Media Spotlight: Inside Job
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Directed by Charles Ferguson
At the end of Oliver Stone’s Wall Street: Money Never Sleeps, the main character Gordon Gekko is back on top.
The credit crunch has been and gone and he’s in business again. He’s manipulated both his daughter and her fiancé into returning the £100m he’d hidden in trust for her, which means he’s free to make lots of money again.
In the closing credits even his estranged family appear to take him back - nothing has changed and everything has been forgiven.
There’s a similar message at the end of Charles Ferguson’s Oscar-winning documentary Inside Job.
Many of the key players in the market collapse in 2007/08 have escaped with their fortunes intact and their reputations only lightly punctured.
How so many people have managed to avoid culpability for their actions is the question that lies at the heart of the film.
But Inside Job is far from brainless banker bashing - it widens the beating it metes out to a broad range of industries, from economists and regulators to stockbrokers and governments.
Narrated by Hollywood star Matt Damon, it starts with dramatic shots of Iceland before delving into the background behind the downturn.
So we have financial innovation in the form of derivatives and then the failure to actively regulate these products.
In easy-to-view charts it then describes the expansion into securitisation and further deregulation with the repeal of the Glass-Steagall Act that separated the retail and investment functions of banks.
As investor George Soros colourfully puts it in the film, repealing Glass-Steagall was akin to removing the separations in an oil tanker.
Without those separations within the tanker the oil will spill out - their removal endangers the tanker and everyone on board. It’s the same with finance.
Unsurprisingly, key players in the credit crunch like Dick Fuld, former chairman of Lehman Brothers, and Alan Greenspan, chairman of the Federal Reserve, refuse to be interviewed for the film.
At first this feels like a cop-out. But consumer groups and independent economists, not to mention the documentary’s director Ferguson, build up a disturbing case against successive government advisers and the US’ top economists, all of whom it seems were in the pocket of the big firms.
Robert Gnaizda, co-founder of consumer advocacy group the Greenlining Institute, describes meeting Greenspan to go through how adjustable rate mortgages in the US had got out of control.
Gnaizda quotes Greenspan as having told him that “If you had a doctorate in math, you wouldn’t be able to tell which was good for you and which wasn’t”.
But still he did nothing because ideologically Greenspan was against regulation.
The dispiriting conclusion of the film is that despite the carnage that ensued from the economic tsunami, few changes have been made to how financial institutions operate. It blames this on the fact that the people advising Barack Obama’s government were the architects of the crisis in the first place.
As Gnaizda adds, it remains a Wall Street government. With such a clear conflict of interest radical change seems not only unlikely, but an impossibility.
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