How Ethics Creates and Destroys Wealth - Essay Example

Summary: How Ethics Creates and Destroys Wealth The presentation on the topic of How Ethics Creates and Destroys Wealth focused particularly on the collapse of the financial market due to sub-prime mortgages. The initial discussion centered on identifying the ethical issues of accounting and finance, specifically on the role that money played in business transactions. Highlights and emphasis were placed on the underlying framework of trust as the crucial point in forging business relationships with various stakeholders, especially those who are directly involved in promising returns for the money invested: investment bankers, portfolio managers, large private banks, investment firms, and investment managers, among others.

The role of homeowners as participants and victims of the financial crisis was proffered in terms of being appraised and evaluated wrongfully posing the inability to pay for mortgages of overvalued homes. The ethical issues identified were dishonest, fraud, and scam, as mortgage brokers’ interests over the homeowners took precedence to gain financial profits at the disadvantage of the unsuspecting public. The presentation, likewise, pinpointed mortgage banks, brokers, and the two government-sponsored entities, Fannie Mae and Freddie Mac, that were supposed to regulate and monitor the creditworthiness and validity of all mortgage instruments of private banks, but failed due to greed, corruption, and excessive bonuses accorded to senior management officers, despite the impending financial meltdown.

In the end, the financial crisis was instigated by the financial system that is expected to apply due diligence and adhere to ethical standards and codes of discipline to ensure the safety and security of the funds invested by the public. Their failure due to erosion of these ethical standards caused the collapse of the financial system and created a repercussive effect on other global markets whose economies depended on America’s business transactions with them. The concerns that were proffered were disturbing and disappointing given that the very people and institutions that were expected to practice ethics in business were the ones who failed.

The lure of personal interest, greed, fraud, dishonesty, scam, and corruption was stronger and created the flaw in the adherence to ethical standards of morality. The basic teaching of good versus bad was eminently discarded and the concept of utilitarianism, which is profoundly taught in business ethics, was unduly bypassed. I learned that people with power are more susceptible to maneuver terms and conditions to suit their own personal interests. The study of business ethics has been incorporated in business modules and managers, leaders, and entrepreneurs are expected to be guided by the ethical framework to appropriately and morally discern their personal values that influence the performance of their required responsibilities.

The awareness of ethical concepts, including applications in business should make every business personnel recognize relationships between legal and ethical decisions. Business ethics discusses the concepts on leadership and management where managerial responsibilities for the conduct of subordinates need to conform to ethical codes for guidance and compliance. The study of ethics should give direction to promote the ethical behavior expected of stakeholders in the business setting. Sadly, the erosion of the very foundation for ethical standards created the flaw that destroyed the trust and confidence of the public in the financial institutions that they previously trusted.