Question
As you may have read, in 2008, the U.S. Federal Reserve Bank (The Fed), fearing the financial collapse of Bear Stearns, a major investment firm,
As you may have read, in 2008, the U.S. Federal Reserve Bank (The Fed), fearing the financial collapse of Bear Stearns, a major investment firm, engineered its sale to another Wall Street firm. In order to facilitate the sale, The Fed, guaranteed the value of almost $30 billion worth of Bear Stearns investments, much of which were based on questionable real estate loans. Many of those who questioned the appropriateness of the Fed's actions asked why it chose to "bail out" a large investment bank, at the possible expense of U.S. taxpayers? At the same time, others asked why the Fed had not instead chosen to guarantee $30 billion of home mortgage loans of individual homeowners facing foreclosure on their sub prime home loans? What ethical reasons would you give for choosing to bail out homeowners over Bear Stearns or Bear Stearns over individual homeowners? Does ethics even enter into it? Is this simply a business decision with no ethical ramifications to it at all? What do you think?
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