Cengage Advantage Books: Business Law 9th Edition by Arnold Goldman ,William Sigismond

Exercise 12

The primary responsibility of a business (which includes banks) is to ensure that the business continues to be profitable. Making a profit enables the business to survive. No one will argue against this theory. However, the question becomes does a concentration on profit maximization provoke a conflict with ethical issues? Banking institutions are a good example. Historically, banks have been viewed solely as financial institutions. Ethics in banking is a relatively new area- which brings problems to light and, as a result, affects depositors. Banks do not keep depositor money in a big vault in their brick and mortar buildings, but rather they invest the money. In the meantime, depositors assume their banks will do their best to maximize returns for them by making good investments. In this modern age, however, depositors are not so sure that their welfare is high priority; depositors feel that banks are really looking to maximize profits through good investments for the banks' sake.
Questions
1. Do you feel that banks place profit motivation over depositors' interests in maximizing their returns from deposits they make? Explain.
2. How could banks improve their image to show that they are ethically concerned about their depositors?
3. Has the federal government done anything to regulate the ambitious desires of banks?