- Basing my argument on the maxims advanced by Kantian ethics, the banks in the United Kingdom did not act ethically. The tree maxims advanced by Kantian ethics are used for vetting the ethicality of actions. Under the first maxim, ethical actions reflect an underlying principle that can be followed by everyone. Under the second maxim, ethical actions are those that treat people with dignity rather than as means. Under the third maxim, all ethical actions are universally accepted by all human beings. An ethical act should satisfy the threshold set by the three maxims (Crane & Matten, 2010, pg.105).
The actions of the banks in the United Kingdom do not satisfy the threshold of the first maxim. The aggressive lending policies that were applied by banks in the United Kingdom were sustained by bonuses that were linked to established sales targets. This caused banking managers to disregard risk assessments because this might impede the aggressive lending policies (Dimsdale & Hotson, 2014, pg.44). Additionally, the banking managers disregarded risk assessment so as to achieve the sales targets and receive the related bonuses, a move that meant banks assumed more risks in lending (Onaran, 2012, pg.17). This principle cannot be followed by all banking industries in different markets. The actions of the banks in the United Kingdom did not meet the threshold under the second maxim. Small and large businesses in the United Kingdom have complained of the actions of banks to recall their loans. Additionally, banks in the United Kingdom were not willing to advance new finances to the small and large businesses despite the presence of consumer credit. This showed a total disregard of the goals of the businesses. The banks have also been accused of misspelling collateralized debt obligations, leading to increased liabilities and also benefiting from the lenient regulatory policies at the expense of consumers. These actions amount to the use of consumers as means, in contravention of the second maxim. The actions of the banks also fail the test of the third maxim because they are not universally accepted. The City of Milan has threatened to take legal actions against banks in the United Kingdom for miss-selling of collateralized debt obligations resulting in increased liabilities and high default rates.
- The financial crisis involves a clash of rights. For instance, there was a clash of the right to justice that encompasses fair procedures and outcomes (Crane & Matten, 2010, pg.111). The consequences of the outcomes are different for the bankers and the citizens. There is a clash of the distributive justices. The outcomes of the financial crisis were not justly distributed. The actions of regulatory agencies to deregulate the banks allowed lending that superseded he deposits from consumers (Buckle, & Thompson, 1992, pg.43). This coincided with aggressive lending policies incentivised by bonuses related to achievement of set sales targets (Dimsdale & Hotson, 2014, pg.44). The fact that the actions of the bank managers to disregard risk assessment contributed to the financial crisis while they were awarded with bonuses clashes with the right to justice. This is because the consumers and shareholders suffered through the increase in liability and a reduction in the value of their shares respectively (Posner, 2010, pg.87). It is possible to determine the relative importance of these clashes. This can be done by determining the effect of the consequences of the clashes to the affected parties. The consumers are affected in a double whammy manner. In addition to the loss in value of the shares and increased liability, the mass bailout of the banks by the government will result in a decrease in the expenditure and the quality of service delivery and also an increase in taxation in order to finance the operations of the government. By this conception, the rights of the consumers matter more compared to those of the banking industry. Even though the banks are in the business of making profits, they should be regulated so that the rights of the consumer are not violated.
- The financial crisis can be further ventilated using the relationships and responsibility approach to ethics. Under the traditional ethical theory, rules and principles in a given situation should be applied not only in a fair and objective manner, but also in a consistent way (Crane & Matten, 2010, pg.120). Based on this premise, the actions of the regulatory agencies in the United Kingdom are questionable. For instance, the deregulation of lending policies by the Conservative government allowed banks to loan out more money than they had in terms of deposits. The Labour government did not institute measures to regulate the baking sector. The lack of objectivity in this instance was seen through the increased focus in taming inflation, leaving the banking industry unregulated (Buckle, & Thompson, 1992, pg.43). Feminist ethics also gives perspectives into the financial crisis. The focus of feminist ethics is different compared to the traditional ethical theory. Feminist ethics see organizations as part of a social network, hence the need to maintain relationships and connectedness. As such, the priority is preventing harm to the other by creating and maintaining healthy social relationships (Richards, 2014, pg.18). The actions of the banks in the United Kingdom did not comply with the ideals of feminist ethics. The banks have a responsibility towards the society and their customers. It is the responsibility of the banking industry to maintain healthy relationships with their customers and the society at large. Their actions brought harm to the entire citizenry and only benefited the bank managers.
References
Buckle, M. J., & Thompson, J. L. (1992). The United Kingdom financial system in transition: Theory and practice. Manchester: Manchester University Press.
Crane, A., & Matten, D. (2010). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford: Oxford University Press.
Dimsdale, N. & Hotson, A. (2014). British financial crises since 1825. Oxford : Oxford University Press.
Fuchita, Y., Herring, R., & Litan, R. E. (2012). Rocky times: New perspectives on financial stability. Tokyo. Nomura Institute of Capital Markets Research.
Geirsson, H., & Holmgren, M. R. (2000). Ethical theory: A concise anthology. Peterborough, Ont: Broadview Press.
Onaran, Y. (2012). Zombie banks: How broken banks and debtor nations are crippling the global economy. Hoboken, N.J: Bloomberg Press/Wiley.
Posner, R. (2010). The crisis of capitalist democracy. Cambridge, Mass: Harvard University Press.
Richards, D. (2014). Resisting injustice and the feminist ethics of care: Obama’s challenge to patriarchy hiding in democracy: “Suddenly,All the truth was coming out’ New York. Routledge
