1. Are subprime loans an Unethical financial instrument, or are they ethical but misused in a way that created ethical issues? In my opinion I think subprime loans is an ethical in some ways but for the most part it’s got misused. One way that I think subprime was misused was the fact that when the economy began to slow down, people started working more and earning less money, subprime lending continued to lend to increasingly risky buyers. Another cause of misusing subprime lending was the fact that they allowed real estate appraisers to inflate the value of a home to insure loans would go through
2. Discuss the ethical issue that caused the downfall of countrywide Financial. One of the Ethical issue that cause the downfall of countrywide financial is the allegations that accused them of increasing its profit by offering subprime loans to people who qualified for regular loans. Another Ethical issue that caused countrywide financial to there downfall was the fact that they gave out liar loans. Liar loans were loans that required no proof of borrowers income or assets allowing consumers to purchase homes while having few or no assets. Many homeowners with liar loans could not pay their mortgages nor were they able to refinance their homes.
3. How should Bank of America deal with potential ethical and legal misconduct discovered at countrywide? One of the ways I think Bank of America should deal with potential ethical and legal misconduct is by dealing with all the lawsuits that have been filed against the company for dumping homeowners with predatory loan practices. Something else I think Bank of America should start doing is managing Countrywide’s debt by helping homeowners by reducing there interest rate so the foreclosure rate could get lower.