Business Research Ethics Paper

824 Words Aug 9th, 2015 4 Pages
Business Research Ethics Paper

Wayne Bell

University of Phoenix

RES/351 Business Research

Robert Caldwell

July 24, 2015

The Goldman Sachs Case When we think of the word ethics, we think of rules and regulations to keep us honest or to know the difference between right and wrong. Another way of defining ‘ethics’ focuses on the disciplines that study standards of conduct, such as philosophy, theology, law, psychology, or sociology” (Resnik, 2011). Considered by many economists to be the worst financial crisis since the Great Depression, the financial crisis of 2007 was primarily due to the collapse of the housing industries subprime mortgage market. Residential
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The unethical business research practices that should have been avoided were the use of misleading marketing tactics to sell subprime mortgages to consumers knowingly putting them in unaffordable loans by exaggerating their income. The consumers would be the ones who would be hurt the most by this new business practice as they were trapped into loans they could not escape. Imagine getting steered into the unfair and deceptive loans that were destined to fail. Communities also would suffer because of thousands home owners unable to pay their high-interest mortgage, defaulted on their loans therefore increasing the skyrocketing number of home foreclosures. “The Goldman Rule suggests that financial institutions are less likely to engage in ethical behavior where the opportunity cost of such behavior is high”. Subprime mortgages provided a means to convert household wealth into corporate profits. This unethical behavior by this financial institution contributed to the housing crisis and economic downfall of the American economy. "The subprime mortgage loan was a cheat.” Goldman Sachs took advantage of the housing boom and the subsequent crisis of subprime mortgages by provided fees to banks since the loans needed to be regularly refinanced. Prepayment penalties further protected creditors from efforts of homeowners to roll over their loans to obtain lower interest rates. Banks would "Make the loans, then sell them

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