the financial crisis of 2007-2008
We are all familiar, to some degree, with the financial crisis of 2007-2008. Did you know that there were several people within the finance industry who raised concerns well before the worst of the crash? Imagine you work for a major American bank before the crash. Part of your job is to ensure your institution’s creditworthiness. You discover that approximately 60% of your institution’s mortgages are defective (and maybe fraudulent!) You notify the board of directors, but you notice no changes in practice or procedure. Over the next year, the rate of defective mortgages increases to 70 and even 80%. You notify top executives within the institution, but later you discover that those executives lied to Congress about their institution’s compliance with Sarbanes-Oxley. You have good reason to believe that these defective (and perhaps fraudulent) mortgages will eventually cause massive damage within and without the institution. What should you do?
The previous is a real case of whistle-blowing. Richard Bowen III was penalized at work (relieved of all official duties and told not to report to work) for repeatedly bringing his concerns to people within the institution. He decided to turn over documents to the Securities and Exchange Commission, but the agency did not pursue an investigation until after the crash. Bowen testified before the Financial Crisis Inquiry Committee in 2010.
Should Bowen have taken information to the SEC? Or should he have continued to appeal to people within the institution? When the SEC did not investigate, should Bowen have gone to the press? Whistle-blowing poses some very difficult questions for society as a whole, but also for the whistle-blower, who inevitably risks a great deal by going public.
· Research a private industry whistle-blower. You can use one of the people listed below or find someone else. Either way, conduct some independent research on this person and their whistle-blowing attempts. For this assignment, do the following:
1. Offer a quick summary of pertinent information about the whistle-blower and their actions.
2. Compose an argument either justifying or criticizing the whistle-blowing act you researched. Use specific criteria outlined in the Bok reading, and reference specific details about your whistle-blower from your own research.
3. Use either the Duska reading or utilitarianism (from the previous module) to further analyze the whistle-blower in the original post to which you are responding. Again, be specific about what ideas from the readings you are able to apply, and how they apply to this specific case.
4. Talk about whether this additional analysis agree with the conclusion arrived at by using Bok. Where do the two approaches agree and where do they diverge?
Here is a partial list of whistle-blowers (private, non-governmental): Karen Silkwood, Mark Klein, Jeffrey Wigand, Mark Whitacre, Sherron Watkins, and Richard Bowen III. Feel free to research others not on this list, but try to stick with non-governmental employees.