Search form

INSIDE JOB (2010) (****)

Check Out the Trailer

Charles Ferguson, a former senior fellow at The Brookings Institute, turned to documentary filmmaking with NO END IN SIGHT, one of the premiere films chronicling the terrible beginnings of the Iraq War. The same extensively researched and clearly executed approach he brought to that Oscar nominated film he brings to this Oscar winning film. Upon accepting his Oscar, he commented that it’s was wrong that no financial exec has gone to prison for the fraud that led to the economic meltdown and it’s hard to disagree with him after watching the film.

Ferguson begins with a prologue to the greater financial crisis by looking at Iceland. Since 2000, the nation’s government has deregulated, which has led to multinational corporations moving in for the country’s resources and the privatization of its three largest banks. It’s a microcosm of what extensive deregulation can do. Bank execs borrowed billions and started paying salaries and bonuses that mirrored Wall Street. Stock and house prices skyrocketed. But it was all built on a house of cards. In five years, the banks had borrowed 10 times Iceland’s economy. Meanwhile, rating agencies were rating Iceland AAA. When the banks went bust in 2008, unemployment tripled and many lost their savings.

Trying to completely understand derivatives and credit default swaps is like trying to completely understand quantum physics. That’s why so many physicists and mathematicians are scooped up by banks. This is what regulators are up against. And if a regulator actually knows what is going on, the banks simply hire him. The best in the brightest are bought off quickly in order to keep them from regulating.

Ferguson makes the idea of derivatives and credit default swaps understandable in laymen’s terms. As a simple overview, the way that mortgages use to work was that the home buyer borrowed from a local bank that made the held the loan. Now it’s sold off and packaged into a derivative investment, which has home loans, credit card debt, etc. all rolled up together. These investments sold like crazy, because they were rated AAA. That’s good as gold.

So the banks wanted more and more home loans and so the pressure was on to make more loans. Subprime loans were even more attractive because the interest rates were higher. This is where the fraud started. Loans were being made that should have never been made in the first place. The film features a couple who spoke no English who got promised the world from a predatory lender and then they were shocked when the first mortgage payment came. What makes these lenders any different than the guy sending the email requesting that you help him transfer some funds from a Nigerian bank account? Do you blame the people who fall for that scam for lacking personal responsibility?

The film lays out the history of the banking industry since World War II and all the deregulation that has led to our current system. Back in the day, regular banks couldn’t speculate with depositors’ savings and investment banks were run by private owners who put up their own money. The problem now is that the line between the two is nonexistent and the bankers don’t have any skin in the game anymore. Richard Fuld, CEO of Lehman Brothers, took a $484 million bonus as his firm crumbled into bankruptcy. The system now encourages massive risk with little downsides if the bets come up bust.

So back to the regulators. Ferguson shows the revolving door between lobbyists, government and the major banks since the Reagan administration. These “experts” have fought regulation tooth and nail. Why? Because they’re all getting ridiculously rich off no regulations. So what happens when the banks fail? Just ask Henry Paulson, Bush’s Secretary of the Treasury and former CEO of Goldman Sachs. He let Goldman Sachs chief rival, Lehman Brothers, fall, but it’s funny how we desperately needed to bail out Goldman Sachs when they were about to sink.

These “experts” also claim that there was no way of knowing that the crisis was coming. Bullshit! Dozens and dozens of scholars and economists were writing papers and articles about how the derivatives market could tank the economy. Heads of business schools were writing papers that were saying the opposite. Who was right? Well, the business schools heads at Harvard and Columbia were being paid by the banks, so what makes them any different from doctors conducting health studies for the tobacco industry?

But the bankers were just getting bad advice, right? Bullshit! Daniel Sparks, head of the Goldman Sachs mortgages department, called the loans shitty. Countrywide CEO Angelo Mozilo was pushing the loans to investors, while his company was shorting, aka betting against, the loans at the same time. Countrywide wasn’t the only one doing it; all of the banks were doing it. In a footnote, Mozilo was fined $67.5 million in the biggest banking fraud settlement in U.S. history. He never had to admit any guilt. Bankrupt Countrywide paid $20 million of his tab, which could have gone to investors, but what the hell, and during his tenure at the company, he made $260 million personally from what he called internally “toxic” loans. So do the math, he tanks his company, puts people on the street, losing others life savings, while knowing is was all crap and he gets a $212.5 million paycheck. The fine is just part of doing business I guess. What would stop anyone from not doing it again and again?

These guys think their untouchable. It’s just about who is making the most money and nothing else. They own the government, because they control the money. An interesting fact in the film is that the stimulus in the brain that making money provides is the same as cocaine. Money, drugs, women. Wall Street rock stars! Kristin Davis, the Manhattan madam, went to prison, but the Wall Street execs who had her on retainer are free men.

This film will make you angry. Ferguson states at the end of the film that financial experts will tell us they have our best interests in mind and that what they do is too complex for us to understand. Here is what the film made me understand. They’re gambling with our money and when they win they keep all the profits. When they lose they get the government to rob us of our tax money to bail them out so they can keep on gambling, while we have to foot the bill for their addiction. It’s time for an intervention.

Rick DeMott's picture

Rick DeMott
Animation World Network
Creator of Rick's Flicks Picks