Global Financial Crisis in Us

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INDIVIDUAL ASSIGNMENT
Critically discuss the contention that inadequate regulatory oversight in the United States of America combined with a culture of greed within the finance sector led to the global financial crisis of 2008-2009. SUBMITTED BY: PANKAJ PARASHAR STUDENT ID: 3098673

SUBMITTED TO: DR.LISA BARNES GSBS6484:CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY

PANKAJ PARASHAR

3098673

GSBS6484

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TABLE OF CONTENTS 1. EXECUTIVE SUMMARY……………………………………………. 3 2. INTRODUCTION ……………………………………………………... 4 3. GROWING OUT OF FINANCIAL CRISIS…………………………. 4 4. INITIATION OF GLOBAL FINANCIAL CRISIS…………………. .5 5. CRITICAL ANALYSIS OF US POLICIES AND IRREGULARITIES OF FINANCIAL MARKET……………………………………………6 6. CORPORATE GOVERNANCE PERSPECTIVE OF CRISIS……...7 7. OTHER GLOBAL MEGATREND RESPONSIBLE FOR CRISIS…8 8. OVERALL ANALYSIS OF US POLICIES & IRREGULARITIES...9 8.1. 8.2. 8.3. 8.4. 8.5. FAILURE TO REGULATE FINANCIAL DERIVATIVES…..9 UNSUSTAINABLE ECONOMIC BOOM……………………...10 POOR MONETRAY POLICY…………………………………..10 EXCESS PRODUCTION OF GOODS………………………….11 CASHING IN ON FALLING SHARE PRICE………………....11

9. CONCLUSION………………………………………………………… 11 10. REFERENCES…………………………………………………………12

GSBS6484-Corporate Governance and Social Responsibility

3098673

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1. EXECUTIVE SUMMARY This report endeavors to support the contention that US unlawful practice and greed in higher authorities were somewhat responsible for the global financial crisis in 2008-2009. Additionally, discussion involves the unethical practices and flaws in both private and public sector, especially intermediaries between investors and borrowers, which were the accountable for this economic crisis. It also argues about the tendency to blame US, is not the right approach because poor governance practice and loose regulations are worldwide incidents and other countries are equally responsible for a current universal downturn. Later, paper investigates the role of various government policies in the burst of housing and financial bubble and describes how the greed of officials and erroneous banking and financial regulations were the roots of current recession. This report is trying to expose a number of previously observed, documented but unresolved fragilities within the integrated financial system.

GSBS6484-Corporate Governance and Social Responsibility

3098673

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2. INTRODUCTION Every crisis has its lesson. A global financial and economic convulsion of the degree we have just experienced should offer more lessons than most (Neal, 2009). The effects of their mistakes had a ripple effect on other countries as well, which is said to be the largest socio-politico-economic event in last 65 years(Yeoh, 2010). The main elements involved in global financial crisis include a dramatic swing in the recent account statements, true depreciation, and a considerable lag in net output(Summers, 2000). The leading approaches to understand the cause of crisis include namely: • Macro-economic, • Accounting –finance and • The legal corporate government position(Yeoh, 2010). 3. Growing out of Global Financial Crisis (GFC): The US economic catastrophe, which has since become global, it mainly originated from 2007 due to poor performance of US mortgage industry(Kregel, 2008). US has followed aggressive economic policy making, which emphasizing namely on low interest rate, deregulated market (financial) and low tax(Donato, 2009). New financial aura has been created in US financial market by these policies in which money became cheap, positive prediction on housing market instigate financial institutions and home owners to lend and borrow money(Obama, 2009b). Eventually sub-prime lending climbed up whereby a bank lent money to even those with poor credit histories. These irregularities resulted as a burst of housing bubble, which had adversely affected on the global prime market

worldwide(Donato, 2009). This report is mainly emphasizing on the origin of...
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