Case 5 Dr. J. Foo Group #: __________ Group Names:______________________, ____________________,_____________________ ________________________, ______________________, ________________________
In answering the case questions for each case, you should:
1. Show how the materials and chapter topics being covered in class relate to the case.
2. Bring in relevant current events and issues from other sources related to the case or topic to support your answers (access to the internet/ internet exercises at the end of the chapter may be helpful) to add new concepts and applications to the topic. Make reasoned arguments.
3. Make every effort to emphasize how multinational companies operate in a global environment or country.
4. Discuss its relevance and how it might be applicable to you in the business world. Be sure to include citations if used.
Letting Go of Lehman Brothers
1. Critics and supporters alike looked at causes, particularly past Congressional acts like the Community Reinvestment Act, the deregulation of the Glass Steagal Act and semi-government agencies like the Fannie Mac and Fannie Mae, as contributors to the subprime crisis. Base on your research, do you think that these Acts and agencies have a role to play in the subprime mortgage crisis?
2. Do you believe that the U.S. government treated different financial institutions differently during the crisis? Was that appropriate?
3. Many experts argue that when the government bails out a private financial institution it creates a problem called “moral hazard,” meaning that if the institution knows it will be saved, it actually has an incentive to take on more risk, not less. What do you think?
4. Do you think that the U.S. government should have allowed Lehman Brothers to fail?
5. Why did the failure of Lehman Brothers, a U.S. investment banking firm, had such a contagion effect spreading to a global financial