?
8. Should the CEOs who refused to have their firms invest in mortgage-backed securities in the early years because the risks were too great receive bonuses in the latter years because their firms did not incur any mortgage-backed security losses? How would you determine the size of these bonuses?
9. Should organizations that have a risk-taking culture, such as the one developed by Stan O'Neil at Merrill Lynch, enjoy the gains and suffer the losses, without recourse to government bailouts?
10. Are the criticisms that M2M accounting rules contributed to the economic crisis valid?
11. The global economic crisis was caused by the meltdown in the U.S. housing market. Should the U.S. government bear some of the responsibility of bailing out the econo¬mies of all countries that were harmed by this crisis?
12. Given that the marketplace for securities is global and that the risks involved can affect people worldwide, should there be a global regulatory regime to protect inves¬tors? If so, should it be based on the regulations of one country? Should enforcement be global or by country?
13. Should members and executives in investment firms be forced to be members of a profession with entrance exams and with adherence to a professional code such as is the case for professional accountants or lawyers?
14. Does the Dodd-Frank Act go far enough, or are some important issues not addressed?
15. What were the three most important ethical failures that contributed to the subprime lending fiasco?