Response to Alexis Healey
Hello, one of the biggest issues in that case involving Rebecca Mairone is that she was a top executive at Countrywide Home Loans, and was in a position where she could make crucial decisions. According to Eisinger (2016), at one time, the head of underwriting at the mortgage company wrote an email, which had a list of crucial questions from most of the junior employees, and one of the questions was whether the firm no longer cared about the quality of loans. Rebecca Mairone was the executive in charge of deciding on such a matter, and she responded by saying that “it sounded like it may work” (Eisinger, 2016).
Countrywide mostly sold its loans to Wall Street banks, or Freddie Mac and Fannie Mae. The latter two mortgage giants insured their loans, so they always demanded for only those with the highest quality. However, at the time, borrowers with the highest credit scores were gradually becoming fewer. Consequently, Countrywide was possibly facing the risk of dwindling profits and revenues. To ensure that the company still made profits, the top executives cut out underwriters, and instead, replaced them with loan processors, who had previously been labeled as unqualified to answer questions from borrowers. Some of the conditions that were to be met by borrowers before their loans were approved were dropped.
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Apart from lack of courage and integrity, I think Rebecca Mairone lacked professionalism. Integrity and professionalism could mean the same thing in such a case. Rebecca knew that the rules were being flouted but she still made decisions as an executive, allowing origination of loans that were not insured. Professionalism dictates that one performs their tasks according to what is required of them in their workplace (Campbell & Taylor, 2019). Rebecca ought to have done the right thing by refusing to make decisions that went against the rules of her profession.
References
Campbell, S. L., & Taylor, D. D. (2019). Professionalism in the workplace. Retrieved from the University of Missouri–Kansas City website: http://www. umkc. edu/starr/Workplace_Professionalism. pdf .
Eisinger, Jesse. (2016). “ Bank of America’s Winning Excuse: We Didn’t Mean To” Retrieved from https://www.propublica.org/article/bank-of-americas-winning-excuse-we-didnt-mean-to
Response to Christian Patrick Lattimore
Hi, Moody’s ratings of risky mortgages can be said to be deceitful practices. That meant that they colluded with mortgage lenders to sell to banks risky mortgages. Since Moody’s was a reputable credit rating agency, many financial institutions did not have any reason to doubt. The main goal of the mortgage companies was to sell them to the banks, and credit rating agencies such as Moody’s were only keen on raking in profits from their services (Reuters, 2017). Therefore, Moody’s actions could be described as collusions with mortgage companies to defraud unsuspecting financial institutions. What turned out was, banks lending money out to people who did not have the ability to pay back, and therefore, finally leading to the financial crisis.
I do not believe the aim of Moody’s was to enable poor people to own homes; rather, I think they were only keen on cashing in on the housing bubble. Simply, the ethical value the executives of the company lacked was integrity. Integrity in this case means doing the right thing even under bad influence ( Duggar, 2009). As a credit rating agency, the firm only needed to do what was required of them, that is, assessing the quality of the mortgages and giving financial institutions accurate information about their quality. People in this firm were simply not doing their job, and it can be argued that they might have been bribed by the mortgage companies to rate their mortgages highly for their own benefit. The consequences of the lack of integrity, as it is evident, were dire. Many innocent people were left in debt, and the economy was in a crisis, just because of the actions of few people.
References
Duggar, J. W. (2009). The role of integrity in individual and effective corporate leadership. Journal of Academic and Business Ethics , 3 (1), 1-7.
Reuters. (2017). “ Moody's $864m penalty for ratings in run-up to 2008 financial crisis” Retrieved from https://www.theguardian.com/business/2017/jan/14/moodys-864m-penalty-for-ratings-in-run-up-to-2008-financial-crisis
