Monday, March 21, 2011

Inside Job (dir. Charles Ferguson, 2010)

I watched Inside Job over the weekend (trailer below). In a down year for documentaries this one won the Academy Award. It's a good, not great, film. Done in conventional documentary style with lots of talking head interviews and earnest voice-over supplied by Matt Damon (which gets to be a bit tiresome) it does a good job of explaining how the Wall Street Big 5 and their enablers at the rating agencies destroyed the housing market and brought the global economy to its knees with acronyms (MBS's, CDO's, etc). Guess what? It wasn't an accident. They were warned. And people should have went to jail.

The film begins with a prologue on the bankruptcy of an entire nation -- Iceland -- which acts as a case study for what happens when banks are given a blank check by their supposed overseers. Human nature being what it is, the temptation to get rich gambling with other people's money proved irresistible. Private gain at public risk turned into private gain at public loss. Much the same thing happened on Wall Street with disastrous consequences for American taxpayers and homeowners.

Yes, Inside Job has an idealogical axe to grind, but in this case I think the grinding is justified. To wit, that systematic deregulation, and the revolving door of key players from Republican AND Democratic administrations to academia and the boards of these Wall Street firms (and back again) led to what happened. This was a classic case of the fox guarding the hen house, and the biggest foxes got away with their $$$. In some cases they even got to be Secretary of the Treasury.

The filmmakers properly point out that the U.S. didn't have a major financial crisis for 40 years after the Great Depression. It wasn't until capital requirements and regulations on banks and investment houses began to be loosened that we had a string of costly disasters beginning with the the savings and loan crisis of the 1980s. Of course, the 125 billion cost of that failure is chump change compared to the trillions lost in 2008. The scary thing is that nothing has really changed so something similar could happen again.

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