INSIDE JOB (MOTION PICTURE)
Summary
A documentary film detailing the causes and effects of the 2008 economic crisis. The film begins by using Iceland’s economic collapse as an example of the global impact of the 2008 economic crisis. The film details the history of the American financial sector. Until the 1980’s, banks were prohibited from using investor’s money to speculate on trading deals, but investment banks went public in the 1980’s and made huge profits from the influx of stockholder money. In 1981, President Ronald Reagan elects Donald Regan, CEO of Merrill Lynch, as the United States Secretary of the Treasury. Under Regan, savings & loans companies are deregulated and allowed to use investor money on financial gambles. By the end of the 1980’s, many savings & loans companies had failed and many investors lost their life savings as a result. The executives of those companies went to jail for their illicit business practices. Many were advised to do so by Alan Greenspan, who was appointed as Chairman of the Federal Reserve. Deregulation continues in the 1990’s under treasury secretaries Robert Rubin and Larry Summers. At this time, the financial sector consolidates intoa few huge firms. Corporations Citicorp and Traveler’s Group unite to form Citigroup in 1998, changing merger laws as a result, encouraging future big-business mergers. In 2001, the internet investment bubble crashes. Then-New York State Attorney General Eliot Spitzer investigates and finds that investment banks promoted internet companies to their customers that they knew would fail and that stock analysts were lying to the public about the true worth of these companies. The film explains that deregulation has led to various criminal activities from corporate leaders, including money laundering, fraud, and record falsification. The late 1990’s see the creation of derivatives, private agreements where bankers could bet on the outcomes of stocks and investments. This creates a $50 trillion unregulated market. Brooksley Born, then-chairwoman of the CFTC, tries to regulate derivatives but is quickly shut down by Summers and other government officials. In the December of 2000, a ban on derivatives regulation is passed. By the time George W. Bush is sworn in as President of the United States in 2001, the mortgage system has been drastically altered. The old system was an agreement solely between home buyers and lenders for a loan to be paid back over time, but in the 2000’s lenders secretly sell mortgages to investment banks, which them combine the mortgages with other loans to create derivatives called “Collateral Debt Obligations,” or CDOs. CDOs are sold to investors all over the world, and because of this system loans secretly become riskier. The early 2000’s see an increase in risky subprime loans; when combined to create CDOs they are still awarded high ratings from credit ratings boards and thus considered by the public to be safe. This cyclical behavior creates a rise in predatory loaning, tricking buyers into accepting loans with high interest rates and poor credibility. The availability of mortgages increases home prices across the nation. Corporate CEOs see massive profits from this scheme; the federal government does nothing to regulate it despite having the ability to do so. Greenspan is ideologically opposed to regulating such transactions. Banks acquire massive “leverage,” a term used for the ratio of borrowed money to the bank’s own money. Some banks reach a leverage as high as 30:1 or higher to get money to purchase more CDOs. The bank AIG sells huge amounts of CDOs called Credit Default Swaps, in which investors pay AIG quarterly premiums in exchange for compensation from AIG if their CDO goes bad, essentially functioning as an insurance scheme where any investor can apply. AIG is warned of the risk of this practice by auditors, but it blocks any attempt to investigate. In 2005, International Monetary Fund Economist Raghuram Rajan delivers a paper to elite banking heads at an international financial conference about the dangers of their risky business ventures, but it is not received well. The film details the extravagant expenditures of Lehman Brothers CEO Richard Fuld and the widespread use of drugs and prostitution by corporate leaders. In 2006, the CDOs begin to fall out and Goldman Sachs is sued by disenfranchised customers. Goldman Sachs had begun betting against its own CDOs by purchasing Credit Defaults Swaps from AIG, then sold those CDOs for a higher profit dependent upon customer’s losses. The film details some of the crisis’s warning signs, such as the FBI’s 2004 investigations and several articles written by noted economic experts. Foreclosures increase throughout the country and lenders can no longer sell loans to investment banks, causing the lenders to fail. In 2008 the lenders start to get bought up by larger companies and by the federal government. Lehman Brothers declares bankruptcy, causing a major disruption in the world economy due to foreign bankruptcy laws and AIG heavily in debt. On September 18th, 2008, AIG is taken over by the government and on October 4th, President Bush signs a $700 billion Wall Street bailout, which does nothing to stem the tide of foreclosures and layoffs across the country. The global community is affected as well; China loses 10 million jobs. By 2010 there are over six million foreclosures in the United States. The CEOs of these companies escaped the crisis with their fortunes largely intact. The crisis has left the banks more consolidated and powerful than before. Financial lobbyists continue to exert considerable influence over the political system. Academics are affected as well; economics professors in some of the nation’s top colleges sit on the board of directors for many large companies and helped them perpetuate their schemes. They refuse to acknowledge an academic conflict of interest. The result of the massive layoffs has weakened the United States’s economic power. It is still the leader in terms of information technology, but that field is accessible only to educated citizens, which are increasingly difficult to come by. Colleges are becoming more and more expensive; the gap between the wealthy and everyone else is widening. Recent tax cuts favor wealthy citizens, and many Americans are in debt trying to pay for their homes and their children. President Barack Obama promised economic change as part of his campaign, but has affected little economic reform so far. The Federal Reserve is still chaired by the same CEOs who created the economic crisis, and the United States has not responded to a consortium of European nations calling for stricter regulations of bank compensations. The CEOs who committed fraud and perpetuated the CDO scheme have not been charged with any criminal activity. The film ends with a plea for accountability against those CEOs and a call to work to change the United States’ system of economic management.
Details
- NETWORK: N/A
- DATE: November 30, 0200
- RUNNING TIME: 1:48:35
- COLOR/B&W: Color
- CATALOG ID: 104724
- GENRE: Public affairs/Documentaries
- SUBJECT HEADING: Public affairs/Documentaries
- SERIES RUN: N/A
- COMMERCIALS: N/A
CREDITS
- Jeffrey Lurie … Executive Producer
- Christina Weiss Lurie … Executive Producer
- Charles Ferguson … Producer, Director, Writer
- Audrey Marrs … Producer
- Kalyanee Mam … Associate Producer
- Anna Moot-Levin … Associate Producer
- Chad Beck … Co-Writer
- Adam Bolt … Co-Writer
- Matt Damon … Narrator
- Gylfi Zoega … Cast
- Andri Magnason … Cast
- Sigridur Benediktsdottir … Cast
- Paul Vocker … Cast
- Dominique Straus-Kahn … Cast
- George Soros … Cast
- Barney Frank … Cast
- David McCormick … Cast
- Scott Talbott … Cast
- Andrew Sheng … Cast
- Lee Hsien Loong … Cast
- Christine Lagard … Cast
- Gillian Tett … Cast
- Nouriel Roubini … Cast
- Glenn Hubbard … Cast
- Eliot Spitzer … Cast
- Samuel Hayes … Cast
- Charles Morris … Cast
- Robert Gnaizda … Cast
- Willem Buiter … Cast
- Andrew Lo … Cast
- Michael Greenberger … Cast
- Satyajit Das … Cast
- Frank Partnoy … Cast
- Eric Halperin … Cast
- Martin Wolf … Cast
- Kenneth Rogoff … Cast
- Daniel Alpert … Cast
- Raghuram Rajan … Cast
- Lawrence McDonald … Cast
- Harvey Miller … Cast
- Jeffrey Lane … Cast
- Jonathan Alpert … Cast
- Kristin Davis … Cast
- Allan Sloan … Cast
- Bill Ackman … Cast
- Jerome Fons … Cast
- Frederic Mishkin … Cast
- Simon Johnson … Cast
- Joanna Xu … Cast
- Patrick Daniel … Cast
- Columba Ramos … Cast
- Eric Evanouskas … Cast
- Steven A. Stephen … Cast
- Martin Feldstein … Cast
- John Campbell … Cast
- Brooksley Born
- George W. Bush
- Alan Greenspan
- Barack Obama
- Ronald Reagan
- Donald Regan
- Robert Rubin
- Larry Summers