Overview of the Ethical Problems facing Goldman Sachs

Overview of the Ethical Problems facing Goldman Sachs

Matt, a management level executive of Goldman Sachs, is on the verge of making a decision on how to reimburse the agreed upon magnanimous payment packages to the group of eight highly salaried traders who had made between $1.5 billion to $3 billion for Goldman Sachs during the years 2008 and 2009. In this context, the main problem that Matt is facing is that owing to the financial recession, there was a widespread criticism and demand for reform in the pay structures across the global financial industry. The extensive criticism is directed to the practice of paying hefty bonuses to the traders by the financial institutes in case their risky investment succeeds. On the contrary, the traders are not subjected to any sort of penalty during instances when their hazardous investments fail. Instead, the bailout amount is paid out from the pockets of the taxpayers if in case the failure of the huge perilous investments leads to a crisis scenario like the subprime crisis (Martin & Scotto, “Bailouts and Bonuses on Wall Street”).
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