Business Case Studies,Corporate Governance & Business Ethics Case Study, Flour Corp's Business Ethics Practices: Creating Six Sigma Standards in Staying Corruption-Free

Code : GOV0041

Year : 2009

Industry : Banking

Region : Global

Teaching Note: Available

Structured Assignment : Not Available

Abstract:
This case study is compiled to highlight the moral arguments on bailing-out the banks that have lost more than a $ 1.5 trillion of investors’ money by betting on the highly complicated financial instruments. The case builds an interesting debate over extending an exorbitant helping hand for the financial institutions, by forcing the huge sums on exchequers.

In the late 1990s and early 2000s when the great housing bubble was building in the US, the so-called “too big to fail” banks have created, traded and invested in toxic financial derivatives. They lured the speculators and investors from across the globe by multiplying the initial investments at every corner point in the chain. In the process these banks grew even bigger by every passing quarter and the Wall Street was all too happy to bestow AAA ratings to the financial investment that barely anybody could decipher – not even the creators. The euphoria blindfolded everyone involved to question the fundamentals. And when the bubble bust, the financial institutions were worth nothing more than a heap of paper assets. The federal government – on behalf of taxpayer – assumed the onus of honouring the cheap, toxic assets to the tune $1.3 trillion. The idea behind the valor was noble -to arrest the damaging effects and bring normalcy to the sinking financial system. But, what happened after the bailouts was all the more disappointing. Some of the banks that were benefited by these packages have announced bonuses for their executives.