Inside Job
Inside Job documentary can be described as the in-depth exploration of the infamous financial crisis of the 2000s. Directed by Charles Ferguson, the film paints a clear picture of the systemic corruption perpetuated by the financial industry in the United States. It shows how corruption can undermine and crumble the national economy. For instance, the film depicts how drastic changes in the banking practices and policy environment played a significant role in causing the financial crisis.
The film illustrates how economic deregulation was gaining momentum during the 1970s. Numerous studies by the Chicago school of economies and the theories of Alfred Kahn and Stigler George played a crucial role in deregulation. Both conservatives and liberals embraced deregulation ideas. The American Enterprise Institute and Brookings Institution – think tanks based in Washington – were active in publishing studies and holding seminars, which advocated for deregulation. Kahn Alfred (Cornell economist) played a significant role in both participating in and theorizing for the economic deregulation.
The U.S financial industry was well regulated from 1950 to 1980, but this was followed by deregulation, which persisted for a long time. At the end of the 1990s, a loan and saving crisis cost the taxpayer about $120 billion. By the end 1980s, few giant companies had consolidated the American financial sector. In May 2000, the financial industry experienced the Internet Stock Bubble – banks were promoting internet firms, of which they knew were destined to fail. Eventually, investors lost $5 trillion. Derivatives became popular during the 1990s, which further triggered the economic crisis. The Commodity Futures Modernization Act 2000 thwarted any effort to regulate the issuance of derivatives. During the 2000s, the financial industry was dominated by the five key banks (Morgan Stanley, Goldman Sachs, Merrill Lynch, Lehman Brothers, and Bear Steams), two conglomerates (JPMorgan Chase, Citigroup), three securitized insurance firms (MBIA, AIG, AMBAC) and three agencies (Fitch, Mood’s, Standard & Poors). Mortgages were bundled with debts and loans into a collateralized debt obligation (CDO). These CDOs were sold to banking investors. The rating agencies gave the CDOs many AAA ratings. Consequently, subprime loans gave rise to predatory lending. Homeowners secured loans, of which they were unable to repay.
The documentary is an aggressive, but well-argued film about the financial industry defrauded the ordinary American investors. Reiterating the words of New York Times reporter (Scott), “in his film, Charles Ferguson delivers a restraint, rigor and excellent humor while addressing critical themes touching on the oblique picture of the American financial industry.”