federalreservehistory.org/essays/great_recession_of_2007092 www.usatoday.com/story/money/markets/2013/09/07/banks-great-recession/2778691/.Forthis paper I am going to be researching and analyzing this situation in anethical perspective.
Where I am challenged by the author to open my mind andsee if the Great Recession of 2007 – 2009 was caused by just the unethicalemployees or is the bank (as a whole) to blame for? I decided to look for anyupdates on how the six major banks of Wall Street has evolved since the crisisand what were the changes. Currently, ithas been a decade since the Recession. In the month of February 2009 PresidentObama and Congress has enacted a stimulus package as known as the ARRA (AmericanRecovery and Reinvestment Act). The objective of this Act is to strengthen theeconomy and have power to turn around any future recession from happening. How can someone turn around or reverse arecession? I was able to talk to a colleague of mine who majors in Economicsand Finance, he was able to give me his definition of the Act, “Reversing aRecession is when the government has the power to be able to increase the employmentnumber and spending to avoid a Recession from reoccurring.” Since the Recessionnot much has changed when it came to the popularity of the banks and their lovefor making money.
2″…The six largest banks in the U.S. now hold $9.6 trillion in assets, aThirty-Seven percent increase from five years ago.” One of the biggest banksJ.P. Morgan who was involved now has an equivalent of $ 2.
4 trillion assetsalone. Did afew individuals cause what is known to be the sharpest decline of the economy?Or are the banks to blame for? In the article Bank Scandals: Bad Apples Vs. Bad Barrels by Mike W. Peng started off asking, “Are some of the employees’ bad apples? Or are the banks’ bad barrels?” To summarize this article, the author wrote about what hadhappened in the Great Recession of 07 – 09 and how hard it was to be a banker duringand after that event. The Great Recession of 07 – 09 known as the “FinancialCrisis” occurred between 2007 – 2009 where the Real GDP dropped 4.3 percent andthe unemployment rate increased from five to ten percent. According to Peng thesix major companies who are allegedly involved with the Financial Crisis (Bankof America, Citi Group, Goldman Sachs, J.
P. Morgan Chase, Morgan Stanley andWells Fargo) had to pay settlements which added up to $80-Billion 1 . Imagine being fined fornot selling mortgage backed securities the way it supposed to be sold andassisting clients to not pay American taxes. Mortgage lenders were tied in the GreatRecession of 07 – 09, they rewarded individuals who requested loans. Thatdoesn’t seem so bad right? The down side of it was that these individuals whorequested loans had a hard time paying the loans back. That issue turned intoan open door of an opportunity for these banks to twist the cap on theindividuals with the loans and involve them into a more “promising” mortgage.
Itwas a way to force these individuals to sign an even more complicated mortgage,which means more money in the company’s pocket. Major newspapers would begin toscratch deeper than the surface and more information kept appearing to thepublic eye. These Mortgage lenders would also commit fraudulent actions toallow all the mortgages to get approved. These six major banks were intertwinedso tightly that it became a domino effect, if one bank failed all of them wouldget effected by the fall.