Ethics Essay Example | Topics and Well Written Essays - 2000 words - 2

Ethics - Essay Example Nearly every citizen in the developed world is a customer to a bank or two. Banks are used in nearly every aspect of human lives, some apply for bank’s mortgages, while others apply for assets financing from the banks, and the payment of salaries through bank accounts heightened the need for everyone to operate a bank account in the country. The crisis therefore directly affected nearly every citizen. Whenever a bank makes losses, it does so with other people’s money in it, most banks used their clients money top run business and make profit, in a crisis such as the one experienced in 2009, most of these money therefore get absorbed up in the crisis resulting in direct losses to the very unsuspecting customers. The final major stakeholder in the financial sector is the government, who acts as the moderator in every crisis. The populace, in an attempt to coordinate the operation of activities especially in a democratic society, forms governments; some of the activities c oordinated by a typical government include the financial stability of a country. The country must have enough currency floating within its economy to enhance governance. However, when banks make losses most of the citizens lose faith in the banking sector, which results in the closure of bank accounts as, was experienced in the United Kingdom. This results in governance crisis since the economy fails to have enough money circulating at any one time, the lack of money circulating results in a series of negatively implicating activities most of which would eventually ground the operations of the government. Given this understanding, the British government bailed out a number of banks that has made enough loses resulting in their clients lining up to close their bank accounts. Such occurrences could have stalled the English economy, the government therefore bailed out banks in the country by offering them a seventy billion pounds financial aid. 1.2 The occurrence of the financial crisi s especially in the United Kingdom was purely a managerial issue. The number of banks has increased in the country, this followed the effective and substantial growth in the economy, when the economy becomes liberal, a majority of players comes on board to try the new business opportunities. The resulting competition made the business environment marked with a lot of uncertainty. Every business venture needed customer; they needed business to stay relevant to the market. Banks thus began the packaging of different products key among which was loans. Mortgages, asset financing and basic loans became very easy to access as most of the financial institutions relaxed their terms of borrowing. As more citizens and clients thronged tge banks for loans among other financial services, it was eminent that very soon the country would hit a financial snag. The banks had greatly relaxed their terms and conditions, getting a loan from any bank thus became a child’s play. The English marke t is one of the most aggressive in the world. They thus applied for loans from the banks sighting different reasons most of which the banks never ascertained their credibility. Most of the loaned customers had poor loan payment histories, which unfortunately the banks did not bother to look into. Most of the loaned customers began defaulting; some became unreachable resulting in a definite loss for most of the banks. This was a financial crisis in waiting, the economy plunged into bankruptcy which it