The Finance Crisis: Case Study: The Financial Crisis

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Case Study-The Financial Crisis
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Case Study-The Financial Crisis

➢ Background
This case study highlights the conflicts between the government and the banking sector. It discusses the disputes regarding the need to tighten up the rule and regulations of banking sector and the need to stay with the bonus driven structure.
The UK Government is considering adopting a regulation reform that will be based on directing banks to separate their retail banking from other businesses they are involved in. It also involves an increase in the capital required to be kept in the bank to combat any future fluctuations. All the stakeholders are not in favor of the reforms. Most of them believe that these structural reforms
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It states that an action is morally justified only if the intention of that act is morally right without any reference to the after effects. The various aspects of mortgage market have to be placed within the Kantian perspective to be able to understand the reasons for subprime crisis according to the Kantian view. Maxim of mortgage market can be stated as anyone can borrow subprime mortgage credits whenever he requires money for financing.

• Any maxim cannot be morally acknowledged unless it is universalizable. The above stated maxim drastically alters the first categorical imperative that an act is morally acceptable only if the maxim associated with it is universal. In other words, if all the people start lending even if they already know that they will not possibly be able to return the amount, this indicates that the maxim is actually not universal.

• As far as the UK banks are concerned, they also broke the second categorical imperative that every client should be considered not just as a source but an end. However the UK banks utilized the mortgage lenders as a mere source after deregulation to gain greater
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Therefore the immoral acts of mortgage lenders indeed are responsible for mortgage crisis.

1.4 What clashes of rights are involved in this situation? Is it possible to judge their relative importance? Whose rights matter most in this situation?

• The clash of rights is between the mortgage lender and the mortgage borrower. The main aspects of subprime mortgage crisis involved low credit quality loans given at decreased interest rates and were scrutinized. They were sold to the investors who were interested in investing in this sector.
Some of the rights involved in the case study are mentioned below:

• The banks have the right to accessibility of their retail operation so that they can finance their investment operation.

• The small businesses have right to get loans with an optimum or bearable interest rate.

• The government has a right to induce policies to restrict the risky role of banks in order to protect the money of the tax

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