The Big Short Film: Motivation, Rationalization, and Opportunity to Commit Fraud

Fraud and Corporate Greed: A Case Study Based on the Film, The Big Short
Student’s Name
Institution
Course Number and Name
Instructor’s Name
Due Date
Fraud and Corporate Greed
The film, The Big Short, to a great extent, describes the three facets that provide the perfect condition for one to commit fraud: pressure, rationalization, opportunity (Free, 2015). Based on a true story, the film narrates the unfoldings leading to the financial crisis of 2008 following a calculated move by some greedy and crooked investors who placed bets against the banks after unmasking a vulnerability in the housing market (McKay, 2015).
Motivation to Commit Fraud
1. High-interest rates
The banks and the credit rating agencies appeared to have defrauded the people in the housing market by inflating the market with high-risk loans backed by skewed credit ratings. The financial institutions engaged in predatory lending in the wake of the 2007-2008 financial crisis, and their goal was to reap more money from borrowers through high-interest rates.
2. The imminent crash of the mortgage-backed real estate market
The wall street investors from the film, led by Michael Barry, Jared Vennett, and Mark Baum, had prior knowledge of the impending crash of the mortgage-backed real estate business carried out with the help of the financial institution. As responsible and duty-bound citizens, the investors had an obligation to warn the authorities and the financial institutions of the dangers of such a business but rather took it as an incentive to commit fraud by shorting the housing market.
Rationalization
1. The perceived boom in the Housing business
The financial institutions and the credit rating agencies knowingly or inadvertently committed fraud by offering subprime mortgages with the pretext of the boom in the housing business. The financial institutions were confident of the boom in the housing business to the extent of allowing the investors to bet against the subprime mortgages, signifying immense confidence...