Should Wells Fargo lose the latest DOJ lawsuit, Were they ethical in Research Paper

Should Wells Fargo lose the latest DOJ lawsuit, Were they ethical in there practices with the Mortgages - Research Paper Example Recently, the company has been facing a lawsuit that requires them to pay for damages, because of acting unethically toward offering substandard mortgage loans, which might have powered the financial crisis in the region (Raindi & Timiraos, 2012). This paper will examine the lawsuit, and if the company is justified in claiming they acted within their financial ethical boundaries. In October 2012, the Department of Justice was at the forefront in trying to prove that Wells Fargo & Co. acted unethically by providing shoddy mortgage deals to insurance programs in the U.S., hence; creating a loss of millions of dollars. An Act enacted in 1989 allows the government to sue any financial institution if the affected party is insured by the federal government. The Department of Housing and Urban Development in US is accusing Wells Fargo & Co. of offering shoddy loans to first-time buyers (Raindi & Timiraos, 2012). According to the Department of Housing, this was done with complete disregard a s to whether the parties being given loans had the ability to pay or not. The probability of Wells Fargo losing the lawsuit There is a likelihood that Wells Fargo & Co. might lose the lawsuit. This is because under the various laws that govern the operations and functions of financial institutions, the company may have gone against the law in their undertakings. The law of restrictions under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), is still a factor to consider, where the company is still liable for prosecution by the state even after the period that has elapsed. The company can also be prosecuted under the federal False Claims Act. The refusal of the banking institution to report the defective loans has played a vital role in the escalation of the financial crisis (Raindi & Timiraos, 2012), which still rocks the U.S. and countless other regions to this day. The company claims that since it was the only institution affected by its actions, there is n o possible reason why it should be prosecuted for unethical practices within the organization. This claim was thrown out of court as the judge presiding over the case indicated that even if the only party affected by such actions was the one under prosecution, it still had to face the charges leveled against it. It is the belief of countless individuals that the simple act of choosing not to report these defective loans meant that the company knew about the issues they faced, but did not bring them to the HUD’s attention. This is tantamount to fraud, according to the court, and that is probably why the company may lose the suit by the U.S. Department of Justice. It is unethical for any financial institution to hold out on information (Jennings, 2011), which may be done to save money and disregard the integrity of the organization they serve. The ethical nature of the company’s lending practices There were some unethical undertakings by the company during the lending of loans to people. It is the task and duty of a financial institution to properly vet the people it is meant to serve, especially when dealing with loans. This is so as to see the chances of the loans being paid by the parties offered loans. In the company’s case, they were sure that any failure by the parties to pay would be bailed out by the Federal Housing Administration, which often bailed out first time buyers (Raindi & Timira

Conflict between the Management and the Employees of Riverside Hotel Case Study - 7

Conflict between the Management and the Employees of Riverside Hotel - Case Study Example However, on off-peak days if the hotel receives only 20 guests, the employees will not be performing work on the value level required. This means that the fixed cost incurred through paying wages is a loss for the hotel. The reduced meal cost for the employees also reduces the profit margin. As such, an opportunity cost presents itself in the form of making the cost of wages variable. This means using the size of the reservation to determine the number of customers who will available and create a roster that will see a rotation of extra employees staying at home on days with low volumes of business. Â  The source of conflict between the management and the employees of Riverside Hotel is the costs the employees incur as a result of their taking dinner at the hotel on the late shift (Jiambalvo Case study 1). The hotel’s labor agreements allow the employees to have free meals during their shifts, provided the meal did not exceed $12. This means that any cost in addition to the $12 would be deducted from their wages. The conflict arose when those taking the late shift found that they had been deducted $10 from their wages for every meal. This meant that the meal cost $22 (Jiambalvo Case study 1). To the employees, the management is just ripping them off because they know the price of the supplies and according to them it should not cost them such a figure for one meal. For example, a prime rib dinner includes supplies of a $7 piece of meat and a $1 salad. This adds up to $8 hence the basis for the employee arguments that the meal should not cost even $12. Â  However, the argument of the employees is both right and wrong. It is right because charging them $22 for a meal that they have helped to put together from $8 supplies does not augur well with any business management practice.