Ethics of Lending Practices Scrutinized in Press Reports
Feb 18th, 2008 • Posted in: NewsIn other business-ethics news, Valentine’s Day flowers are also under the moral microscope
NEW YORK and BOGOTÁ
Ethics figured in several business stories from the world press last week:
- The U.S. Securities and Exchange Commission wants to make Wall Street financial disclosure data more transparent and is currently probing more than three dozen cases related to the subprime mortgage meltdown, chairman Christopher Cox said last week. Reuters reports that Cox is focusing on the “quality of issuer disclosure,” or the clarity of language describing risk, related to the companies involved in marketing complex securities based on risky mortgages.
- The ethics spotlight also is being focused on another type of lender, reports the Wall Street Journal: companies that make so-called payday loans. Such loans typically are for small amounts but come with very high interest rates and typically target low-income borrowers. The Journal reports that payday lenders increasingly are targeting recipients of Social Security and disability benefits. According to Journal reporters Ellen Schultz and Theo Francis, payday lenders are “forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.” As a result, the report claims, many legal-aid lawyers and senior-citizen service groups say they are seeing many clients on Social Security struggling to keep up with multiple payday loans.
- Last week’s Valentine’s Day highlighted the ethics issues surrounding employment conditions for workers who cultivate flowers, often in large operations headquartered in Colombia. The BBC reports that flower workers have found a voice in Floverde (Green Flower) certification, a program that requires producers to meet 165 criteria, including protecting workers from pesticides and imposing a maximum workweek of 48 hours with no more than 12 hours of overtime. According to the BBC report, the increasing demand for Colombian flowers by U.K. florists and supermarket chains has led to increasing scrutiny, with buyers visiting job sites to ensure that suppliers are in compliance with Britain’s Ethical Trading Initiative, which also includes provisions protecting the right to unionize.
Sources: Reuters, Feb. 16 — Wall Street Journal, Feb. 12 — BBC, Feb. 16.
For more information, see: Related Newsline story, Jan. 28 — Related Newsline story, Jan. 14 — Related Newsline story, Dec. 10, 2007 — Related Newsline story, July 2, 2007 — Related Newsline story, Dec. 11, 2006.
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