Corporate cultur1

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Running Head: CORPORATE CULTURE 1

Corporate Culture

Student’s Name

Institutional Affiliation

CORPORATE CULTURE 2

Corporate Culture

The case presents some of the error that the Mortgage Companies did. Despite the New

York Times warning in 1999, the Companies went ahead and guaranteed $12 trillion in the

mortgage market. The situation severely affected them in the 2008 economic crisis. They

committed themselves despite the fact that the homeowners could not afford to pay for the

mortgages. The government further relied on their reports, which had accounting errors, and

passed new regulations to allow them buy $200 billion subprime loans. For example, Fannie Mae

was charged with a criminal offence for misleading financial statements. The government

assisted AIG Company by giving it some injection worth about $180 billion. This was a measure

to rescue the Company from facing total bankruptcy in 2008 economic crisis. The government

therefore became a shareholder in the Company holding up to 79.9 percent of the ownership.

This indicated a sort of cooperation with the government. However, the government aimed at

rescuing other Companies that depended on AIG from possible bankruptcy (Greenberg, &

Cunningham, 2013). Issues of ethics violation were rampant especially in the face of excessive

risk-taking and rewards.

Corporate culture is necessary for establishing the integrity of all relations in the

Company (Flamholtz, & Randle, 2011). If there lacks an appropriate governance that build on

checks and balances, the top officials have a chance of neglecting the stakeholder’s interest for

their personal interest. Therefore, corporate culture prevents cases of misconduct and penalties

from violation of certain regulations. Executive compensation is a factor that has been attributed

to the 2008 downfall of most of the Companies. Despite the financial constraints, the official

continued to receive very high bonuses. For example at Merril Lynch Company, the top

executives were awarded $3.6 billion as bonuses while the Company was undergoing financial

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Running Head: CORPORATE CULTURE Corporate Culture Student’s Name Institutional Affiliation 1 CORPORATE CULTURE 2 Corporate Culture The case presents some of the error that the Mortgage Companies did. Despite the New York Times warning in 1999, the Companies went ahead and guaranteed $12 trillion in the mortgage market. The situation severely affected them in the 2008 economic crisis. They committed themselves despite the fact that the homeowners could not afford to pay for the mortgages. The government further relied on their reports, which had accounting errors, and passed new regulations to allow them buy $200 billion subprime loans. For example, Fannie Mae was charged with a criminal offence for misleading financial statements. The government assisted AIG Company by giving it some injection worth about $180 billion. This was a measure to rescue the Company from facing total bankruptcy in 2008 economic crisis. The government therefore became a shareholder in the Company holding up to 79.9 percent of the ownership. This indicated a sort of cooperation with the government. However, the government aimed at rescuing other Companies that depended on AIG from possible bankrupt ...
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