Wells Fargo and the Housing Mess 1. Wells Fargo & Co. banking institution did not admit or deny the suit brought against it by the SEC to pay $11.2 for allegations that the bank sold risky securities in 2006 and 2007 that later fell in value and created the housing bubble…
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The bank sold the securities to an investor who was unnamed and to the Zuni Indian Tribe. Stuck with $5.5 million in equity that it could not sell, through flashy moves the bank transferred the risk into CDOs marked at 52.7 cents to the dollar. They sold these CDOs to the investor and the Zuni Indian tribe for 95 cents on the dollar. The original property went into default and the purchasers were left with debt. Other fraud allegations were covered in the suit. Also, Wells Fargo had fired a whistle blower who had reported to the SEC in 2009 of these strange dealings at the bank. Is there a moral issue involved? Wells Fargo was fined a small percentage for the billion dollar chaos it helped created.It had probably obtained millions in income before the housing bubble bursted. Is uncontrolled greed a moral issue? Yes, it is. 2. In defense of Wells Fargo & Co., and Goldman Sachs who was mentioned in the article as being fined $550 million last year by the SEC for similar allegations, Milton Friedman, a worldly respected economist, in regard to corporate social responsibility is often quoted, "to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom." Another defense would be to define the rules of society during the period of the spiraling housing prices as one that allowed speculation and rewarded it.
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