•Would the model mean that Fannie Mae could be labeled an “honest” company? Why or why not?

In reference to the latest U.S. financial crisis, no. The company did not comply with the law. Fannie Mae was created to ensure more housing for Americans with less focus on profits and a desire to improve the quality of life of citizens after the great depression. As mentioned in the class text, politics in general change with time (Jennings, 2012). Historically Fannie Mae was a part of The Big Deal and was essential to grow the economy of the US for generations. There have been moments in history that the role of the company might place it as socially responsible (Frame, 2015). But past performance does not always guarantee that businesses are/have/will maintain/ing/ed the same level of social and ethical behavior. Organizations change leadership and with this their internal and external strategies. Let’s provide an answer to each of the questions in Entine and Jenning’s model below based on the facts stated in the text book (Jennings, 2012):

The character of Fannie Mae’s soul around the time of the 2008 US financial crisis:

•   Does the company comply with the law?

    -Accounting practices violated GAAP regulations

    -High risk investing not reported

•   Does the company have a sense of propriety?

     -Company was very profit oriented which put its goods at risk

•   How honestly do product claims match with reality?

    -Credit offerings were not adequate to clientele

     -Media image prior to unveiling mal-practice of the company was distorted and did not reflect its wrongdoings

•   How forthcoming is the company with information?

      -The company reported false high profits

      -The company was not fully cooperative in parts of the investigation

•   How does the company treat its employees?

     -Employees complains about mismanagements were not attended

•   How does the company handle third-party ethics issues?

   

      -The company co-participated with banks to allocate inadequate  mortgage credit

      -The company lobbied strongly providing or removing support to politicians to influence legislative activities that would affect their business

•   How charitable is the company?

            -N/A

•   How does the company react when faced with negative disclosures?

            -N/A

            Even though I did not provide an answer or source for the last two questions all of the other six questions show a negative answer. According to the model Fannie Mae lost its soul.

Works cited

            Frame, W. S., Fuster, A., Tracy, J., & Vickery, J. (2015). The rescue of Fannie Mae and freddie mac†. Journal Of Economic Perspectives, 29(2), 25-52. doi:10.1257/jep.29.2.25

            Jennings, M. (2012). Business ethics: case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.

ISBN: 9780538473538