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Transcript of Moodys
Moody's Corporation provides credit ratings and research covering debt instruments and securities
The Corporation reported revenue of $2.3 billion in 2011, employs approximately 6,700 people worldwide and maintains a presence in 28 countries Moody's Credit Ratings and the Subprime Mortgage Meltdown Corporate Social Responsibility What Did Moody's Do Wrong, If Anything? Legally, Moody’s committed no crime or infraction Moody’s did observe a trend in the declining quality of mortgage-backed securities as early as 2003 Moody’s stated that its not their role to serve as the “gate-keeper” of the securities market and that their ratings were merely opinions A corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment.
Moody's stood back and watched the market crash and did not do anything about it. When the issue came back to them they, claimed not to have had anything to do with it and took no blame. The Subprime Market The market for lenders and borrowers of subprime credit. This is a credit that is lent to people of questionable or limited credit histories
This includes subprime mortgages, autoloans, and subprime credit cards.
Subprime borrowing comes with a higher interest rate than for borrowers with good credit ratings. The risk of default is much higher. The Subprime market defined: Public Policy By definition: Ethical Relativism Ethical Principles should be defined by various periods of time in history, a society's traditions, the special circumstances of the moment, or personal opinion In many cases, borrowers knew they were getting in over their heads -- So they should be at fault and be held accountable.
On the other hand, some borrowers were misled by bank officers or mortgage brokers and did not understand their loan's terms -- perhaps they should not be held responsible.
The banks are as much as fault as anyone, because they were pushing the loans onto people who could not afford to pay for them. a plan of action undertaken by government officials to achieve some broad purpose affecting a substantial segment of a nation's citizens. References Elijio, Jason C. "The Crisis of Conscience." Case Study of Moody's Corp and Subprime Mortgage Meltdown, 3 Feb. 2012. Web. 05 Dec. 2012.
Lawrence, Anne T., and James Weber. Business and Society: Stakeholders,
Ethics, Public Policy. 13th ed. Boston: McGraw-Hill Irwin, 2011. Print.
LuckyDog Investing. "Subprime Mortgages Explained." YouTube. YouTube, 06 Nov. 2010. Web. 05 Dec. 2012. Public Policy Role
Previous presidents pursued policies designed to expand home ownership
First-time buyers policy
Encouraged two government-sponsored mortgage lenders to buy the resident mortgage-backed securities. Opinions The Subprime market cont. Some banks and mortgage companies became particularly aggressive in pushing loans on poorly qualiﬁed borrowers
Washington Mutual operated as a "Boiler Room" culture, which means employees were rewarded for how many loans they lent out.
Giving loans to borrowers regardless of their financial stability. Ethical Relativism Cont. "No income no asset loans. That's a liar's loan. We are telling you to lie to us. We're hoping you don't lie... I wish we never had done it.. We did it because everyone else was doing it." Former Morgan Stanley executive