Business ethics – countrywide financial Essay Example

in enabling individuals to achieve homeownership (Ferrell, 2010). By making homeownership feasible for minorities and those with lower incomes, subprime mortgages were initially regarded as a beneficial financial instrument.

The subprime mortgage practice resulted in more individuals being eligible for home loans, which in turn benefitted various industries including contractors, the building supply industry, and real estate agencies. It appeared that these lending practices were advantageous for multiple sectors.

In a speech given by Govenor Edward Gramlich in May, 2004 (www.federalreserve.gov), he discussed the lending practices, stating that the increased availability of subprime mortgage credit has provided new opportunities for homeownership. This has allowed homeowners who were previously credit-constrained to borrow against their home equity for various purposes. However, the leaders of lending organizations should have anticipated the potential negative consequences of these practices in the future.

As CEO of Countrywide Financial, I would have implemented a structured evaluation system for salespeople based on their education and experience. Additionally, I would have required managers to evaluate the loans processed within their departments. Both managers and employees would be expected to adhere to specific guidelines for loan approval, with the understanding that they would be held accountable for any violations of these guidelines.

Countrywide Financial engaged in the practice of offering "liar loans," which refers to loans where no documentation of income or employment was required by loan officers (Ferrell, 2010). This unethical practice allowed individuals with minimal or no income to obtain loans, ultimately leading to inevitable foreclosure. As the CEO of Countrywide Financial, I would impose a ban on such business practices in order to safeguard both the company and

the consumers.