Ethics Bank Bailout

This typography explores the ethical motive of deposit executives receiving prominent tributees despite the f process that they received a bailout. I rank the functional and deontological implications of these executives actions. This paper also examines if the executives deserved the allowancees, did the blasphemes aim a bonus, and how the banks should return been regulated by the banks.Keywords bailout, utilitarian, deontologyEthics of Bank Bailout BonusesCurrently the economy is tranquilize in The Great Recession oversizely due to the f tout ensembleout ca utilise by banks. Banks caused this fallout by giving out home loans to unqualified borrowers.The banks authorise loans they know could non be repaid by the borrower because of the terms such as adjustable rates.These home loans started defaulting which started a domino effect of bank bankruptcys, except driving the economy into a downward spiral. In came the regime, armed with galactic sums of money determined to rescue these large fiscal institutions. Enrich, Hilsenrath, and Solomon (2009) state that 700 cardinal one dollar bills of taxpayer money was used to bailout these banks under the Troubled Assets Relief Program (TARP).It wasnt long after these bailouts that these banks continued to reward the executives with large bonuses. Should set out these jacket executives of these major banks that received the bailout money been allowed to receive large bonuses? I advance definitely not because it was wrong under the provisions of utilitarian ethics which I believe should have been applied in this point. These executives were at the head when these banks failed. Bonuses should be rewards for success not compensation for a title or position. If these banks had enough money to spread bonuses then the question of do they authentically need a bailout should be asked.Furthermore, this bailout money did not belong to the banks to give out as they pleased, it belonged to the taxpayers a nd the money should have been accompanied by pie-eyed regulations imposed by the brass. A bonus is normally given as a reward for production or as an enticement for promote behavior or performance. On Wall Street a bonus is an equivocal right with no strings attached. Success or failure does not matter. Being an executive in the countrys roughly powerful financial firms is justification enough to entitle them to a bonus. This is the methodological analysis that these institutions catch.Executives used deontological ethics because they focused on their rights and entitlements as executives. They decided their rights to large bonuses outweighed the importance of righting the economy which affected the entire country. Meanwhile, these are the same executives that were in charge when many Americans retirement plans and investments were depleted or completely wiped out. These were the same executives that oversaw an industry that gave out home loans with impossible repayment terms. It can be argued that the banks caused the entire financial woes that are still baffle today.Instead of the institutions terminating their executives for not stopping their organizations misdeeds they were rewarded. These bank executives drove their institutions to the doorstep of demise. Yet, they were still rewarded with multi-billion dollar bonuses. How could this be justified or ethical? tally to Freifeld (2009), Citigroup Inc. , Merrill Lynch & Co. and s nonetheless other U. S. banks paid $32. 6 billion in bonuses in 2008 while receiving $175 billion in taxpayer funds by TARP. That means that almost 20% of the organizations bank bail-out to these banks was used on bonuses for their institutions executives.The question has to be asked, Could the bank bailout have been 20% less to these banks? An flat more interesting question would be, Did these banks actually need the bank bail-out money? These executives took an ethical egoistic set out by accepting these bonuses. An dre and Velasquez (1989) explain that three steps to apply utilitarianism to any situation to decide a moral track down of action. The first step is to identify all the of line of reasoning of actions that are available in a situation. The arcminute step is to determine all the beneficial and evil consequences of each course of action for everyone affected by the action.Finally, the third step is to select the course of action that provides the greatest benefits after the costs have been taken into account. allows apply this theory to the bank executives and their choice to receive a large bonus. First step would have them identify all their course of actions available to them, which was to take or leave the massive bonus. Secondly, was to determine all the beneficial and harmful consequences for each course of action for everyone affected by winning or refusing the bonus. Those affected by the taking or go forth the bonus include the executive, the financial institution, an d the taxpayers.The beneficial consequence of taking the bonus for the executive is a very large sum of money. The benefit to the financial institution and the taxpayer is none. The harmful consequence to the executive would be obvious, which would be the impairment of a tremendous amount of money. The harmful consequences for the financial institution would be loss of capital that could be used some(prenominal)where else more productive and the loss of the governments confidence. The harmful consequence of the executive taking the bonus would be an increased budget deficit which may endure to higher taxes and loss of federal program funding.Finally, weighing the consequences using the utilitarian theory the greatest benefit would be for the executives to refuse the bonus. The right decisiveness for these bank executives would have been to take a utilitarian ethical approach and not accepted their bonuses. These bonuses hurt the government and the people of the United States by costing the bailout more money than inevitable and creating a larger deficit. Thus, the act of the executives taking their bonuses was morally unethical under the theory of utilitarian ethics because the consequences were more harmful for the greater population.Instead, these executives prioritized their needs and wants higher than the needs and wants of the people. financial executives were following the ideology of deontology when they do their determination to take their multi-billion dollar bonuses. gibe to Alexander and Moore (2008) deontology is based from the word duty. I believe that these bank executives felt it was their duty and entitlement to take the bonus. Also deontologists believe in following the rules even though the act may be considered the right thing to do even if it produces bad consequences (Alexander & Moore 2008).They were not breaking the rules or law when they took their bonuses because on that point were no regulations or rules against them doing so. They followed the rules and it produced the bad effect of creating a larger than necessary bailout amount. On the other hand however, the government made the bank bailout loan on good faith. Utilitarian ethics were applied in the decision to give out the loan because they feared the banks would ultimately fail without the money. The choice was made out of consequence. The consequence of failing banks would be a country with an even worse economy and completely ruined financial sector.Thus, the government acted and followed utilitarianisms theory of the greatest good, for the greater amount of people. The government should have not rushed to give the money to the banks without devising stricter regulations. Restrictions were placed on some executive compensation for participating banks, but did not limit salaries and bonuses (Despite Bailout 2008). If the government had placed limitations regulating excessive bonuses this could have been avoided. Executives would have been able to follow either consequential or deontological ethics by following these limits imposed.Instead the government through legislation did not impose sanctions against bonuses as part of TARP. By failing to do so they left the door open for banks and executives to give birth ethical choices on their own. I explored the utilitarian and deontology implications of the bank bailout bonuses. I appoint that the bank executives should not have taken the bonuses after receiving bailout money from the government by using the utilitarian theory because ultimately the consequences were more harmful than good for greater population. I also explained why executives should not have received the bonuses based on their and their institutions performance.I also questioned whether the bank bailout money was necessary because the banks had enough money to give out large bonuses. Also discussed was the idea of the government imposing stricter sanctions with the TARP legislation sorry large bonuses. I a lso stated that the bank executives could have been ethically right under the pretense of deontology. Deontologys theories revolve around duties, rules, and obligations (Waller B. , 2008). Therefore, the bank executives felt they had the right and duty to an enormous bonus as heads of multi-billion dollar financial institutions. They also followed the rules by accepting the bonuses.