Inside Job Case Study Questions
The public ratings agencies such as Standard & Poor’s or Moody’s should have been accurately rating companies and investments rather than being concerned about protecting their business. It’s ridiculous that representatives would claim that their ratings are merely “opinions” and that they had no responsibility. (Inside Job) Can you imagine your home inspector saying their inspection was merely opinion and not standing by their work? In 2015 Standard & Poor’s agreed to a settlement of $1.4 Billion dollars for their role in the crisis. (Fortune, 2015)
The derivatives …show more content…
You ended up with AGI being on the hook on two sides when a CDO failed, both to the original investor, and then to those who speculated against the CDO failing. (Inside Job)
7. While it can be frustrating to bail out companies that made such unethical and dangerous decisions, the decision to bailout or not needed to be based on the ethics of the situation, not out of a desire to punish companies for their …show more content…
The financial industry lobbies to have regulations removed in order to generate more business and complex financial instruments. While there might be less compliance cost in complying with a shorter list of regulations, the primary motivation is profit. With less regulations, companies are able to operate more creatively and generate more business in other sectors. However, this can come at a high cost if companies do not act from an ethical standpoint and have weak systems of corporate governance.
9. Whether or not it was unethical for employees to cash out their company stock depends on whether or not the information was public. If they were acting on nonpublic information this would classified as insider trading and would not be ethical, not to mention illegal. If however this information was public or could be very easily inferred from public sources, then it would be ethical to cash out their stock.
It really makes no difference whether or not an individual was involved in policy decisions whether or not it would be ethical to cash out their stock. Individuals who were involved in fraudulent policy decisions should have compensation and profits from stock sales subject to clawback. It would be very tough to be in a similar situation, as the personal incentive to protect whatever money you could get would be very strong. I hope that I would have complied with the appropriate laws and