Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives - Case Study Example

This is a discussion on the ethical perspectives on the banking industry meltdown. One of the primary reasons, why banking industry experiences financial meltdowns is due to failure of management and employees to observe teleological ethics. Although the banking industry is open to many risks due to global financial conditions, success or failure lies within the decisions of all the people involved in running the banking system. All employees within the banking industry have an ethical responsibility for making good business decisions.

Unlike other businesses and industries, the banking industry involves taking articulated financial risks in the endeavor of making profits in the future. Therefore, the banking industry relies on quality and authenticity of the derivatives to survive. However, sound management of derivatives lies within the hands of financial managers and controllers both within the management and within the employee fraternity. Since the ultimate course, according to ethical teleology, depends on the present course of action, the involved business professionals need to articulate their course of action such that it yields good results.

This is the principal of ethical teleology. The white-collar crimes prevalent in the banking industry are quite similar with blue-collar crime though they deviate in some characteristics. From the case study, it is evident that the fundamentals of the banking industry were skewed towards rewarding financial risk takers, as opposed to protecting the interests of investors and other stakeholders. Although the banking industry is endowed with the ability of manipulating complex financial instruments and risk decisions, such endeavors are open to abuse due to lack of ethical discipline.

Most notably, the derivatives associated with mortgages and debts were manipulated with the interests of the few in