Inside Job | |
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Directed by | Charles Ferguson |
Written by | Charles Ferguson Chad Beck Adam Bolt |
Produced by | Audrey Marrs Charles Ferguson |
Narrated by | Matt Damon |
Cinematography | Svetlana Cvetko Kalyanee Mam |
Edited by | Chad Beck Adam Bolt |
Music by | Alex Heffes |
Distributed by | Sony Pictures Classics |
Release dates |
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Running time | 108 minutes |
Country | United States |
Language | English |
Budget | $2 million [1] |
Box office | $7.9 million [2] |
Inside Job is a 2010 American documentary film, directed by Charles Ferguson, about the late-2000s financial crisis. Ferguson, who began researching in 2008, [3] said the film is about "the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption", [4] amongst them conflicts of interest of academic research, which led to improved disclosure standards by the American Economic Association. [5] In five parts, the film explores how changes in the policy environment and banking practices helped create the financial crisis.
The film was acclaimed by film critics, who praised its pacing, research, and exposition of complex material. It was screened at the 2010 Cannes Film Festival in May 2010 and, on February 27, 2011, won Best Documentary Feature at the 83rd Academy Awards.
This article's plot summary may be too long or excessively detailed.(November 2021) |
The film begins by examining the effects of the government of Iceland's shift toward deregulation in 2000, which included 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.
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 approximately $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 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 (Moody's, 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.
During the housing boom, the ratio of money borrowed by investment banks versus the banks' own assets reached unprecedented levels. Speculators could buy credit default swaps (CDSs), which were akin to an insurance policy, 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, with AAA-rated instruments rocketing from a mere handful in 2000 to over 4,000 in 2006. There were some warnings about the growing risks in the financial system, including from Raghuram Rajan, then the chief economist of the IMF, who, at the Federal Reserve's 2005 Jackson Hole conference, identified some risks and proposed policies to address them, though former U.S. Treasury Secretary Lawrence Summers called his warnings "misguided" and Rajan himself a "luddite".
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 US and the European Union. By December 2008, GM and Chrysler also faced bankruptcy. Foreclosures in the U.S. reached unprecedented levels.
Top executives of the insolvent companies walked away with their personal fortunes intact and avoided prosecution. 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. Many academic economists who had advocated for deregulation for decades and helped shape U.S. policy still opposed reform after the 2008 crisis. Firms involved were the Analysis Group, Charles River Associates, Compass Lexecon, and the Law and Economics Consulting Group (LECG). Many of these economists were paid consultants to companies and other groups involved in the financial crisis, conflicts of interest that were often not disclosed in their research papers. [6]
Tens of thousands of U.S. factory workers were laid off. The incoming Obama administration's financial reforms were weak, and there was no significant proposed regulation of the practices of ratings agencies, lobbyists, or executive compensation. Geithner became Treasury Secretary. Martin Feldstein, Laura Tyson, and Lawrence Summers were all top economic advisers to Obama. Bernanke was reappointed Chair of the Federal Reserve. European nations imposed strict regulations on bank compensation, but the U.S. resisted them.
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The film was met with critical acclaim. On review aggregator website Rotten Tomatoes, it holds an approval rating of 98% based on 148 reviews, with an average rating of 8.2/10; the site's "critics consensus" reads: "Disheartening but essential viewing, Charles Ferguson's documentary explores the 2008 Global Financial Crisis with exemplary rigor." [7] On Metacritic, the film has a weighted average score of 88 out of 100 based on 27 critics, indicating "universal acclaim", [8] and, in 2011, Jason Dietz of Metacritic ranked the film as the best film yet made about the "ongoing financial crisis". [9]
Roger Ebert described the film as "an angry, well-argued documentary about how the American housing industry set out deliberately to defraud the ordinary American investor". [10] 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". [11] Logan Hill of New York magazine characterized the film as a "rip-snorting, indignant documentary", noting the "effective presence" of narrator Matt Damon. [12] Peter Bradshaw of The Guardian said it was "as gripping as any thriller", and also noted the influence of Michael Moore on the film, which he described as "a Moore film with the gags and stunts removed". [13]
The film was selected for a special screening at the 2010 Cannes Film Festival. A reviewer writing from Cannes characterized it as "a complex story told exceedingly well and with a great deal of unalloyed anger". [14]
Award | Date of ceremony | Category | Recipient(s) | Result |
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Academy Awards [15] | February 27, 2011 | Best Documentary Feature | Charles H. Ferguson and Audrey Marrs | Won |
Chicago Film Critics Association Awards [16] | December 20, 2010 | Best Documentary Feature | Nominated | |
Directors Guild of America Awards [17] | December 29, 2010 | Best Documentary | Won | |
Gotham Independent Film Awards [18] | November 29, 2010 | Best Documentary | Nominated | |
Online Film Critics Society Awards [19] | January 3, 2011 | Best Documentary | Nominated | |
Writers Guild of America Awards [20] | February 5, 2011 | Best Documentary Screenplay | Won |
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 or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. The buyer of the CDS makes a series of payments to the seller and, in exchange, may expect to receive a payoff if the asset defaults.
The Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many international financial centers. Goldman Sachs is the second largest investment bank in the world by revenue and is ranked 55th on the Fortune 500 list of the largest United States corporations by total revenue. It is considered a systemically important financial institution by the Financial Stability Board.
The Bear Stearns Companies, Inc. was an American investment bank, securities trading, and brokerage firm that failed in 2008 as part of the global financial crisis and recession. After its closure it was subsequently sold to JPMorgan Chase. The company's main business areas before its failure were capital markets, investment banking, wealth management, and global clearing services, and it was heavily involved in the subprime mortgage crisis.
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). Like other private label securities backed by assets, a CDO can be thought of as a promise to pay investors in a prescribed sequence, based on the cash flow the CDO collects from the pool of bonds or other assets it owns. Distinctively, CDO credit risk is typically assessed based on a probability of default (PD) derived from ratings on those bonds or assets.
Merrill Lynch & Co., formally Merrill Lynch, Pierce, Fenner & Smith Incorporated, was a publicly-traded American investment bank that existed independently from 1914 until January 2009 before being acquired by Bank of America and rolled into BofA Securities.
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The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see Financial crisis of 2007–2008.
This article provides background information regarding the subprime mortgage crisis. It discusses subprime lending, foreclosures, risk types, and mechanisms through which various entities involved were affected by the crisis.
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Timothy Franz Geithner is an American former 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 of New York from 2003 to 2009, following service in the Clinton administration. Since March 2014, he has served as president and managing director of Warburg Pincus, a private equity firm headquartered in New York City.
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