Ethics and Libor Essay Sample
Utilitarian theoreticians are concerned with the maximising the overall felicity for bulk. Harmonizing to this school of idea. morality of action is determined by the effects of 1s actions alternatively of agent’s purposes. Therefore. judging from the Utilitarian position. one can reason that Libor rate use did non profit the society as whole. alternatively it benefited twosome investing Bankss. and therefore it was non an ethical action. However. how about if those Bankss really did non pull strings the Libor rate and went insolvents during the 2008 crisis. will that profit the society as a whole? Probably non. We have seen the Lehman Brothers traveling insolvent in the US and load was one time once more on taxpayers’ shoulders. Therefore. one can oppugn whether or non it would profit the society as a whole. if Barclays’s or other Bankss did non pull strings the Libor rate for adoption?
Furthermore. Kantian approaches this ethical quandary in a different position. Immanuel Kant discusses the categorical jussive mood in The Groundwork of the Metaphysics of Morals in item ; he says people should non utilize other as “means” for their ain “end. ” Furthermore. he adds people should move in a manner that can be accepted as a cosmopolitan jurisprudence. Harmonizing Kant. Barclays acted in an unethical manner. since there are universally recognized responsibilities that agents should move consequently. Therefore harmonizing to Kantian position. there shouldn’t be any sympathy towards Bob Diamond nor other higher-level executives of Barclays. In the Libor instance. judgment from the Kantian position. one can reason that others in this instance were used as agencies for investing Bankss ain terminals. Adam Smith inquiries Kantian attack and footing the moral judgement on the understanding and ignores the ground.
Harmonizing the Smith. we are more likely to happen an action ethical. if we can sympathise with the state of affairs. Therefore. one can reason that it is common for bulk to happen the Libor instance unethical. since as a general populace we can non associate to the state of affairs the investing Bankss were in. we are more likely to sympathise with taxpayers. therefore with ourself. However. what if we were besides piece of the mystifier. one of the bankers in the system. would we sympathise with this state of affairs and happen the action ethical? Do we lose the sight of world when we sympathize with the action and be unjust to the counterparty who has different acquisitions that lead to formation of a different inventive impartial witness?
Meanwhile. Aristotle’s virtuousness moralss focus on virtuousness of agent. which concerns the cardinal character and motives of the single agent. Under the agent-based attack. moral behaviour is non limited trueness to a regulation or guideline but instead involves the single rationally prosecuting moral excellence as a end in and of itself. So for LIBOR instance we can inquire to Bob Diamond and Marcus Agius. what is the good they seek when they resigned after Barclays was fined?
As is stated in the instance. LIBOR is used globally as mention rate for many types of fiscal instruments. runing from syndicated loans to hereafters and options. numbering to a value of at least $ 350trillion. Acerate leaf to state that possible damaging effects have an consequence on 3rd parties. We can separate 3rd parties in three classs: I ) persons. two ) authoritiess. and three ) concerns. Persons tend to pass more than they earn. ensuing in debt such as mortgages and bank loans. They need to pay involvement on their debt. which is determined on the market and is partly influenced by the LIBOR rate. A somewhat lower/higher rate for one twenty-four hours would non act upon such rates. nevertheless in this instance the LIBOR is perchance manipulated for many old ages. Therefore. persons might hold been paying excessively much. It could besides be that the persons ended up paying less. because of the LIBOR use Bankss seemed more fitter and hence charged a lower involvement rate. Governments ( local and national ) use involvement barters to take down their involvement payments on bonds etc. The understandings the authoritiess entered into with the Bankss can backlash if rates move in unexpected waies.
Businesss are affected by the same grounds. they are extremely active in the fiscal market in which rates depend on LIBOR. Furthermore. another of import factor here that should be discussed here is the harm to assurance and trust in the market. To try to accurately quantify the effects fluxing from the use would be an exercising in futility. There is no manner to exactly mensurate the harm done to confidence in the markets. Second the losingss caused by this use can non be accurately quantified because the exact figure of affected minutess is anyone’s conjecture. There is no consensus as to when precisely the use of the LIBOR began. although one could postulate this to hold been from the very origin of the LIBOR. It is difficult to measure the effects with sufficient preciseness since we do non cognize precisely when the use started and who is all affected positively and negatively. For an ethical point of position this is non relevant. we should non look at the result but at the actions. The fact is that persons and Bankss manipulated the LIBOR for their ain involvement without looking at the effects. That itself could be seen as unethical.