Film Review: Inside Job (Documentary)

By Matthew Mullins

At the beginning of the film “INSIDE JOB”, Iceland is used as an example of how deregulation can hurt an economy. The entire island was almost destroyed by it’s financial district “bubble” compromised of three large banks.

     In Sept 2008, Iceland’s economy tanked and the homeless population tripled. This was all caused by the deregulation and privatization of their financial district.

    The collapse in Iceland was partly triggered by the bankruptcy of Lehmann Brothers and AIG on Sept 15, 2008. This caused a global recession costing over 10 trillion in investor losses.

     Since the 1980s the US financial industry has been raking in money while causing the common person financial woes. The investment banks went public causing Wall Street professionals to become rich. Deregulation began to unfold quickly. This was just the beginning of the greed and corruption of Wall St.

    In the late 1990s, the use of derivatives became a common way that banks could bet on investments either being successful or failing. Commonly, they would bet on failing investments to create profit for themselves. The regulation of derivatives were thwarted was defeated by Alan Greenspan and several other high profile Wall St. officials and lobbyists. Greenspan among many others continued to deregulate through President Clinton’s term.

By 1997, Citigroup and other large banks began to merge into conglomerates. The fewer the banks, the more hold they would have over the money of common investors, homeowners and the American people.

     In 1998, the investment banks invested in internet companies they knew would fail. This failed investment scam cost 5 trillion dollars in investment losses. The financial district has been caught cooking books, defrauding customers, tax fraud, giving themselves ridiculously large bonuses, supplying laundered money to support drug cartels and continuing the deregulation by use of derivatives. The banks involved in the scams were fined 1.4 billion and promised to change their ways.

    In 2001, George Bush Jr. was elected president in a controversial election. The financial district began to merge. Five investments banks, two financial conglomerates, three securities insurance companies and three rating agencies were linked by the securitization food chain , which was a large combined pool of home buyers, lenders, investment banks and investors. This “food chain” connected trillions of dollars of mortgages and other loans with investors all over the world. Before the money would go to a lender Investment banks created complex derivatives. Banks combined mortgages with other loans and debts into collateralized debt obligations called CDOs. CDOs were sold to investors and given ratings to help a consumer choose which loan was the best idea for them.

        These rating agencies often gave CDOs the highest rating dubbed AAA. These “Subprime” loans led to a lot of predatory lending. Often a bank would give homeowners loans they couldn’t repay. Subprime loans began to become a huge deal and were gambled on by investment loaners and banks. The securitization chain caused prices of homes to skyrocket. Countrywide, a well known investment firm, made 11 billion off over 200 billion in loans.

     In 2007, a recession began in the United States CDO lending became swallowed by debt causing a freeze in the global market. The banks, one by one became insolvent over a few weeks. The government took over AIG.

        Carl Paulson asked Congress for $700 billion in bail out money to save the banks involved in the CDO scam as unemployment rose to 10%    in the US. The banks foreclosed in record amounts and many US citizens became homeless. Many Wall St executives were given billions in bonuses after the bailouts. Many US citizens were homeless, jobless and penniless.   

      The criminal activity that was allowed to happen through deregulation is truly mind numbing. It just astounds me that anyone could be that cold and calculated while allow their fellow man to suffer under the guise of helping them. This film was brilliantly put together and full of ideas that really improved my understanding of the American economic crisis.

       It is also obviously a catapult to the beginning of the Occupy Wall Street protest. There is only so far you can push someone until they break and fight you back. OWS has risen to cities all across the globe. A peaceful protest may turn into something else entirely if something isn’t done. I hope that many people see “Inside Job” to gain a greater understanding of what our future may hold if we continue to allow the continuation of deregulation and the corruption of the worlds financial market.