Inside Job is a 2010 documentary film, directed by Charles H.

Ferguson, about the late-2000s financial

crisis. Ferguson says the film is about "the systemic corruption of the United States by the financial
services industry and the consequences of that systemic corruption".[3] In five parts, the film explores
how changes in the policy environment and banking practices helped create the financial crisis.

Inside Job was acclaimed by film critics, who praised its pacing, research, and exposition of complex
material. The film was screened at the 2010 Cannes Film Festival in May and won the 2010 Academy
Award for Best Documentary Feature.

Ferguson began doing research for the film in 2008.[4]

Contents [hide]
1 Synopsis
1.1 Part I: How We Got Here
1.2 Part II: The Bubble (20012007)
1.3 Part III: The Crisis
1.4 Part IV: Accountability
1.5 Part V: Where We Are Now
2 Reception
3 Accolades
4 See also
5 References
6 External links
Synopsis[edit]
The documentary is split into five parts. It begins by examining how Iceland was highly deregulated in
2000 and the privatization of its banks. When Lehman Brothers went bankrupt and AIG collapsed,
Iceland and the rest of the world went into a global recession.

Part I: How We Got Here[edit]

The American financial industry was regulated from 1940 to 1980, followed by a long period of
deregulation. At the end of the 1980s, a savings and loan crisis cost taxpayers about $124 billion. In the
late 1990s, the financial sector had consolidated into a few giant firms. In March 2000, the Internet
Stock Bubble burst because investment banks promoted Internet companies that they knew would fail,
resulting in $5 trillion in investor losses. In the 1990s, derivatives became popular in the industry and
added instability. Efforts to regulate derivatives were thwarted by the Commodity Futures
Modernization Act of 2000, backed by several key officials. In the 2000s, the industry was dominated by
five investment banks (Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear
Stearns), two financial conglomerates (Citigroup, JPMorgan Chase), three securitized insurance
companies (AIG, MBIA, AMBAC) and the three rating agencies (Moodys, Standard & Poor's, Fitch).
Investment banks bundled mortgages with other loans and debts into collateralized debt obligations
(CDOs), which they sold to investors. Rating agencies gave many CDOs AAA ratings. Subprime loans led
to predatory lending. Many home owners were given loans they could never repay.

Part II: The Bubble (20012007)[edit]

During the housing boom, the ratio of money borrowed by an investment bank versus the bank's own
assets reached unprecedented levels. The credit default swap (CDS), was akin to an insurance policy.
Speculators could buy CDSs to bet against CDOs they did not own. Numerous CDOs were backed by
subprime mortgages. Goldman-Sachs sold more than $3 billion worth of CDOs in the first half of 2006.
Goldman also bet against the low-value CDOs, telling investors they were high-quality. The three biggest
ratings agencies contributed to the problem. AAA-rated instruments rocketed from a mere handful in
2000 to over 4,000 in 2006.

Part III: The Crisis[edit]

The market for CDOs collapsed and investment banks were left with hundreds of billions of dollars in
loans, CDOs, and real estate they could not unload. The Great Recession began in November 2007, and
in March 2008, Bear Stearns ran out of cash. In September, the federal government took over Fannie
Mae and Freddie Mac, which had been on the brink of collapse. Two days later, Lehman Brothers
collapsed. These entities all had AA or AAA ratings within days of being bailed out. Merrill Lynch, on the
edge of collapse, was acquired by Bank of America. Henry Paulson and Timothy Geithner decided that
Lehman must go into bankruptcy, which resulted in a collapse of the commercial paper market. On
September 17, the insolvent AIG was taken over by the government. The next day, Paulson and Fed
chairman Ben Bernanke asked Congress for $700 billion to bail out the banks. The global financial
system became paralyzed. On October 3, 2008, President George W. Bush signed the Troubled Asset
Relief Program, but global stock markets continued to fall. Layoffs and foreclosures continued with
unemployment rising to 10% in the U.S.A. and the European Union. By December 2008, GM and Chrysler
also faced bankruptcy. Foreclosures in the U.S. reached unprecedented levels.

Part IV: Accountability[edit]

Top executives of the insolvent companies walked away with their personal fortunes intact. The
executives had hand-picked their boards of directors, which handed out billions in bonuses after the
government bailout. The major banks grew in power and doubled anti-reform efforts. Academic
economists had for decades advocated for deregulation and helped shape U.S. policy. They still opposed
reform after the 2008 crisis. Some of the consulting firms involved were the Analysis Group, Charles
River Associates, Compass Lexecon, and the Law and Economics Consulting Group (LECG). Many of these
economists had conflicts of interest, collecting sums as consultants to companies and other groups
involved in the financial crisis.[5]

Part V: Where We Are Now[edit]

Tens of thousands of U.S. factory workers were laid off. The new Obama administrations financial
reforms have been weak, and there was no significant proposed regulation of the practices of ratings
agencies, lobbyists, and executive compensation. Geithner became Treasury Secretary. Martin Feldstein,
Laura Tyson and Lawrence Summers were all top economic advisers to Obama. Bernanke was
reappointed Fed Chair. European nations have imposed strict regulations on bank compensation, but
the U.S. has resisted them.

Reception[edit]
The film was met with critical acclaim, earning a 98% rating on the Rotten Tomatoes website[6] and an
aggregate score of 88/100 on Metacritic. Roger Ebert described the film as "an angry, well-argued
documentary about how the American financial industry set out deliberately to defraud the ordinary
American investor".[7] A. O. Scott of The New York Times wrote that "Mr. Ferguson has summoned the
scourging moral force of a pulpit-shaking sermon. That he delivers it with rigor, restraint and good
humor makes his case all the more devastating".[8] Logan Hill of New York magazine characterized the
film as a "rip-snorting, indignant documentary", noting the "effective presence" of narrator Matt
Damon.[9] Peter Bradshaw of The Guardian said the film was "as gripping as any thriller". He went on to
say that it was obviously influenced by Michael Moore, describing it as "a Moore film with the gags and
stunts removed".[10] In 2011, a Metacritic editor ranked the film first on the subject of the 2008
financial crisis.[11]

The conservative political magazine The American Spectator criticized the film as intellectually
incoherent and inaccurate, accusing Ferguson of blaming "a lot of bad people [with] economic and
political views to the right of [his]".[12]

The film was selected for a special screening at the 2010 Cannes Film Festival. A reviewer writing from
Cannes characterized the film as "a complex story told exceedingly well and with a great deal of
unalloyed anger".[13]

When Michael Moore made his debut feature, Roger and Me, he set about vilifying the boss of General
Motors, the now deceased Roger B Smith, for destroying his home town of Flint, Michigan. Charles
Ferguson's film Inside Job attempts to blame a wider cast list for the banking crash of 2008 and explains
why so little has been done to reform the financial world or bring criminal prosecutions against the main
protagonists.

His villainous lineup includes bankers, politicians (many of whom were previously bankers), regulators,
the credit ratings agencies and academics. When Glenn Hubbard, George Bush's chief economic adviser
and dean of Columbia Business School, is shown as a partisan advocate of deregulation, we have one of
the movie's punch-the-air moments. During the interview, Hubbard, who denies he was corrupted by his
paid-for relationships with government, angrily barks: "You've got five minutes, mister. Give it your best
shot."

Business Today: sign up for a morning shot of financial news

Read more
The spotlight has largely bypassed academics in the UK. There are plenty of economists who believed
the banks understood what they were doing and supported deregulation. Whether they took large slugs
of cash for writing poorly researched, cheerleading reports on the economic miracle in Iceland (pre-
crash), as former US central banker Frederic Mishkin is found doing, is less clear. Over here, the
relationship between academia and business appears to be more arm's length, though London Business
School dean Sir Andrew Likierman sits on the Barclays board, while Howard Davies, who argued for light-
touch regulation while head of the Financial Services Authority, has become director of the London
School of Economics. The UK's chief villian, however, is probably the disgraced, but largely unpunished,
banker Sir Fred Goodwin, the former boss of Royal Bank of Scotland, once the fifth-largest bank in the
world.

In Inside Job, the name that keeps cropping up is Larry Summers, a friend of President Bill Clinton and
more recently Barack Obama. Summers exemplifies the links between cheerleaders in academia, Wall
Street, supine regulators and an ignorant Capitol Hill that Ferguson stresses were at the root of the
problem. It helps that Summers looks like a mafia boss, but the difficulties in making the case against
him are shown by the need to explain financial products like credit default swaps and how securitisation
was used by banks to increase their borrowing.
Still, no matter how much it is explained, the general public is not going to understand. How does one go
into battle yelling slogans about credit default swaps? The bankers know ignorance is their trump card.
Maybe Inside Job will make us more savvy in time for the next crash.

Phillip Inman

The derivatives trader

Advertisement

"The film's first half-hour was absolutely dead-on. The explanation of what happened was a chilling re-
run of all the events that led up to the financial crisis. It also showed very accurately the denial by
everybody inside or outside the industry that such a crisis was even occurring even up to the last
minute before Lehman's bankruptcy.

I have an issue with some of the elements pursued in the rest of the film. One was the vilification of
individual people. Chuck Prince, the CEO of Citigroup at the time of the crisis, may have been overpaid
but I don't think he was particularly at fault. At worst he perhaps should have known more about what
was going on, but really he's just the nice old geezer at the top who shakes people's hands at cocktail
parties. There may be people lower down who knowingly did criminal things, but that is a different
matter.

A weak point was the anti-free market and conspiratorial tone of the film. Yes, deregulation did go too
far particularly with the repeal of the Glass-Steagall Act of 1933, which might have prevented banks
gambling with depositors' money. But to imply that all deregulation in the last 20 years was a conspiracy
perpetrated by an academic elite of economists in the pay of the banks is paranoid and absurd.

An oversight by the film was to ignore how risk managers at many banks knowingly failed to voice their
fears about the way their companies operated. A risk manager once told me that to raise an issue that
undermined the bank's multi-billion-dollar profits would have been to "sign his own death warrant". This
inability to challenge trading desks generating billions in phantom profits was endemic.

Inside Job clearly catches some of the anti-banker mood, and the public is quite right to be outraged at
how banks refinanced at the taxpayers' expense are paying outsized bonuses. Staff at banks such as RBS
should be retained by longer-term incentive schemes such as the one being introduced at Barclays. But,
as a free marketeer, I believe banks that have not taken public money should be able to do as they
please within the law."

Ian Hart was a Wall St derivatives trader, before becoming a head-hunter for, among other banks,
Lehman Brothers. He now runs Sacred Microdistillery. sacredgin.com

The bank director

Advertisement

"This was a well-researched film that clearly explained the complexities of the crisis and the greed of
bankers. It laid the blame squarely where it belongs at the feet of bankers, of ratings agencies, of
regulators and it interviewed a lot of heavyweight people, such as Dominique Strauss-Kahn, Eliot
Spitzer, Raghuram Rajan and Glenn Hubbard.
It will doubtless make many people especially those who lost their jobs and savings angry at not only
what the banks did, but that many of the people responsible are still in their jobs, and that no one's
gone to prison. It beggars belief that ordinary taxpayers are facing higher taxes and spending cuts, while
bankers walked away scot-free. The film shows that people who had bought a house they couldn't
afford are now living in a tent, whereas bankers have still got their jobs. Consumers enjoyed buying
houses that ultimately they couldn't afford, but mortgages were shoved down their throats without any
care on the part of the bankers. In the old days, the bank would say: "We don't think you can afford that
mortgage, so we won't lend you money." The film showed how this kind of advice was thrown out of the
window.

Unfortunately, it's clear that for many investment banks business continues pretty much as normal and
that another crisis is only a matter of time. Sure, there's greater scrutiny of bonuses but many bankers
think they were not responsible personally for the crisis and they're worth every penny they're paid.
Clearly they're not.

I thought the film also brought out well the "capture" of regulators, politicians and academics who all
became cheerleaders for the continued deregulation of finance that began under Ronald Reagan and
that culminated in the great crisis. Massive re-regulation is required to ensure that finance is safely
locked up in a straitjacket again.

Of particular interest is the dubious role played by academic economists, especially those in the US.
Many were paid vast, undeclared sums to produce biased reports saying CDOs and other dodgy
derivatives were safe and that Iceland was fine to be gambling with 10 times its annual GDP. The
corruption of top US economists and their complete lack of awareness of what they had done was truly
shameful."

The broker
"The film was right that banking became synonymous with living the high life, with drug-taking, and
basically being above the law. This culture filtered down from the top, and needs to be stopped and
questioned a lot more. In Europe, we have tried to since the crisis. Where I work, we are compliant up to
our eyeballs be it drug checks, expenses checks, or simply the monitoring of all phonecalls and emails.

But it was too simplistic for the film to imply that we need more financial regulation. It's not a black-and-
white issue, and you can't be that kneejerk: the UK is a service-based economy. I would love that to
change, but right now, a lot of the GDP comes from people in and around finance. The City itself
employs vast numbers of people not just as bankers, but also on the periphery and until we move
away from that, and find other ways of employing these people, you can't just shut down an industry.
With very harsh regulation, that's unfortunately what you risk. As a lot of these banks are global and
flexible, they can just go overseas. HSBC's been threatening for years to move its headquarters to Asia.
For the UK, that would be a disaster. So I think the government has to tread a fine line between bringing
in regulation bit by bit, and regulating all at once.

I'm one of the few women in banking and it's really obvious watching Inside Job that this is the case. We
see the French minister of finance [Christine Lagarde], there's a woman from the Securities and
Exchange Commission but they're few and far between. As they say in the film, banking is such an
alpha-male society and it's very hard for women to succeed within it and yet maintain some sense of
femininity. If they had more women in banking, I really think there would be more sense of community,
and perhaps things such as this crisis wouldn't happen quite so often, because you wouldn't have this
sense of being part of a boys' club."

The investment banker

Advertisement

"Inside Job ignored the enormous level of consumption by ordinary people that drove debt levels so
high. The film suggested it was the bankers and the politicians who were driving the collapse and fair
enough, there was some mis-selling of mortgages. But it wasn't just mortgages: it was bank debt, credit-
card debt, car loans. Blame the banker for providing the credit, but the consumer must also take some
of the rap. If you talk to a sole trader, they'll tell you that when times are good, put some money away
for when times are bad. But the consumers just spent and spent, and assumed the good times would go
on for ever.

Another angle missed by the film was the role of accounting firms. There is a huge amount of blame to
be attributed to them. It was their responsibility to monitor the accounts of banks, and when they
signed off a bank's results, they were stating their confidence in the bank's ability to trade solvently. The
film ignored the failure of accountants to say anything. It talked about regulators and ratings agencies.
But the accountancy firms are just as big as some of the larger banks and not to analyse their role in the
crisis was a huge omission.

The film was very much in the style of Michael Moore they'd clipped and edited the interviews to twist
slightly what was said in them but it was also very watchable, succinct and very good at simplifying a
chain of events. And the accusation that the worlds of academia and politics were complicit in the crisis
was completely valid. There is a lot of cronyism out there, and people who criticised regulation did end
up in the Obama government. There's a gentleman's club, and they all look after each other."

Interviews by Patrick Kingsley. The interviewees above wished to remain anonymous.

Since youre here

we have a small favour to ask. More people are reading the Guardian than ever but advertising
revenues across the media are falling fast. And unlike many news organisations, we havent put up a
paywall we want to keep our journalism as open as we can. So you can see why we need to ask for
your help. The Guardians independent, investigative journalism takes a lot of time, money and hard
work to produce. But we do it because we believe our perspective matters because it might well be
your perspective, too.

I appreciate there not being a paywall: it is more democratic for the media to be available for all and not
a commodity to be purchased by a few. Im happy to make a contribution so others with less means still
have access to information.
Thomasine F-R.
If everyone who reads our reporting, who likes it, helps to support it, our future would be much more
secure.
5
Another ticking tomb was credit default swap, these were derivative issued by AIG, Security Insurance
Company to the investor who purchased CDO, in other world the company insured CDO, due to this
investor felt more secure, however the AIG also issued these derivatives to those who did not own CDO.
Those financial institutions which were selling CDO were also betting against them because they knew
that they will be unable to pay them back. So the CDOs were actually a fraud to the real investors and
these CDO were shown as safe investment, whereas in actual, they were very risky. The rating agencies
like
Moodys, Standard & Poors and Fitch made billions of profits by rating t
hese CDO
as AAA rating.
Part-III: The Crisis
Various warning were given by economist, journalist through their articles and reports in the bubble
period. In 2008, mortgage loan holders failed to payback their loan to lenders, as a result the
Securitization Food Chain imploded. The default on the part of mortgage borrowers were already clear,
because loans were issued even to those house holders who could not afford to pay the loan back. From
the mid of 2008, major Financial Institution started to collapsed and bankrupt. The major bankruptcy
was of Lehman Brothers in September, 2008 and this bankruptcy caused major disruption in the global
financial markets. On September, 17 2008, the AIG was taken over and bailed out by the Government;
$14 billions were only paid to Goldman Sachs out $160 billions total paid by AIG through Government
bailed out. On October 14, 2008, the President Bush signed $ 1400 billion bailed out package, but the
market continued to fall. This crisis did not only hit US but it hit major economies of the world. Nearly
every house was put on sell due to default in payment of mortgage loan and the people has to live on
temporary shelters.

6
Part-IV: Accountability
Many CEO and major decision makers who were responsible for this crisis just walked away. Top five
executives of Lehman Brothers made millions of dollars between 2001 to 2007 (Bubble period).
In march of 2008, the AIGs Financial Product Division lost
11 Billions US dollars, instead of being fired, Joseph Cassano, the head of AIGFP was kept on as a
consultant for a millions dollars a month. Many economists academics and professors were in favour of
deregulation and they were appointed as advisors in economic affairs of the country and many were
elected as directors of major financial institution and they made lots of money and they are also
supposed to be held accountable for this financial crisis.

7
Part-V: Where Are We Now
The American economy is now weak as compared to what it was before the financial crisis, the
competitor like China is flourishing. Unemployment and inflation has increase in US now. The
construction industry is falling, however I.T industry in US is still strongest worldwide. But getting job in
IT industry require high qualification and getting good qualification is very expensive now in US. The
difference between rich and poor is higher in United State than in any other company. The Brack Obama
in 2008 election campaign promised changed and assured the regulation of financial industry so such
financial crisis could not take place again. But after taking over office, the obama administration did not
bring any reforms in financial industry as promised and even it did not charge in firm or bank excutive
who earned millions of dollar during the bubble.
CONCLUSION
The main cause of financial crisis was deregulation and to give financial industry a full freedom, as a
result, they acted in their own interest and made millions of dollars at the cost of taxpayers and general
public investment. So It is recommended that strong actions are need to be taken against those who are
responsible for this crisis, but it is unfortunate to see that those people and institutions are still in
power. The Government need to bring reforms in financial industry