Inside Job, Kenneth Turan, Los Angeles Times, 15 October 2010.
Inside Job [2010, 108 minutes] After watching Charles Ferguson’s powerhouse documentary about the global economic crisis, you will more than understand what went down — you will be thunderstruck and boiling with rage. For this smart and confident film, thick with useful information conveyed with cinematic verve, lays out in comprehensive but always understandable detail the argument that the meltdown of 2008 was no unfortunate accident. Rather, the film posits, it was the result of an out-of-control finance industry that took unethical advantage of decades of deregulation….
In the United States, Ferguson explains, after more than 30 years without a financial crisis, things began to change in 1981. A group including Federal Reserve Chairman Alan Greenspan (who was ideologically opposed to regulation) and both Republican and Democratic Treasury secretaries including Donald T. Regan, Robert E. Rubin and Lawrence H. Summers made deregulation the way things were going to be.
When complex, potentially dangerous financial instruments called derivatives came into vogue, unsung heroes, like government official Brooksley Born, pushed strenuously for their regulation, but the powers that be were so opposed that in 2000 Congress passed a bill specifically prohibiting that from happening.
Derivatives made it possible for banks that made housing loans to minimize their risk if there was a failure to repay, which helped fuel the boom in subprime mortgages. Then financial institutions combined these risky loans and made them seem as reliable as government securities, which of course they were not. Using the notorious credit default swaps, these firms were able to both sell those unreliable securities to gullible clients and also bet that they were going to fail.