Inside Job

In 2009, the Obama Administration bailed out the General Motors and Chrysler automobile companies. Having begun their decent into bankruptcy in 2008, losing thousands of jobs, sales plummeting forty percent, with a high threat of liquidation, General Motors and Chrysler finally reached government-assisted chapter 11 bankruptcy in 2009. Obama allocated eighty five billion dollars in TARP funds to the auto industry, close to fifty billion dollars of it going to General Motors. The allocated funds were successful in keeping two of the Big Three auto companies afloat, keeping taxes from sky rocketing and saving millions of jobs.

On October 3, 2008 President George W. Bush signed the Emergency Economic Stabilization Act of 2008, otherwise known as the “bailout.” The Purpose of this act was defined as to, “Provide authority for the Federal Government to purchase and insure certain types of trouble assets for the purpose of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes” (Emergency Economic Stabilization Act). In my paper I will explain and show the relationship between the Emergency Economic Stabilization Act of 2008 and subprime lending, the collapse of the housing market, bundled mortgage securities, liquidity, and the Government 's efforts to bailout the nation 's banks.

These losses necessitated governmental action in the financial markets. Companies such as Lehman Brothers and Bear Stearns lost all of their stock’s value and were forced into bankruptcy. This risk spread throughout the American banks, forcing the American government to step in and buy all of the securitized, troubled assets from the balance sheets of

While there are several speculated causes to the recession of 2007, one cause that stands out is the housing bubble burst. "As the housing bubble burst and trillions of dollars ' worth of toxic mortgages began to go bad in 2007, fear spread through the massive firms that form the heart of Wall Street ("Meltdown")". The first repercussions of the housing bubble bursting were the floating rumors about the investment bank, Bear Stearns. The rumors of the bank 's imminent bankruptcy were so abundant, that they became a self fulfilling prophecy ("Meltdown"). In an attempt to save the bank, Federal Reserve Chairman Ben Bernanke created a deal with JPMorgan ("Meltdown"). This deal stated that "the federal government would use $30 billion to cover Bear Stearns ' questionable assets tied to toxic mortgages

Government help was seen as the only way to avoid a total economic collapse in the United States, although many thought it could result in a worldwide economic recession. On September 18, 2008 the 700 dollar bailout plan was proposed to congress. Fed Chairman Ben Bernake is quoted telling congress, “If we don’t do this, we may not have an economy on Monday” (The Housing Market Crash of 2007, 2011). This is when it became apparent that the government had a stake in this situation. When people begin questioning whether the United States economy will still exist, the government then has a huge role in the survival of not just the economy, but the entire country. The government is in a situation where it must decide how to protect the American economy, the citizens, the businesses, and the future of the United States of America. On October 3, 2008 congress passed “Emergency Economic Stablization Act” (H.R. 1424- 110th Congress, 2008) which led to the lending of 700 billion dollars’ to

The Federal Reserve made emergency loans to the big companies in order to prevent large banks from failing when their investors frightened. With the stock market crashing, on October 3, 2008, President George Bush signed the Troubled Asset Relief Program into law. TARP used 250 billion dollars of federal money to “bail out” the banks, and later automakers including General Electric. Government-working accountants reviewed large Wall Street banks’ balance sheets and disclosed to the public which were sound in order to instill more confidence within investors.

I made note of a ‘reasonable’ salary earlier in our meetings as well as in this memo. IRC Section 162(a)(1) permits a deduction for a “reasonable allowance for salaries or other compensation for personal services actually rendered.” Regulations further provide that “the test of deductibility in the case of compensation payments is whether they are reasonable and are in fact payments purely for services.” The regs continue, “An ostensible salary paid by a corporation may be a distribution of a dividend on stock. This is likely to occur in the case of a corporation having few shareholders, practically all of whom draw salaries. If in such a case the salaries are [more than] those ordinarily paid for similar services and the excessive payments correspond or bear a close relationship to the stockholdings of the officers or employees, it would seem likely that the salaries are not paid wholly for services rendered, but that the excessive payments are a distribution of earnings upon the

When approving compensation for directors, officers and employees, contractors, and any other compensation contract or arrangement, in addition to complying with the conflict of interest requirements and policies contained in the preceding and following sections of this article as well as the preceding paragraphs of this section of this article, the board or a duly constituted compensation committee of the board shall also comply with the following additional requirements and procedures:

The banking crisis of the late 2000s, often called the Great Recession, is labelled by many economists as the worst financial crisis since the Great Depression. Its effect on the markets around the world can still be felt. Many countries suffered a drop in GDP, small or even negative growth, bankrupting businesses and rise in unemployment. The welfare cost that society had to paid lead to an obvious question: ‘Who’s to blame?’ The fingers are pointed to the United States of America, as it is obvious that this is where the crisis began, but who exactly is responsible? Many people believe that the banks are the only ones that are guilty, but this is just not true. The crisis was really a systematic failure, in which many problems in the

The documentary “Inside Job” offers its viewers with a thorough and thoughtful analysis of the 2008 financial crisis, which eventually led to the Great Recession that later cost the world ten trillion dollars and thirty million jobs. Almost all major economist as well as the International Monetary Fund (IMF) agree that the recession is the worst global recession that has ever happened since the Great Depression of the 1930s.

Read the discussion case "Executive Compensation" on pages 190-192 then answer/discuss questions 1-7 that follow.

There has been a debate for years on what caused the Financial Crisis in 2008 and if there was one main cause, or a series of unfortunate events that led to the crisis. The crisis began when the market was no longer funding many financial entities. The Federal Reserve then lowered the federal funds rate from 5.25% to almost zero percent in December 2008. The Federal Government realized that this was not enough and decided to bail out Bear Stearns, which inhibited JP Morgan Chase to buy Bear Stearns. Unfortunately Bear Stearns was not the only financial entity that needed saving, Lehman Brothers needed help as well. Lehman Brothers was twice the size of Bear Stearns and the government could not bail them out. Lehman Brothers declared bankruptcy on September 15, 2008. Lehman Brothers bankruptcy caused the market tensions to become disastrous. The Fed then had to bail out American International Group the day after Lehman Brothers failed (Poole, 2010). Some blame poor policy making and others blame the government. The main causes of the financial crisis are the deregulation of banks and bank corruption.

A major role of this committee is the reviewing of the Company’s compensation strategy. Ensuring that the compensation strategy aligns with their goal to attract and retain high-quality leadership is crucial to the success of The Home Depot. They must make certain that management is awarded the appropriate incentives and rewarded appropriately for its contributions to the growth and profitability of the Company. The Home Depot’s compensation strategy must also align with all of the Company’s objectives and stockholder interests. ("Leadership development &," 2013)

A public business corporation establishes a compensation committee consisting of outside directors that sets the salaries, incentive bonuses, and other forms of compensation of the top-level executives of the organization. An outside director is one who has no management position in the business and who, therefore, should be more objective and should not be beholden to the chief executive of the business.

According to the work examined in this study the global recession that occurred in 2008 and 2009 was partially a result of the financial industry's failure to be responsible for the decision it made in using financial instruments that were risk and very complex in nature. The culture of corporations were constructed on risk-based rewards instead of rewards that resulted in value for stakeholders. The financial risks that banks took on were not well comprehended by the public or regulators and the mass media also failed to understand the risks that the banks had entered into with certain financial agreements.