Inside Job explains the bank crisis | Film Review | Indy Week
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Inside Job explains the bank crisis 

Ex-Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner

Photo courtesy of Sony Pictures Classics

Ex-Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner

One of the most maddening things about the banking crisis was how huge it was, and how seemingly arcane. The Bush administration's $700 billion emergency bailout of Goldman Sachs, AIG, Citigroup and other players in the financial services sector struck many Americans as outrageous, but Washington talking heads told us it was necessary, that these banks were "too big to fail."

The populist fury over the bailouts seemed to land everywhere but where it should have: in the laps of the people who engineered the series of changes to banking regulations—everyone from Alan Greenspan, Phil Gramm, Bill Clinton and Robert Rubin to Glenn Hubbard, Henry Paulson, Larry Summers and Timothy Geithner.

Although the last two suspects are members of the Obama administration, the players are not particularly political in the reductive, diversionary "red versus blue" sense. Instead, they represent a narrow constituency that has a knack for being in charge of the nation's monetary policy and financial regulations, no matter which party is in power. Not to put too conspiratorial a point on it, but there's seemingly a permanent place in the White House for Goldman Sachs.

One of the reasons Wall Street keeps getting away with it is that it's convinced everyone that what it does is too complex for us to understand and too important for us to live without. However, as Charles Ferguson's Inside Job amply demonstrates, the present "financial services" industry is a creature that invests in little but generating profits for itself. Although the seeds of the crisis were planted in the Reagan era, the growth of the financial services firms was crucially fertilized in 1999, when Clinton signed into law the repeal of the Depression-era Glass-Steagall Act, which had stringently separated the activities of banking, investing and insuring.

The result, beginning with the emergence of the superbank Citigroup, was that a new industry arose that generated staggering sums by speculating on the assets of others. Once, professional investors were cautious types who claimed salaries in line with the dentists and lawyers at their country clubs. Now, it's different. In 2006, Henry Paulson saved millions in income taxes merely by resigning from Goldman Sachs to become Bush's Treasury Secretary.

Ferguson's film is a blunt, didactic instrument—a lefty outrage documentary with celebrity narration by Matt Damon, heavy on the talking heads and complete with ominous, throbbing chords and on-camera confrontations with the few baddies who consented to interviews.

Inside Job effectively exposes one of the great lies of this mess: that it's too complicated for us to understand. Employing bare-bones instructional-video graphics, he explains how the deregulated financial services industry began buying ordinary mortgages from local lending institutions and repackaging them as collateral debt obligations (CDOs). When local mortgage lenders realized there was money to be made by simply selling their mortgages to the likes of Citigroup, there was no incentive to be cautious about whom they loaned money to.

The consequence was the real estate bubble, in which schoolteachers became house-flippers, and blue-collar couples made zero-down payments on McMansions. When the mortgages began to sour, the CDOs became worthless, and the banks that were left exposed went bust (Lehman Brothers), were sold (Wachovia) or were bailed out (Citigroup, Bank of America, AIG, JPMorgan Chase, Wells Fargo, Goldman Sachs et al.).

The only good feeling we get from Inside Job is in its later stages, when Ferguson confronts malefactors who have taken refuge in academia while still commanding big bucks for their services on corporate boards. The rage on the face of Glenn Hubbard, the advisor to George W. Bush who devised the 2003 tax cuts and who is now dean of Columbia University's business school, as Ferguson confronts him about his undisclosed conflicts of interest, is priceless.

Unfortunately, that's as good as it gets. They may tell us that most of the bailout money has been repaid, but we're still paying interest on their crisis.

Film Details

Inside Job
Rated PG-13 · 108 min. · 2010
Official Site: www.sonyclassics.com/insidejob
Director: Charles Ferguson
Writer: Charles Ferguson, Chad Beck and Adam Bolt
Producer: Charles Ferguson and Audrey Marrs
Cast: Matt Damon, William Ackman, Daniel Alpert, Jonathan Alpert, Sigridur Benediktsdottir, Willem Buiter, John Campbell, Patrick Daniel, Satyajit Das and Kristin Davis

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