Essays on CDO

Part 1

- In what ways did the video "The Crisis of Credit" demonstrate the failure of the banking industry's Fiduciary Relationship to investors and home owners?

The video explains a worldwide financial disaster that effected everyone. It started on the burst of the dot com bubble when the federal reserve of the United States decreased the interest rate to 1%. This value dramatically dropped the investment level because of the reduced ROI. This action made banks to take more and more loans from the Federal Reserve. The leverage increased as it became very easy to return a loan, so the demand for credit increased rapidly.

The banks took a lot of credit, and they were easily able to payback and made a lot of profits. Investors saw this as ...

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1. What are the 3 or 4 key issues raised in this case? 1.1 Sale of Client-Adverse Instruments: This violation of the firm’s fiduciary responsibility to its clients on the sale of a collateralized debt obligation (CDO), which triggered the 2010 American financial crisis after the US Securities and Exchange Commission accused it for civil fraud in April 2010, is an affront to revered historical principle of putting the clients’ interest first (INSEAD 1, 25). These mortgage-backed securities are sub-prime assets that Goldman Sach did not disclose to the buyers. Instead, it ...

A 2010 documentary film Inside Job is directed by Charles H. Ferguson and discusses upon the 2008 financial crisis. The film is divided into 5 parts, which explain what led to the financial crisis in the United States. Inside Job was well received by the film critics, and it won the 2010 Academy Award for Best Documentary Feature. The film features numerous examples of potentially illegal practices including different actions, affirmative statements, omissions and schemes. My attention was mostly paid to the Goldman Sachs case of 2007-2008 concerning the short-selling of the subprime mortgage-backed securities the company was ...

Answer 1)

The nightmares of global financial crisis began in 2007 and despite the efforts of central banks and policy makers to restore the economy, the crisis were intensified in 2008. The proven impotency of policy responses and multiple views of number of economists and analysts over causes of Financial Crisis, has raised the root causes of global financial crisis.

The Sub Prime Lending: The continued trend of increasing prices in housing sector because of excessive liberal and accomodative policy along with lax liberal standards during the period of 2002-2006, led to large issue of mortgage credit to households including ...

Analysis of Personal and Organizational Ethics and Values between For-Profit and Not-for-Profit Organizations

Introduction Unethical business behavior remains a major concern in the business world. The ethics problem is witnessed indiscriminately in both profit making and nonprofit making organizations. Ethics are as important as the objectives of the business and, therefore, corporations and other companies have a responsibility to adhere to the ideals of their organizations. This is if the ideals of such organizations have a standard moral and ethical stand that is universally acceptable. The persistence of this problem becomes a greater concern after considering the fact that organizations like those involved in charitable activities find themselves on the wrong side of morality.

This ...

A Study

The US Subprime crisis and its impact Introduction The United States subprime mortgage crisis was a chain of events in the country that led to a financial crisis that was one of the biggest in the world since the era of great depression of the 1928 -1933. It began in the late 2000’s and the effects of it are still being felt in 2012. The subprime mortgage crisis originated due to a number of factors. Those included a boom and the bust in the housing market, the house-owners speculation, improper and high risk mortgage loans and lending/borrowing practices adopted by ...

The financial crisis in Iceland was mainly because in 2001 the government deregulated the banks in the country. This led to rapid expansion in the banking industry. This in turn led to a large number of banks accumulating foreign debt in order to finance rapid expansion. The crisis mainly started when the banks were unable to refinance the short-term foreign debts that they had accumulated in countries such as the United Kingdom. At the onset of the crisis, the three largest banks in Iceland had foreign debt that was almost €50 billion. This led to the banks collapsing leading to a ...

Throughout history, financial crises and economic recessions have taken place in different parts of the world. After the collapse of the Soviet Union, the United States of America emerged as a force to reckon with in the global market. The emergence of the United States of America as a financial power house is attributed to the liberalization of the markets and the focus on the development of the IT and communication sector. Given the pivotal role of financial epicenters in global financial markets, a crisis in any of the financial epicenters can have devastating effects. In 2008-2009, there was a financial crisis that ...