Ethics of Sub-Prime Lending

1656 Words Mar 14th, 2011 7 Pages
Spenser Yeager
Ethics Final
Ethics of Sub-Prime Lending

Introduction As a topic for this research paper, I decided to analyze the ethics behind the recent mortgage crisis in the United States. Banks were approving people for loans very easily, to people they knew would not be able to pay them back. Thus, many people were buying homes, missing payments, getting foreclosed on, and ruining what credit they had. Throughout this paper I intend to show how the practices that the banks were using were unethical. I will show who stakeholders were, and analyze them through Utilitarian and Kantian standpoints. A Utilitarian standpoint weighs the hedons and dolors in a situation. Ultimately it says that the most ethical thing to do
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People able to sell their homes more easily, since the people buying homes were able to obtain loans with more ease. The government also benefited because with more people owning homes they have the ability to earn more revenue through property taxes. The dolors in this situation were the mortgage bankers/companies, the people borrowing money who defaulted, the United States government, and the tax payers in the United States. The mortgage bankers/companies benefited from this for a while, but also lost when people defaulted on loans and house prices dropped. The people borrowing money who defaulted are dolors because they ended up losing their homes and ruining their credit. The United States government and tax payers are dolors because when financial institutions went under and bail-outs were given that money came from the government, which in turn came from the taxpayers. A Utilitarian would look at this situation and weigh the hedons and dolors to decide if sub-prime lending is considered an ethical practice. They would see that, initially, the lender is trying to help a person who normally would not be able to afford a home, have the opportunity to purchase one. In doing so, they were also doing themselves good because it helped them increase their sales, and businesses became more profitable. This also helped real estate companies and people selling their homes because it allowed more people
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