Business Ethics

Ethical Issue/Values conflict: Rebecca Mairone faced was the Chief Operating Officer in
Countrywide Financial Corporation, which is the lending division of Bank of America. In spite
of doing her work diligently, she was wrongly being represented as an employee who has
misrepresented and wrongly analyzed the quality of loans that were sold to Fannie Mae and
Freddie Mac. The issue here is that though she worked sincerely, she was being tried in court for
a fraud.

Values lacking in the Organization: The bank had indulged in faulty practices while giving
mortgage loans. There was no proper security or collateral taken for the loans. This led to
extensive usage of mortgage loans. Later on, the loans were not paid back and this led to the
financial crisis of 2008. The values that the organization and the system lacked were: lack of
proper check on the collateral issued before sanctioning the loan and lack of verification of the
genuineness of a mortgage loan application. There was lack of proper implementation of any
checking or control measure that would identify the errors in the loan sanctioning process. There
was also no transparency in the guidelines and policies of giving mortgage loan. These values
would have helped in identifying the risks involved in such loan giving practice and the financial
crisis could have been avoided.

Stakeholders: The stakeholders in this case were the employees of the organization and the
general society. The effect of the mistakes done by the bank in the mortgage loans had its effect
in the form of the financial crisis on the whole of United States as well as the world economy.
From Rebecca Mairone’s point of view, the stakeholders were the company’s management, the
employees of the company and the society in general. The company’s management could have
stood beside Rebecca Mairone to support her honesty. This would have made the case stronger
from her side. Similarly, the employees of the company who were also her colleagues should
have supported her during such difficult times. But instead of doing so, they put the blame of the
whole fiasco on her. The whistle blower Edward O’ Donnell, who received a huge amount of
money for whistleblowing, also blamed Rebecca Mairone. Since, none of the stakeholders
helped in any manner to prove the innocence of Rebecca Mairone, it had to be done on her own.
The society would believe whatever the court would decide. Thus, the dilemma had to be
resolved such that she could prove herself innocent.

Role of Conformity bias: The incidence of conformity bias was very high in the company.
There was no effort to find out what the truth or the reality was. Since the whistle blower had
highlighted the name of Rebecca Mairone in the report, everyone in the company blindly
believed it. The decision to issue such loans was not taken by any one person of the company
alone. However, the blame of the crisis was put on only one person. It also led to loss of
employment and so there was no option left but to fight the case to win it and clear her name
from the controversy.
Reference:

Shayndi Raice, “Ex-Countrywide Executive Rebecca Mairone Defends 'Hustle' Mortgage

Program”, Wall Street Journal, 15th Oct, 2013. https://www.wsj.com/articles/no-headline-
available-1381869163

“Rebecca Steele (Formerly Mairone) Found Innocent In 2008 Financial Crisis” accessed from
https://www.aapia.org/node/1154