Inside Job

Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W. Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts [US President George H. W. Bush’s vice president] Dan Quayle among its executives. [Former Federal Reserve chairman, 1987–2006] Alan Greenspan... became a consultant to Pimco, perhaps the biggest player in international bond markets.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni – including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson – not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman... as an institution that was itself almost a form of public service.3

Johnson goes on to make the case that, in the United States, “financiers...played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse”. And he outlines how, as the financial crisis deepened, the government, virtually in the service of an “advanced financial oligarchy”, spent hundreds of billions of taxpayers’ dollars to “recapitalise”, effectively a euphemism for subsidise, the likes of Citigroup, AIG, and the Bank of America with multiple handouts on terms ever more favourable to those precipitous institutions – terms that were also, very deliberately, “too complex for the general public to understand”. The damage done, Johnson finds it even “[m]ore alarming” that the US financial oligarchs “are now using their influence to prevent precisely the sorts of reforms that are needed... The government seems helpless, or unwilling, to act against them”.4

Those who would think Inside Job’s revelations are only relevant to the United States need to think again. Take the United Kingdom, for example, where the global financial industry has its sister-city capital in London, and where a compounding financial crisis led the UK government to bail out Northern Rock, Bradford and Bingley, and two major banking groups of global status, the Royal Bank of Scotland (RBS) and Lloyds. The multiple bailouts and other “financial interventions” have officially cost Her Majesty’s Treasury £1,366.3 billion, resulting in staggering, Third-World levels of public debt of 149.1 percent of gross domestic product.5 It is this state of public finances that has led to the current government’s harsh, “austerity” budgets, even as Britain’s bankers revel in a full return to the bonus culture, which, this February, saw multi-billion-pound packages paid industry-wide for the 2010 operating year.

The issue of bloated financial services industry remuneration packages and, especially, bonuses, is not a mute one, and Ferguson accords it due attention in Inside Job, and this is why: even as the dark shadow of the GFC lingered over the world – its consequences, in fact, still unfolding today – US media headlines and business article leads early in 2010 pronounced “the big money is back on Wall Street” as collective bonuses for the 2009 year were reported at $22.5 billion. This February, reporting of “the bonus season” for 2010’s rewards made much of a fall in cash-bonus disbursements, to $20.8 billion; this was often presented by the financial services industry and its sycophants, including those in associated professions, politics and the media, as the bankers’ new sensitivity to calls for pay restraint. Now, it seems, bonus packages feature a relatively greater proportion of deferred payments and stock options. Overall, however, these pay packages are as lucrative as ever, with the likes of JPMorganChase chief executive and chairman Jamie Dimon taking one worth around $17 million for 2010.6

All this, of course, is in the face of an American taxpayers’ bailout of the financial system that on face value makes the British one appear relatively modest: according to one US government source, official support for the US financial system as of mid 2010 stood at $3.7 trillion.7 This, however, is a figure other sources would dispute and dismiss as hopelessly conservative. Among these sources are the authoritative voices of two of only a handful of economists credited with accurately predicting the financial crisis, Associate Professor Steve Keen of the University of Western Sydney, who as early as November 2008 cited reports of a US government commitment of more than $5 trillion; and Professor Michael Hudson of the University of Missouri, Kansas City, who last September put the figure at $13 trillion. The actual amount, which by all accounts – and scandalously so – is virtually impossible to pin down, is in any case likely to continue rising.8

Thus do we gain further insight into the poignancy of Ferguson’s Oscar-acceptance remarks. Indeed, they are remarks on which he had already elucidated in an interview with Salon film critic Andrew O’Hehir:

[O’Hehir] You cover the question of executive compensation in the film, the insane and obscene salaries and bonuses these guys take home. But is that a largely symbolic question, or does it speak to the corruption of the system?

[Ferguson] Oh, it’s an extremely real question. First of all it’s a very obvious symptom and example of the corruption of the system, but it’s much more than that. It’s also systemically important. These people do these things because they can make money doing them and get away with it. And if they couldn’t, they would behave differently. If there’s a place in the world where you can make a billion dollars by being a criminal, that place is going to attract criminals. And if you have a system that is appropriately regulated so the only way that you can make money is by doing something worthwhile, you are not going to attract criminals to run that industry.

We now have a situation where the way that you can make the most money is by doing criminal things. And you get away with it. You can even destroy your own company. In some cases, destroying your company is the way that you make the most money. And that’s bad. Personally, from the experience of researching and making this film, I think that legal controls on the structure of executive compensation are a very important part of fixing this.9

Ferguson is not alone in this view. Johnson agrees; and other academics apparently not beholden to the financial services industry, having produced a detailed analysis of the performance-based compensation packages “pocketed” by the top five Bear Stearns and Lehman Brothers executives in the period 2000–08 – around $1.4 billion and $1 billion, respectively – before both investment banks collapsed, conclude: “Legislators and regulators seeking to prevent future crises would do well to consider seriously the role of incentives in the financial crisis and the fixing of such incentives in the future”.10

The director has one last message he wishes to deliver with Inside Job, and it is a simple truth. It is this: unless those responsible for the criminal fraud that resulted in the financial crisis are brought to justice, they will return to “business as usual”, as indeed they have been in the process of doing since the initial acute phase of the crisis passed. And then there will be Global Financial Crisis, Part Two, which will be even more devastating than 2008’s crash. That is, of course, if one is inclined to believe there has actually been any meaningful recovery from the crisis of 2008 when all evidence suggests the full effects of GFC Part One have not yet played out. It is little wonder a new term has been invented and is no doubt destined only to gain in popularity and relevance: the “banksters”.

Inside Job is more likely to be showing at smaller, independent cinemas, but if you miss it on the big screen, it qualifies as an essential purchase on DVD, which was released in the United States in March and is due for mid-June UK release. There can be no higher recommendation than this: Inside Job is one of the most important films to be produced thus far this century. SDk

Inside Job (USA, Sony Pictures Classics 2010), is written and directed by Charles Ferguson, co-produced by Charles Ferguson and Audrey Marrs, and narrated by Matt Damon. 108 minutes.



3 Simon Johnson, “The quiet coup”, The Atlantic, May 2009 (p. 2 online). ^

4 Johnson, “The quiet coup” (pp. 1, 2, 3 online). ^

5 Office of National Statistics, “Public sector finances: February 2011”, Statistical Bulletin, 22 March 2011. ^

6 See, for example, Graham Bowley, “Wall Street ’09 bonuses increase 17%”, New York Times, 23 Feb. 2010; Henry Goldman & Michael J. Moore, “Wall Street bonuses decline 8% in 2010, New York comptroller DiNapoli says”, Bloomberg, 24 Feb. 2011; Clare Baldwin & Jonathan Stempel, “JPMorgan CEO Dimon awarded $17 million stock, options”, Reuters, 17 Feb. 2011; Eric Dash & Susanne Craig, “Big paydays return with big profits at Wall St. banks”, New York Times, 21 Jan. 2011. ^

7 David Lawder, “US financial system support up $700 bln in past year - watchdog”, Reuters, 21 July 2010. ^

8 See: Steve Keen, “Can the USA debt-spend its way out?”, Steve Keen’s Debtwatch, 29 Nov. 2008; Michael Hudson, “Bailing out the fraudsters instead of saving America’s economic base: Is the economy as broke as Lehman was? The Angelides committee sidesteps the mortgage fraud issue”, Global Research, 3 Sept. 2010. A Bloomberg report less than three months after Keen’s article suggested the US government commitment to the financial system could blow out to $9.7 trillion: Mark Pittman & Bob Ivry, “U.S. taxpayers risk $9.7 trillion on bailout programs (update 1)”, Bloomberg, 9 Feb. 2009. ^

9 Charles Ferguson, quoted in O’Hehir, “Cannes: How the bankers fleeced the world”. ^

10 Johnson, “The quiet coup”, (p. 4 online); Lucian Bebchuk, Alma Cohen & Holger Spamann, “The wages of failure: executive compensation at Bear Stearns and Lehman 2000-2008”, Harvard Law School discussion paper no. 657 (Dec. 2009/Feb. 2010), pp. 3, 27. The authors have also written a short article outlining the conclusions of their full paper: see Bebchuk, Cohen & Spamann, “Paid to fail”, Project Syndicate, 18 May 2010. ^


Additional Info

Inside Job (DVD)

Debunking Economics (2nd edition, Kindle)

Ferguson cannot be dismissed as a filmmaker attempting to justify a
wild conspiracy theory.

A fall in 2010 cash-bonus disbursements to $20.8 billion was often presented by the financial services industry and its sycophants, including those in associated professions, politics and the media, as the bankers’ new sensitivity to calls for pay restraint.

The director has one last message he wishes to deliver: unless those responsible for the criminal fraud that resulted in the financial crisis are brought to justice, they will return
to ‘business as usual’.