Unfortunately, it did. On October 29, 1929, the stock market crashed, and the United States once again found itself in economic turmoil. Prior to this, many people had begun purchasing stock on margin, or in other words, on credit. When the market crashed, the stock brokers called the loans they gave out back so that their companies may survive, except the loans couldn’t be paid back by the debtors. Many of the nation’s banks soon went under because they too had paid into the stock market and had lost much of their money.
Employee feedback was discouraged. Critique of Lehman’s corporate policy was not tolerated, and questioning of its risky business practices snubbed or worse, as in the case of Lehman’s “whistle blower” Matthew Lee. According to Andrew Clark of the Guardian (2010), Lee “a worried accounting executive at Lehman Brothers raised alarm about what he saw as dubious number-crunching at the doomed Wall Street Bank” (para. 1). Just one month after alerting auditors to his findings, Lee was dismissed from his role as senior vice president of the financial division citing workforce reduction.
English Comp 1 November 11, 2013 How Bad Has the Government Shutdown Hurt the Economy? The government shutdown lasted 16 days, and in total, cost 6.6 million in work, with a back pay of $2 billion (Lowrey, A20). It cost many people their jobs which will have to be paid back. Government services which were delayed, like cancer studies, kids left out of Head Start, etc., will up the cost even more (Lowrey, A20). The government didn’t calculate how much this would all cost and what would be delayed because of it.
During an investigation there were many questionable accounting transactions that were brought up, such as large executive bonuses as well as many loans for large amounts of money that were later forgiven without repayment. Kozlowski and Swartz were sentenced to 8 – 25 years in prison ("Investopedia", 2014). Then a lawsuit against Tyco cost the company $2.92 billion in repayment to its investors ("Investopedia", 2014). The biggest issue here was allowing for a CEO and CFO to have too much access to funds. A protocol should be in place that when a sale of stocks is made and no one authorized it then a full audit should take place from a third party or if a loan is going to be made then more then just the CEO and CFO’s approval needs to be given.
6, 2008. In an already tumultuous market the preferred stock of the two firms tumbled to below a dollar. September 2008 was the month that saw the fall of many financial institutions. Banks termed too big to fail. Lehman Brothers file bankruptcy, Merrill Lynch was bought out by Bank of America, and AIG, an insurance company that sold insurance to investment banks to cover the downturn of investments, was on the brink of financial distress along with so many other failing financial institutions.
THE GREAT DEPRESSION American success failed when the stock market crashed in 1929 during President Herbert Hoover’s administration. All of a sudden people were out of work, thousands lost their savings, and the nation was in a state of shock. Even millionaires lost their money. The problems and the causes that led up to The Great Depression were multiple. Farm income went down from the drought.
The stress that can compel a company to doctor their financial data can override the compromise of ethics within an organization. A look back at the catastrophic financial mistakes of health care organizations in the past illustrates the devastation unethical accounting can cause. HealthSouth provides an excellent glimpse into the horrible consequences when it all comes crashing down. According to Bouchard (2012), "Committing fraud, said the former CFO, had consequences he couldn’t and didn’t foresee. It nearly destroyed him emotionally, which is why he retired to everyone’s surprise in 1997 at the age of 54, just a year after the fraud began.
Stock Market Crash of 1929 caused bank failures all over the United States. Throughout the 1930’s over nine thousand banks failed. Beginning in October 1930 and lasting until December 1930, the first of a series of banking panics now accompanied the downward spasms of the business cycle (Rosenberg, Jennifer). Although bank failures had occurred throughout the 1920s, the magnitude of the failures that occurred in the early 1930s was of a different order all together.The absence of any type of deposit insurance resulted in the contagion of the panics being spread to sound financial institutions and not just those on the margin. Bank deposits were uninsured and because of that people lost their savings.
It was hard enough with just a recession, but now banks are much stricter when it comes to lending. Surveys done show that 63 percent of companies with less than 100 employees are having trouble with credit, 12 percent had to lay off employees because of it, and 1 in 5 of 600 polled are at risk of going out of business in the next six months. In a brief interview with Mr. Paul Braungart III, entrepreneur and president of Regional Capital Group, a commercial real estate lender and investment company based in Marlton NJ, Mr. Braungart explained that the crisis has impacted values of property and the ability to buy and sell. Therefore, no one’s doing anything really, which paralyzes the market because everyone’s afraid to make any potentially risky moves. The commercial real estate market isn’t as bad off as the residential market, but it has a significant ripple effect on the mind state of the nation.
Around August of 2007, banks become afraid to loan money out due to the fact that they did not want to suffer from losing money yet again. “This led to the $700 billion bailout, and bankruptcies or government nationalization of Bear Stearns, AIG, Fannie Mae, Freddie Mac, IndyMac Bank, and Washington Mutual. By December 2008, employment was declining faster than in the 2001 recession.”(useconomy.com). With so many foreclosures on houses, many americans were either homeless, or had bought a cheap apartment to keep them from being homeless. Because of the recession, and bad economic, many Americans have no jobs, and barely have a house.