Wells Fargo and the Housing Mess - Article Example

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 whistleblower who had reported to the SEC in 2009 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 create. It had probably obtained millions in income before the housing bubble burst. Is uncontrolled greed a moral issue? Yes, it is.

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, regarding corporate social responsibility is often quoted, as "making 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 spiraling housing prices as one that allowed speculation and rewarded it. Those who were able to make a "killing" in real estate became heroes.

Aristotle defined virtue as to being the best one could be in their particular field. This became part of his moral edict and could be seen in his example of the flute player becoming the best-skilled artist in playing the flute. Some people would have better abilities than others. One may be in selling real estate. Yet something would be missing in the application of this view as an ethical principle without accounting for justice. This would be like saying some poor people can be best when they are extremely poor. This is why there is a limit to the pure principle of utilitarianism and John Stuart Mill tried to put fairness into it. How can this matter of Wells Fargo and the other big banks who profited off the housing bubble while the common people are still being forced to pay to be resolved? Present society hasn't yet dealt with this matter because everyone would not want to be denied an opportunity to be an investment banker to make as much money as possible. It is a moral dilemma.