Saturday, August 24, 2019

The Subprime Meltdown Movie Review Example | Topics and Well Written Essays - 500 words

The Subprime Meltdown - Movie Review Example Many banks, carried away by the rising real estate prices, extended loans to even those people who had a compromised credit history or did not qualify to secure such loans. The banks went extending such risky loans to profit from the high-interest rates agreed upon by such people. Being too overconfident that their creditors will eventually be able to honor such mortgages, considering the rising real estate prices, these banks did not care to be particular about the credit history of many of the creditors. By omitting this cardinal practice they not only compromised the eventual financial health of their banks but also betrayed their shareholders. The irony was that many Western investment firms also gave in to this opportunistic greed and readily purchased these loans from the erring banks to repackage them and sell them as Mortgage Backed Securities to their customers. The net result was that when in 2007 many customers started defaulting on their mortgages, it gave way to a chain reaction, leading to many banks and financial institutions going bankrupt. This avoidable economic debacle was caused by the basic unethical decision made by many banks to extend risky loans to customers with poor credit history. Simply speaking, defaulting customers, irresponsible banks, and unrealistically speculative investment firms were responsible for this fall. Primarily, the parties involved in these acts of omission were guided by ethical egoism. It is an ethical philosophy that lays stress on validating the rightness or wrongness of any action in relation to the extent to which it serves one’s self-interest. The banks and their customers opted for risky mortgages led by their greed for higher profits, even at the cost of forsaking sound financial practices. In contrast, if the investors and financial institutions had pursued a philosophy of ethical utilitarianism, which favors such decisions that enhance positive outcomes for the maximum number of people associatedà ‚  with such a decision, things would have turned different.  

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