Ave Maria School of Law; Thomas More Law School; Bond University School of Law
July 27, 2008
VERANTWORTUNG IN EINER KOMPLEXEN GESELLSCHAFT/RESPONSIBILITY: RECOGNITION AND LIMITS, Anton Rauscher, ed., 2009
This paper briefly outlines the sub-prime lending crisis and how it came about, including an explanation of who were the lead players involved in the popular practice of securitization, and American courts’ approach to exotic financial products. It also explains some of the differences between the European and U.S. markets for collateralized debt obligations ('CDOs'), and discusses possible implications for the notion of 'responsible' lending, both in domestic and global contexts. Some of the insights of Max Weber and Alasdair MacIntyre on bureaucracy and the law are used to point beyond greed to more systematic causes lying within modernity.
The paper concludes by suggesting that assets should be presumed best left on the balance sheets of those who originated them and that bad lending decisions should not be 'on sold' except in the most transparent manner possible. It also questions utopian dreams of 'bankruptcy remote' businesses and constantly rising prices. Modern bureaucratic structures that reach across institutions must not be allowed to command unrealistic and unsustainable economic models.
Number of Pages in PDF File: 26
Keywords: subprime lending, Max Weber, bureaucracy
Date posted: September 6, 2009 ; Last revised: September 13, 2011