October 1, 2013
Crisis and Regulation
In 2008, the United States stock market crashed due to large financial institutions packaging subprime loans and credit default swaps, sending the housing market, and the economy into a downward spiral. This then forced the government to have to bailout the banks even though much of this could be seen as their faults due to the loans they were giving out. In 2009, Amitai Etzioni who “served as a senior adviser to President Jimmy Carter, taught at Columbia University, Harvard, and University of California Berkeley” (Etzioni, 1) wrote an article called The Free Market Versus a Regulating Government. In his article, he discusses the need for more regulation in all aspects of life, such as, the private sector, and even in elections. This is why more regulation is needed so issues, such as the crash of the stock market would be avoidable, because large financial institutions would have rules and regulations which if they broke they would be penalized for.
In the case of the Mason Company, their Russell Plant was “depositing a dusty white substance over the surrounding country side” (Meyer, 1). Eventually the Pollution Control Agency got word of this, they requested that Mason Company install air pollution control equipment or suffer being shut down at the end of the current fiscal year. After the officers at Mason Company decided to install the equipment, they came to a dispute over which periods the penalty should be charged. They could not decide if the Russell plant cost should be accounted for as an expense of the current year, a retroactive adjustment of prior periods’ earnings, or if it should be capitalized and amortized over future fiscal year. Though it is a difficult choice, Mason company should account for the charges as a retroactive adjustment of prior periods earned because the pollution occurred in the past, over a number of years. The pollution was unaccounted for during those years of...
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