IntroductionAccording to a September 2 article provided by AP's Rexrode (2011), "The government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac (Appendix) billions of dollars worth of mortgage-backed securities that became toxic when the housing market collapsed.” Beyond the apparent legal questions, this article has me intrigued to examine whether they exist whether or not ethical issues are involved regarding the sale of mortgage-backed securities by banks A mortgage-backed security is defined by the Securities and Exchange Commission (SEC 2010) as debt obligations that represent rights to cash flows from pools of mortgages. mortgages, most commonly on residential properties. To put it simply, the buyers/investors of such securities are the lenders to all homebuyers in the United States who pay their mortgages. The reason the US government is suing major banks seems rational at first glance: the subprime mortgage crisis caused millions of people to lose their property. jobs; after all, someone has to take the blame, right? But after thinking about it, we might ask: Did the banks really cause the subprime mortgage crisis by selling mortgage-backed securities? Should banks be blamed for the heavy losses of investors involved in subprime mortgages? Is it justified for the government to sue those banks now, instead of stopping the issuance of risky securities sooner? To be specific, the purpose of this essay is to identify whether major banks are ethical in selling mortgage-backed securities. DiscussionReal estate market vs. major banksShould banks be blamed for the sale of mortgage-backed securities? They shouldn't be blamed for this, because the dramatic decline in mortgage-backed securities prices wasn't the last...... middle of paper ...... erms/a/arm.asp#axzz1Yg1GGIpvFannie Mae ( 2011). About Fannie Mae. Retrieved September 21, 2011, from: http://www.fanniemae.com/kb/index?page=home&c=aboutusFreddie Mac (2011). About Freddie Mac. Retrieved September 21, 2011, from http://www.freddiemac.com/corporate/company_profile/our_business/index.htmlParsons, J. (2011) Inflation-Adjusted Home Prices. JP Real Estate Chart Retrieved September 21, 2011, from: http://www.jparsons.net/housingbubble/Rexrode, C. (2011) Feds Sue Big Banks for Selling Risky Investments. New York: Associated Press Retrieved September 21, 2011, from: http://online.wsj.com/article/APb385e88b96c543718ec2671061996bab.html?KEYWORDS=federal+government+sue+bank#articleTabs%3DarticleSEC (2010) Mortgage-Backed Securities . Retrieved September 21, 2011, from: http://www.sec.gov/answers/mortgagesecurities.htm