Ethical Principles- MAN 4701- JM2 (1)

Ethical Principles- MAN 4701- JM2 (1) - securities (RMBSs)....

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Ethical Principles Predominant Ethics Approach o Universal ethics- everyone does it so it must be ok. Profile of Stakeholders The stakeholders affected by Moody’s decision to give loans to people with low incomes and poor credit histories, who could not afford to repay the loans, were many. They included the shareholders of Moody’s stock, the public (the population of people receiving home loans), the entire credit rating industry, the community (everyone involved in home loan mortgages and the housing market), and of course their employees. o Primary Stakeholders Immediate Effect on Population As the market began to fall apart, homeowners realized that they can no longer afford the higher payments for their loans. Most even found out that their homes weren’t even worth as much as they owed for their mortgages. Decision Makers Moody’s decision makers began to downgrade a lot of mortgage-backed
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Unformatted text preview: securities (RMBSs). This angered many institutional investors who invested in the poor performing RMBSs. Moody’s decision makers also received a ton of criticism from the institutional investors, homeowners, and the public. Moody’s stock eventually began to drop causing decision makers to review all of Moody’s actions. o Secondary Stakeholders Spillover Beneficiaries/ Victims Other Interested Parties Another party interested in the Moody’s crisis was the House of Representatives Committee on Oversight and Governmental Reform. They were interested in how the top credit rating agencies played a role in the nation’s financial crisis. The U.S. Justice Department also has been investigating Moody’s in connection with their rating practices during the financial crisis....
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This note was uploaded on 11/11/2011 for the course MAN 4701 taught by Professor Putchinski,l during the Fall '08 term at University of Central Florida.

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