University Business Ethics & Social Responsibility Homework Analysis

This assignment analyzes the ethical issues presented in the documentary 'Inside Job,' focusing on the 2008 financial crisis. The student identifies key ethical issues, including systemic corruption in the financial services industry, deregulation, and risky investments. The assignment identifies stakeholders such as investment banks, financial conglomerates, insurance companies, government bodies, and the general public. It then evaluates the responsibilities of corporations and governments, concluding that corporations failed to meet their responsibilities due to unethical practices and a lack of foresight, while governments failed to adequately regulate the financial sector. The assignment suggests societal responses, emphasizing education on investment concerns, understanding financial laws, analyzing market trends, and holding government accountable. The analysis incorporates several academic references to support the arguments presented.

Running head: BUSINESS ETHICS & SOCIAL RESPONSIBILITY
BUSINESS ETHICS & SOCIAL RESPONSIBILITY
Name of the Student
Name of the University
Author Note

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1. What are the primary ethical issues in the video?
Answer: The documentary ‘Inside Job’ directed Charles Ferguson, deals with the financial crisis
that hit the world economies in the late 2000s. According to Ferguson, the main issue that the
film deals with is the systemic corruption of the financial services industry in The United States
and the consequences of that thereafter on the economy (Ferguson, 2010). It speaks about the
deregulation of the banks beginning from the 1980s and the privatization of the banks; and the
subsequent collapse of the big firms and conglomerates during the Great Recession of 2007 and
2008. The film speaks about the fact that Wall Street knew about the impending doom, but did
nothing in order to stop it.
2. Who are the stakeholders we should consider as we work through the issues in the
video?
Answer: While working through the issues in the video, the main stakeholders that we can
identify are the five investment banks namely Golman Sachs, Morgan Stanley, Lehman Brother,
Merril Lynch and Bear Stearns, two financial conglomerates namely Citigroup and JP Morgan
and three Security Insurance companies, AIG, MBIA and AMBAC. Apart from that, government
bodies and the general public should also be considered important stakeholders in this regard.
These individuals and corporations have a shared interest of making profit, cutting losses and
maintaining their individual savings (Pizzo, Fricker and Muolo). Thus these are the parties most
affected by a financial crisis. As the film indicates, several of the corporations mentioned above
went bankrupt during the crisis and unemployment in the country grew substantially affecting
people’s lives. The film narrates the events of the financial crisis starting from the 1980s when
the Reagan government was responsible for allowing banks to make risky investments with the

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public savings deposits and at the end of the decade, costing the taxpayers an insane amount of
loss (Nelson and Katzenstein 361-392).
3. What responsibilities do the corporations involved have? Are the corporations meeting
those responsibilities? Why or why not?
Answer: Between satisfying all involved stakeholders and managing profits, the primary
responsibility of the corporates is to understand the source of the money they are so riskily
gambling with. Secondly, the corporate responsibility should also involve foresight and full
disclosure about harmful events. Based on these aspects, we can assert that the corporations are
not meeting those responsibilities. The crisis indicates that many financial companies after the
deregulation were exposed to be connected with frauds like money laundering, bribes and
displaying wrong financial records. Home mortgage loans taken from people were sold to
investment banks who in turn made a product called CDO (Collateral Damage Obligation) which
received AAA ratings, the highest possible rating, because they were paid for by the same banks
(Mary Lauesen 641-663). This displays the irresponsible attitude of the corporations which, if
taken care of, could have averted the crisis or at least reduced its damages.
4. What responsibilities do the governments involved have? Are the governments meeting
those responsibilities? Why or why not?
Answer: Governments play the role of acting as a bridge between the general public and the
corporations involved in a case like a financial crisis. Their primary responsibilities involve
putting checks on the corporations and preventing them from taking issues related to public
financial investments too liberally. However the crisis of 2008 has clearly shown that the
involved government bodies have not met the responsibilities. One prominent example in this

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regard would be the violation of the Glass-Steagal act in 1999 (Nersisyan, 545-567). The act
prohibited the making of risky investments using the customer deposits. However, Citicorp and
Travelers joined together to form Citigroup and the government, instead of discouraging the
event, introduced a new act namely the Gramm-Leach-Bliley act or the Financial Modernization
Act of 1999 which became the reason for more similar mergers (Filson & Saman Olfati, 209-
221). Another example of government irresponsibility is the financial bubble of 2001-2007
which allowed everyone a loan on house mortgage even if they were not able to pay it back. The
result was the skyrocketing of house prices. During this period, the US Government and the US
Security and Exchange commission did not monitor the banks carefully allowing them to heavily
borrow. The resulting loan versus deposit ratio was 33 to 1. However the US government did not
take any lesson from the crisis, nor did it put any regulation on those institutions which later
became the root cause of the 2008 Global Financial Crisis.
5. How, if at all, should our society respond to these challenges?
Answer: Our society should respond to these challenges primarily by educating the general mass
about the concerns regarding investments in corporate financial companies and private banks.
Apart from that, understanding federal laws in correlation with investments, savings, taxation
and returns would also help people understand the gravity of the situation. Analysing stock
market graphs also provide useful information and foresight about certain outcomes. Our society
should also realise that government bodies do not hold ultimate power over people’s money and
should act accordingly to prevent them from encouraging big corporate firms to gamble with
public investments and savings.

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References
Ferguson, Charles. Inside Job. United States of America: Sony Pictures Classic, (2010). film.
Filson, Darren, and Saman Olfati. "The impacts of Gramm–Leach–Bliley bank diversification on
value and risk." Journal of Banking & Finance 41 (2014): 209-221.
Marie Lauesen, Linne. "CSR in the aftermath of the financial crisis." Social Responsibility
Journal 9.4 (2013): 641-663.
Nersisyan, Yeva. "The repeal of the Glass–Steagall Act and the Federal Reserve’s extraordinary
intervention during the global financial crisis." Journal of Post Keynesian Economics37.4
(2015): 545-567.
Nelson, Stephen C., and Katzenstein, Peter J. "Uncertainty, risk, and the financial crisis of
2008." International Organization 68.2 (2014): 361-392.
Pizzo, Stephen, Mary Fricker, and Paul Muolo. Inside job: The looting of America's savings and
loans. Vol. 16. Open Road Media, (2015).