Hello, can you rewrite the attachment to avoid plagiarism? You can add, take out, or move sentences around to make it different from the attached document. Any information that is false/wrong, you can omit. Thank you.
Rewriting this to avoid plagiarism. MUST KNOW ABOUT FINANCIAL CRISIS OF 2008
In the end, please define what ethics means to you and how this situation could have changed.
Write a couple of paragraphs about how the financial crisis of 2008 occurred, and how ethics played a role in it.
Years ago investors wanted to make more money. Investors bought treasury bills. The dot com bubble busted and lowered the interest rate to 1 percent to keep the economy strong. There was a low return on investment so investors chose not to invest. But banks can borrow a lot for just 1 percent. This made it easier for banks to borrow a lot of money so they abused it. Leverage became the name of the game.
Wallstreet decided to connect homeowners and investors through mortgages. For example, a family saves for a down payment then contacts a mortgage broker, who connects them to a lender. The lender gives a mortgage and gives a nice commission. The lender gets a call from a banker who can sell the mortgage for a good deal. The banker borrows more money to get more home mortgages. The banker makes a CDO, which becomes risky. If homeowners default on the mortgage, then the risk may not be worth it. The investment banker can sell the CDO slices to certain groups and make huge profits.
When homeowners default on a mortgage, the lender gets the house. Lenders can start adding risk to new markets. They can give subprime mortgages. Monthly payments can turn into houses. The housing supply goes up too high so their price decreases. Homeowners paying for mortgages run into problems because houses around their area are losing value. Thus, these homeowners walk away from their houses. Default rates swept the country. The banker now has many unwanted mortgages. The whole financial system gets frozen. Everyone started to go bankrupt. Investors tell homeowners that their investments are pointless.
This incident shows how engaging in risky, poor ethical behavior can be dangerous. It can leave everyone unsatisfied. The leveraging of bankers and lenders are a perfect example as to why it’s best to stay ethical. The actions that began from the dot com bustled to many people defaulting on their mortgages. People ended up walking away from their homes because it simply wasn’t worth paying for anymore. The mortgage cost more than what the house was actually valued at. The lenders and bankers were greedy for trying to earn a high profit, so they started subprime mortgages. They lowered the standard for being able to have a mortgage. This caused more foreclosures because people who weren’t supposed to qualify for a mortgage did, but then couldn’t pay it off. The investors and lenders were ultimately the people who started a giant mess. They abused the ability to borrow money at a 1 percent interest rate to get mortgages.
Consequently, they sold too many mortgages and caused the housing market to crash. It may be enticing to earn large profits, but the best way to do so is ethical. Perhaps if the bankers and lenders engaged in ethical behavior, the housing crisis most likely wouldn’t have happened. They made risky decisions that looked successful but weren’t. The housing crisis serves as a good reminder to be ethical with financial decisions. Ethical behavior is far less likely to cause the economy to collapse.
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