Conflicts of interest, shifts in corporate culture, heightened competitive pressures, and lack of regulatory oversight created a perfect storm that enveloped the entire economy.
The mortgage crisis was a result of too much borrowing and flawed financial modeling, largely based on the assumption that home prices only go up. Greed and fraud and easy money also played important parts before the mortgage crisis.
Our history gives us some very good lessons (like “great depression” in 1929) on what not to do, but since we can't understand or can't read history, we are doomed to repeat it time and time again. Those should have been a warning to us. So “not learning the things in the way they are meant to be” is one of the ethical failure that lead to housing crisis.
2.What can be done to make sure this doesn’t happen again:
Many of the CRAs’ ratings that “contributed significantly to the mismanagement of risks by financial institutions and investors,” demonstrating the need for “increased accountability on the part of credit rating agencies.” The provision consistently mentions the need to identify and eliminate the conflicts of interest widespread in the credit rating system and restore confidence in CRAs and the credit rating process.
The temptation offered by such readily available savings overwhelmed the policy and regulatory control mechanisms in country after country, as lenders and borrowers put these savings to use, generating bubble after bubble across the globe. Usually as one buys the loan, the others follow you.Thus reminding us not to follow bad blindlyand think with your own senses to follow good as far as possible.
Life is about learning, I have learned that cash is king, credit is a terrorist, taking those who partake