Inside Job (2010 film)
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''Inside Job'' is a 2010 American
documentary film A documentary film or documentary is a non-fictional film, motion-picture intended to "document reality, primarily for the purposes of instruction, education or maintaining a Recorded history, historical record". Bill Nichols (film critic), Bil ...
, directed by Charles Ferguson, about the late-2000s financial crisis. Ferguson, who began researching in 2008, says the film is about "the systemic corruption of the United States by the
financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...
industry and the consequences of that systemic corruption", amongst them conflicts of interest of academic research which led to improved disclosure standards by the American Economic Association. 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. It screened at the 2010 Cannes Film Festival in May and won the 2010
Academy Award for Best Documentary Feature An academy ( Attic Greek: Ἀκαδήμεια; Koine Greek Ἀκαδημία) is an institution of secondary or tertiary higher learning (and generally also research or honorary membership). The name traces back to Plato's school of philosoph ...
.


Synopsis

The documentary is split into five parts. It begins by examining how Iceland was highly deregulated in 2000 and the
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of its banks. When
Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, a ...
went bankrupt and
AIG American International Group, Inc. (AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. , AIG companies employed 49,600 people.https://www.aig.com/content/dam/aig/amer ...
collapsed,
Iceland Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its s ...
and the rest of the world went into a global recession. At the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
annual Jackson Hole conference in 2005,
Raghuram Rajan Raghuram Govind Rajan (born 3 February 1963) is an Indian economist and the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. Quote: "I am an Indian citizen. I have always b ...
, then the chief economist of IMF, warned about the growing risks in the financial system and proposed policies that would reduce such risks. Former U.S. Treasury Secretary
Lawrence Summers Lawrence Henry Summers (born November 30, 1954) is an American economist who served as the 71st United States secretary of the treasury from 1999 to 2001 and as director of the National Economic Council from 2009 to 2010. He also served as pre ...
called the warnings "misguided" and Rajan himself a "
luddite The Luddites were a secret oath-based organisation of English textile workers in the 19th century who formed a radical faction which destroyed textile machinery. The group is believed to have taken its name from Ned Ludd, a legendary weaver s ...
". However, following the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
, Rajan's views were seen as prescient and he was extensively interviewed for this movie.


Part I: How We Got Here

The American financial industry was regulated from 1941 to 1981, 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,
derivative In mathematics, the derivative of a function of a real variable measures the sensitivity to change of the function value (output value) with respect to a change in its argument (input value). Derivatives are a fundamental tool of calculus. F ...
s became popular in the industry and added instability. Efforts to regulate derivatives were thwarted by the
Commodity Futures Modernization Act of 2000 The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that ensured financial products known as over-the-counter (OTC) derivatives remained unregulated. It was signed into law on December 21, 2000 by President ...
, backed by several key officials. In the 2000s, the industry was dominated by five investment banks (
Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...
,
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
,
Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, a ...
,
Merrill Lynch Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment bank ...
, and
Bear Stearns The Bear Stearns Companies, Inc. was a New York-based global investment bank, securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession, and was subsequently sold to JPMorgan Chase. The comp ...
), two financial conglomerates (
Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
,
JPMorgan Chase JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
), three securitized insurance companies (AIG,
MBIA MBIA Inc. is an American financial services company. It was founded in 1973 as the Municipal Bond Insurance Association. It is headquartered in Purchase, New York, and as of January 1, 2015 had approximately 180 employees. MBIA is the largest bo ...
,
AMBAC The Ambac Financial Group, Inc., generally known as Ambac (originally the American Municipal Bond Assurance Corporation), is an American holding company. Its subsidiaries provide financial guarantee products such as bond insurance to clients in b ...
) and the three rating agencies (
Moody's Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international ...
,
Standard & Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is con ...
, Fitch). Investment banks bundled mortgages with other loans and debts into
collateralized debt obligations A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing mortgage-backed securities (MBS).Lepke ...
(CDOs), which they sold to investors. Rating agencies gave many CDOs AAA ratings. Subprime loans led to
predatory lending Predatory lending refers to unethical practices conducted by lending organizations during a loan origination process that are unfair, deceptive, or fraudulent. While there are no internationally agreed legal definitions for predatory lending, a 2006 ...
. Many home owners were given loans they could never repay.


Part II: The Bubble (2001–2007)

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 A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against som ...
(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.How could that be?


Part III: The Crisis

The market for CDOs collapsed and investment banks were left with hundreds of thousands of dollars in loans, CDOs, and real estate they could not unload. The
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
began in November 2007, and in March 2008, Bear Stearns ran out of cash. In September, the federal government took over
Fannie Mae The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the N ...
and
Freddie Mac The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia.Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank w ...
.
Henry Paulson Henry Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the Chairman a ...
and
Timothy Geithner Timothy Franz Geithner (; born August 18, 1961) is a former American central banker who served as the 75th United States Secretary of the Treasury under President Barack Obama from 2009 to 2013. He was the President of the Federal Reserve Bank o ...
decided that Lehman must go into bankruptcy, which resulted in a collapse of the
commercial paper Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity of rarely more than 270 days. In layperson terms, it is like an " IOU" but can be bought and sold because its buyers and sellers have some ...
market. On September 17, the insolvent AIG was taken over by the government. The next day, Paulson and Fed chairman
Ben Bernanke Ben Shalom Bernanke ( ; born December 13, 1953) is an American economist who served as the 14th chairman of the Federal Reserve from 2006 to 2014. After leaving the Fed, he was appointed a distinguished fellow at the Brookings Institution. Durin ...
asked Congress for $700 billion to bail out the banks. The
global financial system The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade finan ...
became paralyzed. On October 3, 2008, President
George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
signed the
Troubled Asset Relief Program The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by President G ...
, but global stock markets continued to fall. Layoffs and foreclosures continued with unemployment rising to 10% in the US and the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
. By December 2008, GM and
Chrysler Stellantis North America (officially FCA US and formerly Chrysler ()) is one of the " Big Three" automobile manufacturers in the United States, headquartered in Auburn Hills, Michigan. It is the American subsidiary of the multinational automoti ...
also faced bankruptcy. Foreclosures in the U.S. reached unprecedented levels.


Part IV: Accountability

Top executives of the insolvent companies walked away with their personal fortunes intact. The executives had hand-picked their
boards of directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...
, 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. Firms involved were the
Analysis Group Analysis Group, Inc. (AG), founded in 1981 by economists Bruce E. Stangle and Michael F. Koehn, is an economic consulting firm based in North America. It provides economic, financial, and strategic analysis and expert testimony to law firms, cor ...
,
Charles River Associates Charles River Associates (legally CRA International, Inc.) is a global consulting firm headquartered in Boston. Practice areas Their practices include: aerospace & defense, antitrust & competition economics, auctions & competitive bidding, climat ...
,
Compass Lexecon Compass Lexecon is a global economic consulting firm with headquarters in Chicago, Illinois. It provides analysis of economic issues for use in legal and regulatory proceedings, strategic decisions, and public policy debates. Compass Lexecon LLC ...
, and the Law and Economics Consulting Group (
LECG LECG Corporation was an American consulting company based in Emeryville, California. It provided independent expert testimony on behalf of corporations, produced authoritative studies for industry, conducted economic and financial analyses on dis ...
). Many of these economists had conflicts of interest, collecting sums as consultants to companies and other groups involved in the financial crisis.


Part V: Where We Are Now

Tens of thousands of U.S. factory workers were laid off. The incoming
Obama administration Barack Obama's tenure as the 44th president of the United States began with his first inauguration on January 20, 2009, and ended on January 20, 2017. A Democrat from Illinois, Obama took office following a decisive victory over Republican ...
's financial reforms were weak, and there was no significant proposed regulation of the practices of ratings agencies, lobbyists, and executive compensation. Geithner became Treasury Secretary.
Martin Feldstein Martin Stuart Feldstein ( ; November 25, 1939 – June 11, 2019) was an American economist. He was the George F. Baker Professor of Economics at Harvard University and the president emeritus of the National Bureau of Economic Research (NBER ...
,
Laura Tyson Laura D'Andrea Tyson (born June 28, 1947) is an American economist and university administrator who is currently a Distinguished Professor of the Graduate School at the Haas School of Business of the University of California, Berkeley and a senio ...
and
Lawrence Summers Lawrence Henry Summers (born November 30, 1954) is an American economist who served as the 71st United States secretary of the treasury from 1999 to 2001 and as director of the National Economic Council from 2009 to 2010. He also served as pre ...
were all top economic advisers to Obama. Bernanke was reappointed Fed Chair. European nations imposed strict regulations on bank compensation, but the U.S. resisted them.


Reception

The film was met with critical acclaim. On
review aggregator A review aggregator is a system that collects reviews of products and services (such as films, books, video games, software, hardware, and cars). This system stores the reviews and uses them for purposes such as supporting a website where users ...
Rotten Tomatoes Rotten Tomatoes is an American review-aggregation website for film and television. The company was launched in August 1998 by three undergraduate students at the University of California, Berkeley: Senh Duong, Patrick Y. Lee, and Stephen Wang ...
, the film holds an approval rating of 98% based on 147 reviews, with an average rating of 8.21/10. The website's critical consensus reads, "Disheartening but essential viewing, Charles Ferguson's documentary explores the 2008 Global Financial Crisis with exemplary rigor." On
Metacritic Metacritic is a website that review aggregator, aggregates reviews of films, TV shows, music albums, video games and formerly, books. For each product, the scores from each review are averaged (a weighted arithmetic mean, weighted average). M ...
, the film has a weighted average score of 88 out of 100, based on 27 critics, indicating "universal acclaim".
Roger Ebert Roger Joseph Ebert (; June 18, 1942 – April 4, 2013) was an American film critic, film historian, journalist, screenwriter, and author. He was a film critic for the ''Chicago Sun-Times'' from 1967 until his death in 2013. In 1975, Ebert beca ...
described the film as "an angry, well-argued documentary about how the American housing industry set out deliberately to defraud the ordinary American investor". A. O. Scott of ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' 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". Logan Hill of '' New York'' magazine characterized the film as a "rip-snorting, indignant documentary", noting the "effective presence" of narrator
Matt Damon Matthew Paige Damon (; born October 8, 1970) is an American actor, film producer, and screenwriter. Ranked among ''Forbes'' most bankable stars, the films in which he has appeared have collectively earned over $3.88 billion at the North Americ ...
. Peter Bradshaw of ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' said the film was "as gripping as any thriller". He went on to say that it was obviously influenced by
Michael Moore Michael Francis Moore (born April 23, 1954) is an American filmmaker, author and left-wing activist. His works frequently address the topics of globalization and capitalism. Moore won the 2002 Academy Award for Best Documentary Feature for ' ...
, describing it as "a Moore film with the gags and stunts removed". In 2011, a ''Metacritic'' editor ranked the film first on the subject of the 2008 financial crisis. 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".


Accolades


See also


Films and series related to 2007-8 financial crisis


References


External links

* * * *
IONCINEMA.com TIFF 2010 Viral: Charles Ferguson's ''Inside Job''

Radio interview for 'It's The Economy' with Claudia Cragg KGNU
{{DEFAULTSORT:Inside Job 2010 films 2010 documentary films American business films American documentary films Best Documentary Feature Academy Award winners Documentary films about American politics Documentary films about business Documentary films about the Great Recession Wall Street films Films about financial crises Films scored by Alex Heffes Sony Pictures Classics films 2010s English-language films 2010s American films