To evaluate the actions and practices discussed in “What Was Up with Wall Street? The Goldman Standard and Shades of Gray”, using ethical analysis models other than the question “Is it legal?” we can consider several ethical frameworks. Here, I’ll use three prominent ethical analysis models:
Utilitarianism:
Utilitarianism assesses actions based on their overall consequences and aims to maximize the greatest good for the greatest number.
Mortgage-Backed Securities: The sale of complex mortgage-backed securities without transparent information can be considered unethical from a utilitarian perspective. While it may have generated profits for some, it had widespread negative consequences during the financial crisis, causing harm to many individuals, investors, and the economy as a whole.
Conflict of Interest: Failing to disclose conflicts of interest can be considered unethical, as it can lead to biased advice and harm investors. The practice prioritized profits for a few at the expense of the broader investing public.
Deontology (Duty-Based Ethics):
Deontological ethics emphasize adherence to moral principles and duties, regardless of the consequences.
Mortgage-Backed Securities: Deontologically, selling mortgage-backed securities without adequate disclosure could be viewed as unethical because it violates the duty to provide complete and accurate information to investors.
Conflicts of Interest: Failing to disclose conflicts of interest also goes against the duty to act with honesty, transparency, and loyalty to clients, which is expected in the financial industry.
Virtue Ethics:
Virtue ethics focuses on the character and virtues of individuals and organizations.
Mortgage-Backed Securities: The practice of packaging and selling risky mortgage-backed securities might be seen as a failure of virtue ethics. It reflects a lack of honesty, integrity, and responsibility in pursuing short-term gains.
Conflicts of Interest: Concealing conflicts of interest reflects a lack of transparency, honesty, and fairness, which are virtues expected in the financial sector.
In both cases discussed, the actions and practices involved lacked transparency, honesty, and integrity, which are core virtues in ethical analysis. They also had significant negative consequences for investors and the broader financial system, which would be evaluated unfavorably from a utilitarian perspective. Additionally, they violated their duties to provide complete and accurate information and to act in the best interests of clients, which goes against deontological principles.
Overall, ethical analysis using these frameworks suggests that the actions and practices described in the article had ethical shortcomings, regardless of their legality. They demonstrate a failure to uphold ethical standards and principles expected in the financial industry, ultimately contributing to the financial crisis.
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