Unethical Business Practices that Contributed to the 2007–2008 Financial Crisis

Improving the quality and success of global businesses needs ethical business practices. The negative effects of the 2007–2008 financial crisis are still evident in many corporate sectors today. McLean and Nocera present a perspective on the unethical business practices of banking and real estate professionals (76). The authors assert that initiatives to provide residents with access to affordable housing precipitated the 2007–2008 economic downturn (367). Although homeownership presented a commercial opportunity for financial institutions and real estate brokers, it was handled unethically, severely influencing the American economy and precipitating a global catastrophe.

The ambition of Americans to own a home prompted the development of risky business philosophies. However, McLean and Nocera explain how unethical business practices that began more than 30 years ago in the banking and real estate sectors led to enormous losses (352). According to the authors, the American urge for homeownership led to a hidden arrangement that offered expensive properties (157). A notion or activity is categorized as right or wrong in accordance with the utilitarianism principle, depending on its effects or repercussions (Mill 9). The difficulty was caused by the fact that facilitating agents handled the matter poorly, although the concept of cheap home ownership was sound. In addition, the institutions engaged in negative virtue ethics by altering regulations and procedures to their advantage, resulting in substantial financial losses for investors. The lack of adequate regulations in the mortgage business led to faulty norms and practices, which in turn produced a global recession.

In addition, banks could not collect homeowners’ mortgage insurance premiums due to unethical activities in the industry. McLean and Nocera demonstrate that the mortgage industry’s issues began when banks and other lenders delegated the responsibility of collecting monthly payments (270). Significantly, the individual loans were bundled into bonds and sold to investors…