Ethical Behavior in the Current Business Environment

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Ethical Behavior in the Current Business Environment Currently, there seems to be a feeling of distrust among many Americans about the corporate environment. So many companies are being exposed for committing fraud, i.e., Enron, Tyco, Freddie Mac, AIG, etc., that it can be a challenge to believe that any company behaves in an ethical manner. However, out of the millions of businesses in this country, large and small, only a small percentage is exposed as being unethical. The corporate environment appears to be more conducive to ethical behavior. The Current Ethical Business Environment Corporations understand the importance of ethical behavior and usually have a code of conduct that all of their employees are required to follow. They also understand that for a code of conduct to work, it must start with executive management. According to Archer (2008), “Starting with the CEO, senior managers must continually demonstrate the company’s core values and reinforce standards of behavior.” Upper management understands that it costs more to be unethical than to follow the rules; such as reputational, financial, and operational costs. A Brief History of Freddie Mac The Federal Home Loan Mortgage Corporation, or Freddie Mac, was established in 1970 due to two main issues: to help with interest rate risk and to prevent a monopoly. Freddie Mac, one of the four Government Sponsored Entities (GSE), was created by Congress with the Emergency Home Finance Act and funded $100 million by FHLBanks (History of the Government, n.d.). It then began to assist thrifts, or Savings and Loans Associations, by buying mortgages from them which made more money available for other mortgages and lowered interest rate risk (History of the Government, n.d.). The Act also permitted Freddie Mac to buy and sell mortgages that were not insured by the government. Freddie Mac was also created

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