As CEO of Countrywide Financial I believe CEOs hold the responsibility of the company they are over. Executives of companies should not be compensated for failure, if their company falls, then the chief executives should submit with the failure of the company. The structure would be different in my case as CEO, interviews would be conducted monthly to ensure individuals are following through with their payments. If there are delinquencies, it would followed up on and address the issues at hand. These delinquencies would not fall through the cracks. A checklist would be issued in order to ensure all sales staff have conducted the right evaluations for all loan applications. It would not be overlooked, if a traditional loan was possible for the
As of now, you are all most likely aware that our nation’s economy is rapidly declining because of the stock market crash. What you may not know is that your father and I have lost our life’s savings because of it. You see, your father and I decided to invest in some shares, hoping to make a profit in the long run. What a mistake that turned out to be! Although we only used a miniscule portion of our money, we bought the stocks on a margin, receiving loans from the bank. When the market crashed, our bank announced that all loans must be fully paid off.
Even though Countrywide stopped offering subprime loans 4 months ago, the company is still in the forefront of the subprime mortgage lending and foreclosure crisis.
In the article “California: $15 Minimum Wage, $30 per Pizza, Massive Fail,” William Bigelow shares how some small businesses are already struggling to stay afloat despite the minimum wage increase to $15 an hour in some parts of California. Bigelow interviewed a business owner who was terrified of going out of business after eighteen years; he says that other businesses are experiencing similar strains. In the article he also states that minimum wage hikes are being planned all over northern California, and that by the year 2020 Berkeley plans to raise its minimum wage to $19. So to conclude, while many people are all for having the minimum wage increased, some find it terrifying.
The Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) were to central semi-public organizations that assisted buyers with qualifying for mortgages. The both the company failed during the year 2008 when they were left with no money and were bankrupt. Like every company they were unable to pay back the money and they were in the looking for the help of government via taxpayer’s money. Hence, after the bankruptcy of 2008, the government has utilized huge amount of the taxpayer’s money for not letting them to shutdown and recovering them.
The U.S. economy experienced a deep recession in years of 2008 through 2009. A huge factor in this was the number of large financial institutions that failed. Also, the stock market declined significantly which can be contributed to the bailout plan that was passed by our government. Third, spreads on many different types of loans over comparable U.S. Treasury securities has expanded significantly (Chari, Christiano, & Kehoe, 2008). The financial crisis is the result of the collapse of the housing bubble in the U.S., which can be seen as the starting point of a crisis in the global economy afterward.
Schafer and Bell (2005) discuss some of the things a Chief Executive Officer must do in order to provide strong financial leadership. One thing a Chief Executive Officer must do is hire a financial staff that is knowledgeable about not only basic finance practices but those that are specific to nonprofit needs such as the ins and outs of restricted and non-restricted funds and the use of the Statement of Accounting Standard 117. The CEO must also hire an appropriate amount of staff to make sure everything is being done in the most efficient manner and allow for accountability. Schafer and Bell (2005) also talked about following a standardized set of financial practices that help keep the organization in line with everyone else so if new staff do come in they are able to come into a system that they are more than likely familiar with. The other thing that Schafer and Bell (2005) talk about is having a uniform accounting system. To do this an organization must have a chart of accounts which helps keep track of all financials and makes it easy for non-finance staff to interact with. Most of all, whether an organization’s CEO has a finance background or not it is their responsibility to develop that skill so they are able to successfully navigate that aspect of their organization and have a strong financial presence so they are able to lead in that
Countrywide Financial, co-founded in 1969 by Angelo Mozilo and David Loeb became the largest provider of home loans in the U.S., where one out of every six loans originated with Countrywide (Olster, 2010). Countrywide found its niche providing loans to minorities, those with less than stellar credit, and by issuing loans to low income families. Numerous families, unable to achieve the American dream, had the capability of becoming home owners, because Countrywide diminished the barriers preventing this group from obtaining home ownership (Ferrell, Fraedrich, & Ferrell, 2013).
During the financial crisis of 2007-2009 the government bailed out several financial institutions two of the most notorious financial institutions the government bailed out was Fannie Mae and Freddie Mac. These two companies were one of the biggest mortgage lenders that suffered from the subprime mortgage disaster. Fannie Mae and Freddie Mac were both on the barge of bankruptcy if it weren’t for the help of the government, which granted each company $100 billion dollars in cash credit to bail them out (according to Investopedia). The government bailed them out since Freddie Mac and Fannie Mae were both considered to be two on the giant mortgage lenders at the time and they were “too big to fail”.
The financial crisis of 2007-2008 that caused the stock market to drop significantly worldwide as well as led many people to unemployment, foreclosures, and evictions still resonates in today’s economy. All sorts of investigations are still in the process to find and bring to justice the culprits of such a large-scale collapse of the market. Some of them have lasted several years and only recently came to an end. Not that long ago settlements between the government and the biggest U.S. banks such as J.P. Morgan and Bank of America have occurred. They agreed to pay $13 and $17 billion to the government respectively. A tremendous portion of the penalty came from the companies that the banks purchased during the recession. Controversy around
Even before the financial crisis began in 2008, the Financial Accounts Standards Board (FASB) and the International Accounts Standards Board (IASB) began working on a joint project to overhaul their accounting standards for financial instruments. The financial crisis showed how the overstatement of assets was caused by a delayed recognition of credit losses associated with loans and other financial instruments. This led to the IASB and FASB forming the Financial Crisis Advisory Group (FCAG) in October 2008 with the objective to deal with reporting issues that arose from the crisis and to examine how improvements in financial reporting could help improve investor confidence. In particular, both the regulators felt the need for a forward looking
A.) The national bank, though surrounded by political and economic controversy, was valuable in certain aspects of the development of the United States. According to the fifth reading, the banking system showcased remarkable intelligence, efficiency, energy, and most importantly, independence. The bank served as a sense of security unattainable by local banks. In addition to providing security and independence, the national bank facilitated the majority of foreign and domestic trade.
In 2008 the world faced the worst financial crisis since the great depression. Many banks closed their doors for good that year. Among them were both small and large banks. One specific bank that collapsed that year was IndyMac, one of the largest banks in the United States. IndyMac marked the largest collapse of a Federal Deposit Insurance Corporation (FDIC) insured institution since 1984, when Continental Illinois, which had $40 billion in assets, failed, according to FDIC records (“The Fall of IndyMac 2008). This paper will talk about the cause of the collapse of IndyMac in 2008, the handling of the issues, as well as the aftermath of the collapse.
On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman 's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. The consequences for the world economy were extreme. Lehman’s ' fall contributed to a loss of confidence in other banks, a worldwide financial crisis and a deep recession in many countries. Lehman 's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government 's decision to let Lehman fail, as compared to its tacit support for Bear Stearns, which was acquired by JPMorgan Chase & Co. (JPM) in March 2008. Lehman 's bankruptcy led to more than $46 billion of its market value being wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America in an emergency deal that was also announced on September 15.
Angelo Mozilo, founder and Chairman of Countrywide Financial Corporation, was the driving force behind the company’s efforts to become the largest real estate mortgage originator in the United States and, according to some, was also the driving force behind the company’s eventual collapse. Mozilo and partner, David Loeb, founded Countrywide in
Before the firm became bankrupt, they had more than $275 billion in assets under management. Furthermore, since the time the bank went public in 1994, the firm had increased net revenues over 600% from $2.73 billion to $19.2 billion and increased its employee headcount over 230% from 8,500 to almost 28,600 (Demyanyk, Y. S. and Hemert, O. V. 2008).