Detailed Question: Big Short - A case study of stock market crisis
The Big Short: Inside the Doomsday Machine by Michael Lewis explores the stock market crash of 2008 precipitated by the housing bubble and, in particular, the use of certain financial instruments, collateralized debt obligations, and credit default swaps, in the context of subprime mortgages. The book also reveals numerous conflicts between various actors in the financial markets as well as dilemmas confronted by market participants, some of which could be considered ethical or unethical in nature.
In the context of the latest financial instrument, bespoke tranche opportunity, which purportedly is a "new" name for collateralized debt obligations (CDOs), you must decide on a path forward in light of the conflicts and dilemmas identified in The Big Short from the perspective of an institutional market participant, e.g., Mortgage Brokers, Subprime Mortgage Lenders, Rating Firms, Commercial Banks, Investment Banks, Traders. In particular, identify alternative courses of action from the perspective of social corporate responsibility (as discussed in David P. Baron's book), and an ethical framework, system, identified in that book.
When constructing your essay:
1. Summarize the issues, interests, institutions, and information (the Four I's explained in the attachment)
2. Identify the potential perils associated with the path you have selected, including how various stakeholders may react: the general public; government; shareholders; and the media.
3. Identify potential legislative responses associated with your selected course of action, e.g., any proposed legislation introduced by any members of Congress and status.
4. Construct a Press Release setting forth your company's position.
Analysis: 4-Eyes
Issues
Interests
Institutions
Information
- Legislatures
- Executive
- Branch
- Judiciary
- Administrative
- Agencies
- Regulatory
- Agencies
- WTO