The movie is Inside Job.
Writer/director Charles Ferguson explains exactly what happened to cause the Great Recession, the serious economic downturn we are now experiencing. He explains what happened in layman’s terms and makes the crisis and its multiple causes easy to understand.
This is one of the most important documentaries to hit a Tri-Cities screen in years. In my review I urge you to go, and to take friends and loved ones — especially young people — with you.
In my other — non-movie critic life — I write and edit an online news magazine for independent insurance agents in nine western states. Part of what we cover regularly is financial news. The U.S. economy is always a big focus and Inside Job is a fairly accurate representation of what has been happening economically in the U.S. for the last decade or more.
And Ferguson names names.
Charles Ferguson spent about a half an hour with me earlier this week about his fascinating documentary..
GW: Your movie skews people on both sides of the political aisle. Where are you politically?
CF: Obviously there are some ways that the film reflects my personal views. However, most of the film is independent of most of my personal politics. It is the work of investigative journalism and/or history or policy analysis. I don’t think of it as an ideological statement.
GW: In my other, non-movie critic life, I write a weekly online newsletter for a nine state independent insurance agent association and I have been covering this topic for six years. I found your movie to be very accurate. In just a few sentences can you sum up what you’re trying to tell the American people about this very complex issue?
CF: I wanted to convey the basics of what occurred. My aspiration is that somebody who is not a financial or economics person can — after watching the film — come out with a fairly comprehensive view of what occurred. It is a big problem that has yet to be fixed. It is worthy of public energy and attention to fix it.
GW: Your film is fairly detailed. How much research did you do before you started shooting?
CF: We did research pretty much full-time for six months before we started filming and we continued doing research at least one-quarter of the time all the way through the filming and the six months of editing. We kept learning things as we went along. People published books. There were congressional hearings and we kept learning stuff in various ways. We tried to keep up.
GW: Where did you end things?
CF: The point that we chose was the passing and signature of what essentially was President Obama’s financial reform bill. It presents the Obama administration’s view that we have now roughly taken care of the problem.
GW: And what you discovered in the bill is that “change you can believe in” really isn’t change at all. They didn’t fix anything.
CF: They did very little.
GW: They made a lot of noise and that’s about it.
CF: That’s pretty much our conclusion.
GW: Isn’t this what we really need — regulators that actually regulate. Onto another topic. It’s popular now to blame President Bush for this crisis. Aren’t both political parties are to blame? Weren’t credit default swaps — the vehicle that undid AIG — made legal under Bill Clinton’s administration?
CF: No they were already legal. What the Clinton administration did was make it illegal to regulate them.
GW: Your movie pissed me off. But that was the point, right?
CF: We want people to come out of the film with the feeling that bad things were done here and that they led to a very bad result. This problem has not — in fact — been fixed.
GW: You studied this for a couple of years and certainly have a deeper understanding than most of the problem. So what is your solution?
CF: In terms of policy substance, it is relatively straight forward. And most who study this agree. There has to be some kind of regulation about the structure of financial sector compensation. There has to be more stringent regulation of the accounting and financial capital condition of the financial system, including the shadow financial system. Something has to be done about the rating agencies. And something should probably be done about the relevant portion of the system of justice to make it easier to investigate and subpoena people and sanction them if they need to be sanctioned.
The more difficult part is how do you get it done given the condition of the American economy and political system. All that money plays an important role in politics these days and the political power of the financial services industry and so forth.
My view is that we have a very difficult time with regard to your question. There was a moment when Barack Obama was elected. He had an opportunity, an unusual opportunity in historical terms, to do something about this because of his mandate, because the country was in crisis, because he had a large Democratic majority in Congress.
He blew it by not trying to do something serious about this. Now that the moment has passed, it is going to be much more difficult to get something done.
GW: The first thing he did was health care? And then he brought New York Federal Reserve Bank President Timothy Geithner on board as his Treasury Secretary and Larry Summers, the former Secretary of the Treasury under Bill Clinton to head his National Economic Council and advise him on the financial system. These are two of the players that helped make the mess in the first place. Considering the results, Obama doesn’t seem much different than George W. Bush.
Even worse, the bankers that ran the system into the ground and personally made millions of dollars destroying the financial system still have their jobs and they’re still making decisions.
And then there’s Congress. As a body, it really doesn’t understand the economic system, does it?
CF: As a whole, I would say that. And it is also depressingly easy to buy them off. Look at the volume of campaign contributions and lobbying. The totals from the financial services industry for the last decade relative to the profits they’ve been able to make, and relative to the bailouts they were able to receive, it has been money very well spent. It was relatively inexpensive for them.
GW: Why do you think Obama picked Timothy Geither — who ran the New York Federal Reserve bank and was supposed to be watching Wall Street — and Larry Summers to advise him?
CF: I don’t know. I’ve heard a number of explanations. I don’t know Obama personally, but what I’ve heard is Obama is conflict adverse. He doesn’t like to get into fights. Second, when he was elected, he had very little personal experience or training with economic and financial issues. He had no private sector experience. He had very little academic training and didn’t have experience managing his own personal money. He didn’t have much wealth until a couple of years before he became president.
So you have this guy with very little experience in this enormous crisis. He feels a sense of inferiority and insecurity about decisions. So he turns to people who have experience. And who does he turn to? Principally the people who had been working with him during the campaign. By this point there were two groups of people around him. One is a group that latched onto him very early, and they had been with him for roughly two to three years.
The other group joined when it became clear he was going to be the nominee and not Hillary Clinton. That’s the group of people he turned to. They were for the most part ex-Clinton people.
GW: Did you try to interview the president and the financial advisors on his staff for your movie?
CF: Everybody from Obama to [Obama Chief of Staff] Rahm Emanuel to Larry Summers. Nobody would even talk to me off the record. I don’t know Obama but I do know Rahm Emanuel and I do know Larry Summers and several other people in the administration. Their not talking to me — even off the record — did surprise me a bit.
GW: Running this nation as president is like getting on a train. The track runs one direction and once you are on board that’s the direction you go, too. Campaigning on change doesn’t mean much once you are on that track.
You mentioned AIG in your movie. We bailed them out and where did the money go? To Goldman Sachs, Merrill Lynch and to European banks. If this is an international company and if it fails it destroys the international economy, why are the American taxpayers the only place to go to bail them out. Why didn’t the European nations pitch in? They had just as much to lose as we did.
CF: It was a combination of stupidity, desperation and corruption.
GW: What about the consumer? The average American? This is “our” government after all. What part do we play in this?
CF: Obviously there was some general, popular cultural sensibility to the real estate bubble. There was a lot of deception and a lot of fraud but there was also some general popular involvement especially in the states that were most seriously affected: California, Florida, Arizona, Nevada.
This is a democracy. A very imperfect one but it’s still a democracy. I think many Americans thought the government would address this problem when they voted for Obama. He said things during the campaign that — if you believed them — led one to be very hopeful that he would take this on. I think a lot of people are now confused, disappointed and upset and angry don’t know where to direct that anger. They a) they don’t know both parties are responsible, and b) they thought they had a solution in Obama and it turns out to be not the solution.
There is a lot of anger and alienation in the American population right now.
GW: But aren’t we just as responsible as the politicians for this thing? Don’t we have some blame in this? We seem to be sitting around waiting for the government to solve all of our problems.
CF: There is no question that to some extent we are getting what we deserve.
GW: The crisis is worldwide and not just in the U.S. Do we solve this?
CF: Yes, but it’s going to be difficult and it’s going to take a long time. It’s going to take a grassroots movement. Something similar to the civil rights movement or the environmental movement. Those things take time. This sort of thing has happened before in American history and it got dealt with.
And if a movement is the only way this is going to be dealt with then probably the people that created this crisis and profited from the bubble are going to get away with it. I don’t enjoy that fact but I am optimistic that over time the American people will come to their senses and force their government to enact a serious regulatory regime to prevent this from continuing to happen.
GW: And we come full circle. Again, why did you make this movie?
CF: It was important to present this information in an accessible, popular way.